Northeast Indiana Bancorp, Inc. Announces Increase in Third Quarter Earnings

Northeast Indiana Bancorp, Inc. Announces Increase in Third Quarter Earnings HUNTINGTON, Ind., Oct. 13 /PRNewswire-FirstCall/ -- Northeast Indiana Bancorp, Inc. (NEIB), the parent company of First Federal Savings Bank, today announced net income of $422,000 ($0.29 per diluted common share) for the Company's third quarter ended September 30, 2004 compared to net income of $395,000 ($0.28 per diluted common share) for the third quarter ended September 30, 2003, an increase in net income of $27,000 or 6.8%. The current three months earnings represents an annualized return on average assets (ROA) of 0.73% and a return on average equity (ROE) of 6.44% as compared to an ROA of 0.72% and an ROE of 5.96% for the three months ended September 30, 2003. Net interest income increased to $1.6 million for the quarter ended September 30, 2004 when compared to $1.4 million for the quarter ended September 30, 2003. The Company's net interest margin also improved 24 basis points to 2.93% for the current quarter compared to 2.69% in the year earlier quarter. This improved margin was primarily due to a decline in the cost of interest-bearing liabilities that was greater than the decline in interest- earning asset yields and to a lesser extent, higher average interest-earning asset balances during the quarter ended September 30, 2004 compared to the quarter ended September 30, 2003. For the third consecutive quarter, Northeast Indiana Bancorp, Inc. saw significant improvement in non-performing asset trends. The Company's non- performing assets were $1.7 million or 0.7% of total assets at September 30, 2004, a decline of 51.4% from the $3.5 million or 1.6% of total assets reported at September 30, 2003 and a 29.2% decline from the $2.4 million or 1.1% of total assets reported at June 30, 2004. The decline in non-performing assets is primarily due to the sale of a significant commercial real estate property during the quarter ended September 30, 2004 that was included in real estate owned as of June 30, 2004. This property was disposed at a minimal loss compared to the carrying value. Based on the positive trend in non- performing assets and the outcome on this significant commercial real estate property, the Company made no provision for loan losses during the quarter ended September 30, 2004. Noninterest income was relatively unchanged at $356,000 for the third quarter ended September 30, 2004 compared to $353,000 during the quarter ended September 30, 2003. Declines in net gain on the sale of loans and net gain on sale of securities were more than offset by a significant increase in service charges on deposit accounts. The increased service charges on deposit accounts is due to a new retail overdraft program the Bank implemented during the quarter ended June 30, 2004. Noninterest expenses increased to $1.36 million for the quarter ended September 30, 2004 compared to $1.22 million for the quarter ended September 30, 2003. This increase came primarily in salaries and employee benefits due to increased funding on a defined benefit pension plan, increased ESOP expense due to the Company's current share price, less deferred loan origination fees due to lower mortgage volumes and wage increases related to more employees from a brokerage acquisition that was completed late June 2004. Net income for the nine months ended September 30, 2004 decreased to $1.3 million compared to $1.5 million for the nine months ended September 30, 2003. This decrease is mainly due to a decline of $402,000 in net gain on sale of loans between periods due to significantly lower mortgage sales volumes and to a lesser extent, lower deferred loan origination fees and increased benefit costs between periods. These items were partially offset by an increase in net interest income of $381,000 to $4.7 million for the nine months ended September 30, 2004 compared to $4.4 million for the nine months ended September 30, 2003. Total assets at September 30, 2004 of $228.7 million was relatively unchanged compared to December 31, 2003 assets of $227.4 million. However, net loans receivable increased $8.6 million or 5.3% to $172.3 million at September 30, 2004 from $163.7 million at December 31, 2003 and total deposits increased $6.4 million or 5.2% during the same time frame. Shareholders' equity at September 30, 2004 was $26.0 million compared to $27.2 million at December 31, 2003. The Company closed out a previously announced stock repurchase program after repurchasing 44,260 shares at an average cost of $21.86 during the current quarter. The Company subsequently announced a new repurchase program to buy back up to 5% or approximately 71,000 shares over the next twelve months. In the opinion of management, these repurchases help leverage Northeast Indiana Bancorp's remaining equity and tend to improve return on shareholders' equity. The book value of NEIB's stock was $18.22 per common share as of September 30, 2004. The number of outstanding common shares was 1,425,357. The last reported trade of the stock on October 11, 2004 was $21.50 per common share. This represents a 2.2% increase over the closing price of $21.04 per common share on December 31, 2003. Northeast Indiana Bancorp, Inc. is headquartered at 648 North Jefferson Street, Huntington, Indiana. The company offers a full array of banking, trust, and financial brokerage services to its customers through three full service branches located in Huntington, Indiana. The company is traded on The NASDAQ Stock Market under the symbol "NEIB". 