Northeast Indiana Bancorp, Inc. Announces Second Quarter Earnings

HUNTINGTON, Ind., July 13 /PRNewswire-FirstCall/ — Northeast Indiana Bancorp,
Inc. (OTC Bulletin Board: NIDB), the parent company of First Federal Savings
Bank, today announced net income of $491,000 ($0.40 per diluted common share)
for the Company’s second quarter ended June 30, 2010 compared to net income of
$476,000 ($0.39 per diluted common share)for the second quarter ended June 30,
2009. The current three months earnings equates to an annualized return on
average assets (ROA) of 0.76% and a return on average equity (ROE) of 8.38%
compared to an annualized ROA of 0.77% and an ROE of 8.61% for the months ended
June 30, 2009.

Net interest income increased by $138,000 or 6.9% to $2.1 million for the
quarter ended June 30, 2010 when compared to $2.0 million for the quarter ended
June 30, 2009. The Company’s net interest margin increased by twelve basis
points to 3.55% for the current quarter compared to 3.43% in the year earlier
quarter. Sequentially, the current quarter’s 3.55% net interest margin was also
a seven basis point improvement over the quarter ended March 31, 2010 net
interest margin of 3.48%.

The Company made a $500,000 provision for loan loss during the quarter ended
June 30, 2010 compared to a $300,000 provision for loan loss for the quarter
ended June 30, 2009. 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 $452,000 for the quarter ended June 30, 2010 compared to net
charge-offs of $25,000 for the quarter ended June 30, 2009.

Noninterest income increased by $73,000 or 11.6% to $701,000 during the quarter
ended June 30, 2010 when compared to $628,000 in the same quarterly period a
year ago. This was primarily due to an increase in brokerage fees from improving
asset values in wealth management as well as a reduction in net losses on sale
of securities.

Noninterest expense increased by $34,000 to $1.7 million for the current quarter
compared with $1.6 million for the quarter ended June 30, 2009. Increases in
salaries/benefits and occupancy were due to our new Fort Wayne branch office
that opened September 2009. Legal expenses were higher due to increased
collection efforts during the current period. These increases were largely
offset by a sharp reduction in FDIC premiums by $104,000. The quarter ended June
30, 2009 contained an FDIC Special Assessment levied on all FDIC-insured
financial institutions of $115,000. The Company’s efficiency ratio improved to
58.5% for the current three month period compared to 61.9% in the prior year
three month period.

Net income for the six months ended June 30, 2010 decreased to $944,000 ($0.76
per diluted common share) compared to net income of $1.0 million ($0.82 per
diluted common share) for the six months ended June 30, 2009. The decrease in
net income between six month periods is primarily due to an increase in loan
loss provisions of $275,000 between six month periods, as well as a sharp
reduction of $184,000 in net gain on sale of loans due to significantly reduced
mortgage refinance volumes.

These items were partially offset by increased net interest income of $165,000,
reduced FDIC premiums of $87,000 and a lower effective tax rate for the current
six month period due to the implementation of a Nevada Investment
Subsidiary/REIT during the fourth quarter of 2009.

Total assets increased $5.5 million to $258.2 million at June 30, 2010 compared
to December 31, 2009 assets of $252.7 million. Net loans decreased $1.2 million
to $190.0 million at June 30, 2010 compared to $191.2 million at December 31,
2009. Total deposits increased sharply by $17.3 million to $171.9 million at
June 30, 2010 from $154.6 million at December 31, 2009. The significant increase
in total deposits came in non-interest bearing DDA, 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 $13.2 million or 18.1% to
$59.9 million June 30, 2010 compared to $73.1 million at December 31, 2009.

Shareholder’s equity increased to $23.7 million at June 30, 2010 compared to
$23.0 million at December 31, 2009. The book value of NIDB’s stock was $19.11
per common share as of June 30, 2010. The number of outstanding common shares
was 1,239,946 as of the same date. The last reported trade of the stock on July
9, 2010 was $10.89 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,
——– ————
2010 2009
—- —-
Interest-earning cash and cash
equivalents $10,070,222 $10,929,272
Noninterest earning cash and cash
equivalents 3,067,599 2,473,235
——— ———
Total cash and cash equivalents 13,137,821 13,402,507
Securities available for sale 39,676,977 33,025,298
Securities held to maturity 400,000 550,000
Loans held for sale 530,000 53,200
Loans receivable, net of allowance
for loan loss June 30, 2010
$2,838,360 and December 31, 2009
$2,868,468
190,036,234 191,267,218
Accrued interest receivable 1,054,149 1,040,528
Premises and equipment 2,133,987 2,158,406
Investments in limited liability
partnerships 272,595 317,643
Cash surrender value of life
insurance 6,641,027 6,514,390
Other assets 4,311,537 4,395,150
Total Assets $258,194,327 $252,724,340
============ ============
LIABILITIES AND STOCKHOLDERS’
EQUITY
Non-interest bearing deposits 13,250,043 11,065,663
Interest bearing deposits 158,729,029 143,563,858
Borrowed Funds 59,906,344 73,064,228
Accrued interest payable and other
liabilities 2,615,284 2,065,832
——— ———
Total Liabilities 234,500,700 229,759,581
———– ———–

Retained earnings – substantially
restricted 23,693,627 22,964.759
———- ———-
Total Liabilities and Shareholder’s
Equity $258,194,327 $252,724,340
============ ============

