Northeast Indiana Bancorp, Inc. Announces Increased Third Quarter Earnings

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Oct 13, 2011, 09:51 ET

HUNTINGTON, Ind., Oct. 13, 2011 /PRNewswire/ -- Northeast Indiana Bancorp, Inc. (OTCQB: NIDB), the parent company of First Federal Savings Bank, today announced net income increased $92,000 or 17.1% to $631,000 ($0.51 per diluted common share) for the Company's third quarter ended September 30, 2011 compared to net income of $539,000 ($0.44 per diluted common share) for the third quarter ended September 30, 2010. The current three months earnings equates to an annualized return on average assets (ROA) of 0.98% and a return on average equity (ROE) of 9.97% compared to an annualized ROA of 0.83% and an ROE of 9.02% for the three months ended September 30, 2010.

Net interest income increased by $129,000 or 5.9% to $2.3 million for the quarter ended September 30, 2011 when compared to $2.2 million for the quarter ended September 30, 2010. The Company's net interest margin increased by thirty basis points to 3.85% for the current quarter compared to 3.55% in the year earlier quarter. On a linked quarter basis, the Company's 3.85% net interest margin was eleven basis points higher compared to the 3.74% net interest margin reported for the quarter ended June 30, 2011.

The Company made a $375,000 provision for loan loss during the quarter ended September 30, 2011 compared to a $500,000 provision for loan loss for the quarter ended September 30, 2010. 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 weak economic conditions. The Company experienced a decline in net charge-offs to $123,000 for the quarter ended September 30, 2011 compared to net charge-offs of $515,000 for the quarter ended September 30, 2010. In addition, total non-performing assets declined $1.6 million or 17.0% to $8.0 million at September 30, 2011 compared to $9.6 million at June 30, 2011.

Noninterest income increased slightly to $727,000 for the third quarter ended September 30, 2011 compared to $687,000 during the quarter ended September 30, 2010. The modest increase is mostly due to an increase of $188,000 in net gains on security sales more than offsetting an increase in net losses on repossessed asset sales and a decline in net gain on loan sales between quarterly periods.

Noninterest expense increased $175,000 to $1.8 million for the quarter ended September 30, 2011 when compared to $1.6 million for the quarter ended September 30, 2010. This increase was due to a $90,000 non-recurring payment into the bank's frozen defined benefit pension plan to remain adequately funded. In addition, management set up a $67,500 valuation allowance on three real estate owned parcels due to continued weak market pricing on similar collateral.

Net income for the nine months ended September 30, 2011 decreased to $1.29 million ($1.05 per diluted common share) compared to net income of $1.48 million ($1.21 per diluted common share) for the nine months ended September 30, 2010. Net interest income increased $351,000 or 5.5% to $6.69 million for the nine months ended September 30, 2011 compared to $6.34 million for the prior year nine month period. The Company made a $1.93 million provision for loan loss for the nine months ended September 30, 2011 compared to a $1.35 million provision for loan loss for the nine months ended September 30, 2010. Noninterest income increased slightly to $1.92 million for the nine months ended September 30, 2011 compared to $1.88 million for September 30, 2010. Noninterest expense was $266,000 higher for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010. Increases in salaries and employee benefits between nine month periods were due to the non-recurring pension payment as well as the establishment of a valuation allowance on real estate owned, both of which were discussed with quarterly results. These increases were partially offset by decreases in deposit insurance premiums.

Total assets increased $3.07 million or 1.2% to $259.17 million at September 30, 2011 compared to December 31, 2010 assets of $256.10 million. Net loans decreased $3.45 million to $179.46 million at September 30, 2011 compared to $182.91 million at December 31, 2010. However, net loans increased 3.0% or $5.26 million for the current quarter when compared to net loans reported of $174.20 million at June 30, 2011. Total deposits increased sharply by $13.16 million or 7.5% to $189.56 million at September 30, 2011 from $176.40 million at December 31, 2010. The increase in total deposits came in noninterest 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 decreased $12.18 million or 22.7% to $41.38 million at September 30, 2011 compared to $53.56 million at December 31, 2010.

Shareholder's equity at September 30, 2011 was $25.57 million compared to $24.13 million at December 31, 2010. The book value of NEIB's stock was $20.62 per common share as of September 30, 2011. The number of outstanding common shares was 1,239,946. The last reported trade of the stock on October 11, 2011 was $12.10 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 OTC Markets Group, Inc. (www.otcmarkets.com) utilizing the OTCQB platform 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*	September 30, 2011		December 31, 2010
Interest-earning cash and cash equivalents	$	8,993,434	$	9,450,979
Noninterest earning cash and cash equivalents	3,065,342		2,045,215
Total cash and cash equivalents	12,058,776		11,496,194
Securities available for sale	51,463,727		46,477,692
Securities held to maturity	483,304		400,000
Loans held for sale	1,248,200		353,642
Loans receivable, net of allowance for loan loss September 30, 2011 $3,859,859 and December 31, 2010 $3,227,844	179,465,188		182,913,386
Accrued interest receivable	968,755		981,357
Premises and equipment	2,510,383		2,554,170
Investments in limited liability partnerships	173,610		233,001
Cash surrender value of life insurance	6,954,356		6,765,215
Other assets	3,843,423		3,926,783
*Total Assets*	$	259,169,722	$	256,101,440
*LIABILITIES AND STOCKHOLDERS' EQUITY*
Non-interest bearing deposits	14,616,806		14,301,482
Interest bearing deposits	174,947,410		162,099,970
Borrowed Funds	41,385,764		53,565,973
Accrued interest payable and other liabilities	2,649,100		1,998,866
*Total Liabilities*	233,599,080		231,966,291