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 September 30, December 31, 2004 2003 Interest-earning cash and cash equivalents $2,401,752 $6,849,198 Noninterest earning cash and cash equivalents 2,771,941 2,483,881 Total cash and cash equivalents 5,173,693 9,333,079 Securities available for sale 39,434,079 43,687,318 Securities held to maturity estimated market value of $60,000 and $150,000 at September 30, 2004 and December 31, 2003 60,000 150,000 Loans held for sale 224,100 - Loans receivable, net of allowance for loan loss September 30, 2004 $1,461,051 and December 31, 2003 $1,772,109 172,319,234 163,676,825 Accrued interest receivable 838,473 798,722 Premises and equipment 2,158,128 2,061,781 Investments in limited liability partnerships 1,428,726 1,602,147 Cash surrender value of life insurance 5,108,374 4,352,129 Other assets 1,944,003 1,732,531 Total Assets $228,688,810 $227,394,532 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits 128,437,746 122,009,736 Borrowed Funds 72,494,686 76,545,485 Accrued interest payable and other liabilities 1,782,318 1,644,751 Total Liabilities 202,714,750 200,199,972 Retained earnings - substantially restricted 25,974,060 27,194,560 Total Liabilities and Shareholders' Equity $228,688,810 $227,394,532 CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Total interest income $3,027,478 $2,997,728 $9,031,581 $9,380,905 Total interest expense 1,443,208 1,599,978 4,283,857 5,013,744 Net interest income $1,584,270 $1,397,750 $4,747,724 $4,367,161 Provision for loan losses - - - - Net interest income after provision for Loan losses $1,584,270 $1,397,750 $4,747,724 $4,367,161 Service charges on deposit account 150,671 94,669 359,536 272,788 Net gain (loss) on sale of securities 165 12,397 19,136 12,397 Net gain on sale of loans 19,028 52,095 75,236 477,215 Net gain (loss) on sale of repossessed assets (14,924) (5,829) (10,702) 57,033 Trust and brokerage fees 28,657 31,989 54,493 134,202 Other income 172,739 167,741 501,560 480,963 Total noninterest income $356,336 $353,062 $999,259 $1,434,598 Salaries and employee benefits * 771,904 653,916 2,274,258 1,931,281 Occupancy 110,913 111,459 333,578 358,642 Data processing 161,274 175,808 483,541 512,135 Deposit insurance premiums 4,758 5,001 14,122 15,072 Professional fees 61,285 50,948 197,034 197,953 Correspondent bank charges 55,064 55,540 162,689 155,314 Other expense * 194,152 172,216 582,222 570,279 Total noninterest expenses $1,359,350 $1,224,888 $4,047,444 $3,740,676 Income before income tax expenses $581,256 $525,924 $1,699,539 $2,061,083 Income tax expenses 158,796 130,728 442,069 552,628 Net Income $422,460 $395,196 $1,257,470 $1,508,455 * - Certain prior year line items were reclassified to conform with current year presentations. NORTHEAST INDIANA BANCORP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Basic Earnings per common share 0.30 0.28 0.88 1.06 Dilutive Earnings per share 0.29 0.28 0.85 1.02 Net interest margin 2.93% 2.69% 2.97% 2.77% Return on average assets 0.73% 0.72% 0.74% 0.91% Return on average equity 6.44% 5.96% 6.27% 7.56% Average shares outstanding- primary 1,400,399 1,410,934 1,427,182 1,419,016 Average shares outstanding- diluted 1,444,857 1,432,864 1,476,474 1,476,235 Allowance for loan losses: Balance at beginning of period $1,483,672 $1,857,963 $1,772,109 $2,135,630 Charge-offs: One-to-four family - - 2,907 25,954 Commercial real estate - 34,343 208,218 235,722 Commercial - - - 100,488 Consumer 68,324 30,323 235,806 171,188 Gross charge-offs 68,324 64,666 446,931 533,352 Recoveries: One-to-four family - - - - Commercial real estate - - - - Commercial - - 10,000 96,000 Consumer 45,703 63,050 125,873 158,069 Gross recoveries 45,703 63,050 135,873 254,069 Net charge-offs (recoveries) 22,621 1,616 311,058 279,283 Additions charged to operations - - - - Balance at end of period $1,461,051 $1,856,347 $1,461,051 $1,856,347 Net loan charge-offs (recoveries) to average loans (1) 0.05% 0.00% 0.24% 0.24% Nonperforming assets At At At At (000's) September 30, September 30, June 30, December 31, Loans: 2004 2003 2004 2003 Non-accrual $1,493 $3,231 $1,342 $2,413 Past 90 days or more and still accruing - - - - Troubled debt restructured - - - - Total nonperforming loans 1,493 3,231 1,342 2,413 Real estate owned 150 218 1,099 162 Other repossessed assets 12 11 - 3 Total nonperforming assets $1,655 $3,460 $2,441 $2,578 Nonperforming assets to total assets 0.72% 1.56% 1.08% 1.13% Nonperforming loans to total loans 0.86% 2.07% 0.81% 1.46% Allowance for loan losses to nonperforming loans 97.86% 57,44% 110.58% 73.44% Allowance for loan losses to net loans receivable 0.84% 1.19% 0.89% 1.07% At September 30, 2004 2003 Stockholders' equity as a % of total assets 11.36% 12.25% Book value per share $18.22 $18.41 Common shares outstanding- EOP 1,425,357 1,472,944 (1) Ratios for the three-month periods are annualized. DATASOURCE: Northeast Indiana Bancorp, Inc. CONTACT: Randy J. Sizemore, Sr Vice President, CFO of Northeast Indiana Bancorp, Inc., +1-260-358-4680 Web site: http://www.firstfedhuntington.com/