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended
June 30,
2010 2009
—- —-
Total interest income $3,235,620 $3,422,105
Total interest
expense 1,100,060 1,424,302
————– ——— ———
Net interest income $2,135,560 $1,997,803
——————- ———- ———-
Provision for loan
losses 500,000 300,000
Net interest income
after provision for
loan losses $1,635,560 $1,697,803
Service charges on
deposit accounts 177,870 177,420

Net loss on sale of
securities (5,646) (45,198)
Net gain on sale of
loans 214,723 205,577
Net loss on sale of
repossessed assets (37,575) (10,684)
Brokerage fees 106,870 61,791
Increase in cash
surrender value of
life insurance 63,319 61,626
Other income 181,083 177,439
————
Total noninterest
income $700,644 $627,971
—————– ——– ——–
Salaries and employee
benefits 865,240 758,304

Occupancy 224,035 192,149
Data processing 187,372 193,689
Deposit insurance
premiums 78,000 182,000
Professional fees 81,172 50,083
Correspondent bank
charges 31,653 31,630
Other expense 191,284 216,607
————- ——- ——-
Total noninterest
expenses $1,658,756 $1,624,462
—————–
Income before income
tax expenses $677,448 $701,312
——————– ——– ——–
Income tax expense 186,668 224,843
Net Income $490,780 $476,469
========== ======== ========

Six Months Ended
June 30,
2010 2009
—- —-
Total interest income $6,443,281 $6,983,887
Total interest
expense 2,276,889 2,982,482
————– ——— ———
Net interest income $4,166,392 $4,001,405
——————- ———- ———-
Provision for loan
losses 850,000 575,000
Net interest income
after provision for
loan losses $3,316,392 $3,426,405
Service charges on
deposit accounts 343,316 331,190

Net loss on sale of
securities (39,847) (46,790)
Net gain on sale of
loans 245,568 429,235
Net loss on sale of
repossessed assets (53,342) (87,597)
Brokerage fees 217,745 138,411
Increase in cash
surrender value of
life insurance 126,638 127,873
Other income 349,068 308,212
———— ——-
Total noninterest
income $1,189,146 $1,200,534
—————– ———- ———-
Salaries and employee
benefits 1,705,032 1,496,598

Occupancy 428,388 395,096
Data processing 377,719 384,714
Deposit insurance
premiums 149,400 236,000
Professional fees 143,170 112,880
Correspondent bank
charges 60,547 62,720
Other expense 385,569 440,245
————- ——- ——-
Total noninterest
expenses $3,249,825 $3,128,253
—————–
Income before income
tax expenses $1,255,713 $1,498,686
——————– ———- ———-
Income tax expense 312,105 489,519
Net Income $943,608 $1,009,167
========== ======== ==========

NORTHEAST INDIANA BANCORP
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
—- —- —- —-

Basic
Earnings
per common
share 0.40 0.39 0.76 0.82
Dilutive
Earnings
per share 0.40 0.39 0.76 0.82
Net
interest
margin 3.55% 3.43% 3.52% 3.40%
Return on
average
assets 0.76% 0.77% 0.74% 0.81%
Return on
average
equity 8.38% 8.61% 9.64% 9.16%
Efficiency
ratio 58.49% 61.87% 60.69% 60.14%
Average
shares
outstanding
-primary 1,238,246 1,227,920 1,236,933 1,227,816
Average
shares
outstanding
-diluted 1,238,246 1,227,920 1,236,966 1,227,933
———— ——— ——— ——— ———

Allowance
for loan
losses:
Balance at
beginning
of period $2,790,401 $1,886,191 $2,868,468 $1,750,605
Charge-
offs:
One-to-
four
family 7,292 139,308 99,359 194,266
Commercial
real
estate 128,082 – 128,082 -
Commercial 328,269 14,358 675,061 14,358
Consumer 8,983 22,039 9,353 117,538
—– —— —– ——-
Gross
charge-
offs 472,627 175,705 911,855 326,162
Recoveries:
One-to-
four
family 975 730 1,950 1,130
Commercial
real
estate – – – -
Commercial – 136,635 – 136,635
Consumer 19,611 13,534 29,797 24,207
—— —— —— ——
Gross
recoveries 20,586 150,929 31,747 161,972
—— ——- —— ——-
Net charge-
offs 452,041 24,776 880,108 164,190
Additions
charged to
operations 500,000 300,000 850,000 575,000
——- ——- ——- ——-
Balance at
end of
period $2,838,360 $2,161,415 $2,838,360 $2,161,415
========== ========== ========== ==========

Net loan
charge-
offs to
average
loans (1) 0.93% 0.05% 0.90% 0.16%
——— —- —- —- —-

Nonperforming
assets At December
(000′s) At June 30, At March 31, 31,
Loans: 2010 2010 2009
—- —- —-
Non-
accrual $4,552 $5,474 $2,826
Past 90
days or
more and
still
accruing – – -
Troubled
debt
restructured 621 621 3,008
— — —–
Total
nonperforming
loans 5,173 6,095 5,834
Real
estate
owned 1,058 884 934
Other
repossessed
assets 6 3 11
— — —
Total
nonperforming
assets $6,237 $6,982 $6,779
====== ====== ======

Nonperforming
assets to
total
assets 2.42% 2.77% 2.68%
Nonperforming
loans to
total
loans 2.68% 3.12% 3.01%
Allowance
for loan
losses to
nonperforming
loans 54.86% 45.78% 49.16%
Allowance
for loan
losses to
net loans
receivable 1.49% 1.45% 1.50%