Northeast Indiana Bancorp, Inc. Announces Second Quarter Earnings

Share Name	Share Symbol	Market	Type
Northeast Indiana Bancorp (MM)	NASDAQ:NEIB	NASDAQ	Common Stock

Northeast Indiana Bancorp (NASDAQ:NEIB)
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Northeast Indiana Bancorp, Inc. Announces Second Quarter Earnings HUNTINGTON, Ind., July 16 /PRNewswire-FirstCall/ -- Northeast Indiana Bancorp, Inc. (NEIB), the parent company of First Federal Savings Bank, today announced net income of $432,000 ($0.30 per diluted common share) for the Company's second quarter ended June 30, 2004 compared to net income of $632,000 ($0.44 per diluted common share) for the second quarter ended June 30, 2003. The decline is primarily due to significantly less refinancing activity between quarters that produced net gains on the sale of loans of $28,000 for the current quarter compared to $260,000 in the year earlier quarter. Sequentially, the second quarter 2004 net income is $29,000 or 7.2% higher than the first quarter ended March 31, 2004 net income of $403,000. The current three month earnings represents an annualized return on average assets (ROA) of 0.77% and a return on average equity (ROE) of 6.46%. Net interest income increased to $1.6 million for the quarter ended June 30, 2004 when compared to $1.5 million for the quarter ended June 30, 2003. The Company's net interest margin also improved 21 basis points to 2.99% for the current quarter compared to 2.78% in the year earlier quarter. This 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 loan balances during the quarter ended June 30, 2004 compared to the quarter ended June 30, 2003. A very positive development for the Company came in the form of a sharp decline of $1.5 million in non-performing loans to $1.3 million at June 30, 2004 compared to $2.8 million at March 31, 2004. The decrease was due to a significant commercial real estate loan being transferred to real estate owned during the quarter ended June 30, 2004 and still being carried as such at quarter end. Subsequent to the transfer of the property to real estate owned, the Bank accepted a purchase agreement and earnest money from a qualified buyer. The closing is expected to take place during July 2004. Based on the outcome of this loan and no significant change in loans outstanding, the Company made no provision for loan losses during the quarter ended June 30, 2004. Noninterest income decreased by $307,000 to $331,000 during the quarter ended June 30, 2004 when compared to $638,000 in the same period a year ago. This was primarily due to a $232,000 decrease in net gains on the sale of loans quarter to quarter as mentioned above. The Company also recorded a net loss on the sale of repossessed assets for the quarter ended June 30, 2004 of $1,000 compared to a net gain on the sale of repossessed assets for the quarter ended June 30, 2003 of $49,000. Trust and brokerage fees declined $40,000 between quarters due to the conversion of trust assets to another financial institution during the third quarter of 2003 under a revenue sharing agreement. Service charges on deposit accounts increased $31,000 for the current quarter as a new retail overdraft program was implemented by management during the quarter ended June 30, 2004. Non-interest expense increased to $1.3 million for the quarter ended June 30, 2004 compared to $1.2 million for the quarter ended June 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, and less deferred loan origination fees due to significantly lower mortgage volumes. Occupancy, data processing, professional fees and other expenses saw decreases between quarters. Net income for the six months ended June 30, 2004 decreased to $835,000 compared to $1.1 million for the six months ended June 30, 2003. This decrease is mainly due to a decline of $369,000 in net gain on the 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 $194,000 or 6.5% to $3.2 million for the six months ended June 30, 2004 compared to $3.0 million for the six months ended June 30, 2003. Total assets at June 30, 2004 of $225.1 million was relatively unchanged compared to December 31, 2003 assets of $227.4 million. However, total deposits increased $8.1 million or 6.6% to $130.1 million at June 30, 2004 from $122.0 million at December 31, 2003. The increases came primarily in MMDA, NOW, savings, and non-interest bearing checking accounts as management continues to focus on lower costing funding sources. These funds were used primarily to replace other borrowed funds. Shareholder's equity at June 30, 2004 was $26.5 million compared to $27.2 million at December 31, 2003. The company repurchased 30,186 shares of treasury stock, at an average cost of $21.95, for a total cost of approximately $663,000 during the quarter ended June 30, 2004. In the opinion of management, these repurchases help leverage Northeast Indiana Bancorp's remaining equity and tend to improve return on shareholder's equity. Northeast Indiana Bancorp has approximately 44,000 shares that may be repurchased under the current stock repurchase