Retained earnings – substantially restricted	25,570,642		24,135,149
*Total Liabilities and Shareholders' Equity*	$	259,169,722	$		256,101,440


CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
		2011		2010		2011		2010
Total interest income	$	3,048,865	$	3,248,075	$	9,133,501	$	9,691,357
Total interest expense		744,798		1,072,797		2,441,124		3,349,686
Net interest income	$	2,304,067	$	2,175,278	$	6,692,377	$	6,341,671
Provision for loan losses		375,000		500,000		1,925,000		1,350,000
Net interest income after provision for loan losses	$	1,929,067	$	1,675,278	$	4,767,377	$	4,991,671
Service charges on deposit accounts		160,060		172,027		450,048		515,344
Net gain/ (loss) on sale of securities		158,362		(29,412)		272,542		(69,259)
Net gain on sale of loans		187,863		235,142		441,949		480,709
Net (loss) on sale of repossessed assets		(103,607)		(742)		(204,902)		(54,083)
Brokerage fees		113,033		87,169		303,190		304,914
Increase in cash surrender value of life insurance		62,138		61,481		189,141		188,119
Other income		149,236		161,171		466,368		510,238
Total noninterest income	$	727,085	$	686,836	$	1,918,336	$	1,875,982
Salaries and employee benefits		925,219		848,710		2,634,326		2,553,739
Occupancy		235,265		226,371		706,614		654,757
Data processing		186,320		188,722		578,892		566,441
Deposit insurance premiums		31,000		84,000		194,000		233,400
Professional fees		102,255		77,412		289,097		221,122
Correspondent bank charges		33,662		32,319		100,989		92,867
Valuation allowances – repossessed assets		67,500		-		67,500		-
Other expense		226,598		174,785		577,585		560,359
Total noninterest expenses	$	1,807,819	$	1,632,319	$	5,149,003	$	4,882,685
Income before income tax expense	$	848,333	$	729,795	$	1,536,710	$	1,984,968
Income tax expense		217,564		190,325		243,324		502,430
Net Income	$	630,769	$	539,470	$	1,293,386	$	1,482,538

NORTHEAST INDIANA BANCORP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011		2010
Basic Earnings per common share	0.51			0.44		1.05		1.21
Dilutive Earnings per share	0.51			0.44		1.05		1.21
Net interest margin	3.85%			3.55%		3.72%		3.53%
Return on average assets	0.98%			0.83%		0.67%		0.77%
Return on average equity	9.97%			9.02%		6.99%		8.42%
Efficiency ratio	59.64%			57.03%		59.80%		59.42%
Average shares outstanding- primary	1,232,303			1,229,589		1,231,717		1,229.235
Average shares outstanding- diluted	1,237,507			1,229,872		1,232,584		1,229,919
Allowance for loan losses:
Balance at beginning of period	$		3,608,088	$	2,838,360	$	3,227,844	$	2,868,468
Charge-offs:
One-to-four family	124,116			213,145		454,569		312,504
Commercial real estate	15,138			174,286		304,479		302,368
Land/land development	-			-		284,961		-
Commercial	-			126,046		124,292		801,106
Consumer	-			21,933		160,945		31,286
Gross charge-offs	141,297			535,410		1,329,246		1,447,264
Recoveries:
One-to-four family	975			975		2,425		2,925
Commercial real estate	-			455		-		455
Land/land development	-			-		-		-
Commercial	-			6,791		-		6,791
Consumer	17,093			11,945		33,836		41,742
Gross recoveries	18,068			20,166		36,261		51,912
Net charge-offs	123,299			515,244		1,292,985		1,395,352
Additions charged to operations	375,000			500,000		1,925,000		1,350,000
Balance at end of period	$		3,859,859	$	2,823,116	$	3,859,859	$	2,823,116

Net loan charge-offs to average loans (1)	0.27%			1.06%		0.94%		0.95%

Nonperforming assets (000's)	At September 30,			At September 30,		At June 30,		At December 31,
Loans:	2011			2010		2011		2010
Non-accrual	$		6,750	$	6,246	$	5,640	$	7,275
Past 90 days or more and still accruing	-			-		-		-
Troubled debt restructured	-			708		2,421		737
Total nonperforming loans	6,750			6,954		8,061		8,012
Real estate owned	1,254			1,487		1,586		594
Other repossessed assets	-			19		1		0
Total nonperforming assets	$		8,004	$	8,460	$	9,648	$	8,606

Nonperforming assets to total assets	3.10%			3.28%		3.78%		3.36%
Nonperforming loans to total loans	3.68%			3.65%		4.53%		4.30%
Allowance for loan losses to nonperforming loans	57.19%			40.59%		44.77%		40.29%
Allowance for loan losses to net loans receivable	2.11%			1.48%		2.07%		1.76%


	At September 30,
	2011			2010

Stockholders' equity as a % of total assets	9.87%			9.32%
Book value per share	$	20.62		$	19.58
Common shares outstanding- EOP	1,239,946			1,239,946

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