program, which was previously announced. The book value of NEIB's stock was $18.07 per common share as of June 30, 2004. The number of outstanding common shares was 1,467,917 as of the same date. The last reported trade of the stock on July 12, 2004 was $21.41 per common share. This represents a 1.8% 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 June 30, December 31, 2004 2003 Interest-earning cash and cash equivalents $2,331,792 $6,849,198 Noninterest earning cash and cash equivalents 4,462,827 2,483,881 Total cash and cash equivalents 6,794,619 9,333,079 Securities available for sale 41,174,716 43,687,318 Securities held to maturity estimated market value of $60,000 and $150,000 at June 30, 2004 and December 31, 2003 60,000 150,000 Loans held for sale - - Loans receivable, net of allowance for loan loss June 30, 2004 $1,483,672 and December 31, 2003 $1,772,109 164,358,144 163,676,825 Accrued interest receivable 803,947 798,722 Premises and equipment 2,117,731 2,061,781 Investments in limited liability partnerships 1,486,533 1,602,147 Cash surrender value of life insurance 5,056,430 4,352,129 Other assets 3,247,321 1,732,531 Total Assets $225,099,441 $227,394,532 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits 130,070,620 122,009,736 Borrowed Funds 66,802,588 76,545,485 Accrued interest payable and other liabilities 1,702,849 1,644,751 Total Liabilities 198,576,057 200,199,972 Retained earnings - substantially restricted 26,523,384 27,194,560 Total Liabilities and Shareholder's Equity $225,099,441 $227,394,532 CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Total interest income $2,994,605 $3,148,787 $6,004,104 $6,383,181 Total interest expense 1,406,257 1,673,717 2,840,648 3,413,766 Net interest income $1,588,348 $1,475,070 $3,163,456 $2,969,415 Provision for loan losses - - - - Net interest income after provision for loan losses $1,588,348 $1,475,070 $3,163,456 $2,969,415 Service charges on deposit accounts 124,493 93,585 208,865 178,121 Net gain on sale of securities - - 18,971 - Net gain on sale of loans 27,659 259,546 56,208 425,120 Net gain (loss) on sale of repossessed assets (1,450) 48,508 4,241 62,862 Trust and brokerage fees 10,913 50,517 25,837 102,212 Other income 169,826 185,706 328,800 313,220 Total noninterest income $331,441 $637,862 $642,922 $1,081,535 Salaries and employee benefits 756,050 617,615 1,502,354 1,277,364 Occupancy 110,409 123,454 222,663 247,182 Data processing 158,181 167,243 322,266 336,324 Deposit insurance premiums 4,680 4,918 9,364 10,071 Professional fees 65,103 69,288 135,751 147,005 Correspondent bank charges 54,251 53,836 107,626 99,773 Other expense 183,481 186,981 388,071 398,072 Total noninterest expenses $1,332,155 $1,223,335 $2,688,095 $2,515,791 Income before income tax expenses $587,634 $889,597 $1,118,283 $1,535,159 Income tax expenses 155,214 257,550 283,273 421,900 Net Income $432,420 $632,047 $835,010 $1,113,259 NORTHEAST INDIANA BANCORP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 Basic Earnings per common share 0.30 0.45 0.58 0.78 Dilutive Earnings per share 0.30 0.44 0.56 0.75 Net interest margin 2.99% 2.78% 3.00% 2.81% Return on average assets 0.77% 1.13% 0.75% 1.00% Return on average equity 6.46% 9.47% 6.19% 8.35% Average shares outstanding- primary 1,436,264 1,414,449 1,440,721 1,423,186 Average shares outstanding- diluted 1,461,025 1,442,606 1,491,937 1,475,036 Allowance for loan losses: Balance at beginning of period $1,694,249 $1,796,511 $1,772,109 $2,135,630 Charge-offs: One-to-four family 2,907 - 2,907 25,954 Commercial real estate 208,218 - 208,218 201,379 Commercial - - - 100,488 Consumer 55,291 48,717 167,482 140,865 Gross charge-offs 266,416 48,717 378,607 468,686 Recoveries: One-to-four family - - - - Commercial real estate - - - - Commercial 10,000 83,000 10,000 96,000 Consumer 45,839 27,169 80,170 95,019 Gross recoveries 55,839 110,169 90,170 191,019 Net charge-offs (recoveries) 210,577 (61,452) 288,437 277,667 Additions charged to operations - - - - Balance at end of period $1,483,672 $1,857,963 $1,483,672 $1,857,963 Net loan charge-offs (recoveries) to average loans (1) 0.49% (0.16)% 0.34% 0.35% Nonperforming assets (000's) At June 30, At March 31, At December 31, Loans: 2004 2004 2003 Non-accrual $1,342 $2,805 $2,413 Past 90 days or more and still accruing - - - Troubled debt restructured - - - Total nonperforming loans 1,342 2,805 2,413 Real estate owned 1,099 89 162 Other repossessed assets - 17 3 Total nonperforming assets $2,441 $2,911 $2,578 Nonperforming assets to total assets 1.08% 1.31% 1.13% Nonperforming loans to total loans 0.81% 1.68% 1.46% Allowance for loan losses to nonperforming loans 110.58% 60.39% 73.44% Allowance for loan losses to net loans receivable 0.89% 1.02% 1.07% At June 30, 2004 2003 Stockholders' equity as a % of total assets 11.78% 12.17% Book value per share $18.07 $18.28 Common shares outstanding- EOP 1,467,917 1,464,944 (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/

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NEIB Northeast Indiana Bancorp (MM)