Northeast Indiana Bancorp, Inc. Announces Year End 2004 and Fourth
Quarter Earnings HUNTINGTON, Ind., Jan. 21 /PRNewswire-FirstCall/
-- Northeast Indiana Bancorp, Inc. (NEIB), the parent company of
First Federal Savings Bank, today announced earnings for the year
ended December 31, 2004 of $982,000 ($0.67 per diluted common
share) compared to net income of $1.9 million ($1.31 per diluted
common share) for the year ended December 31, 2003. Overall, the
Bank's underlying core businesses remained stable or saw
improvement in 2004. The fourth quarter and year ended December 31,
2004, however, were impacted negatively by a $735,500 non-cash
accounting write-down of Federal Home Loan Mortgage Corporation
(FHLMC) and Federal National Mortgage Association (FNMA) preferred
stocks in the investment portfolio. The Company's earnings would
have been $1.7 million ($1.17 per diluted common share) for the
year ended December 31, 2004 without the non-cash accounting
write-down of the preferred stocks. Stephen E. Zahn, Chairman and
Chief Executive Officer, commented on the results by stating "while
we are pleased with improvements in the Company's net interest
income and margins, declines in non-performing asset ratios, and
increases in certain segments of non-interest income, we are not
pleased with the volatility of our earnings for 2004. This was
particularly evident when we made the decision to recognize through
the income statement the impairment of $735,500 related to our
holdings of FHLMC and FNMA preferred stock. Unrealized gains and
losses on these securities had been recognized in the equity
section of the balance sheet in prior periods. Due to a number of
factors, including recent public disclosures about these companies
and our cost in relation to their market value, we concluded the
securities were impaired and reflected the loss in our income
statement. We continue to hold these securities due to their
variable rate features in the face of rising interest rates and
other positive income characteristics." Net interest income
increased $539,000 or 9.2% to $6.4 million for the year ended
December 31, 2004 when compared to $5.8 million for the year ended
December 31, 2003. This increase was primarily related to volume
from additional average interest earning assets in 2004 compared to
2003 and to a lesser extent, changes in rates between the same
periods. The Company's net interest margin improved to 2.97% for
the twelve months ended December 31, 2004 versus 2.78% for the
twelve months ended December 31, 2003. Northeast Indiana Bancorp,
Inc. saw improvements in non-performing asset trends during 2004.
The Company's non-performing assets were $1.9 million or 0.8% of
total assets at December 31, 2004, a decline from the $2.6 million
or 1.1% of total assets reported at December 31, 2003. Net
charge-offs increased to $452,000 for the twelve months ended
December 31, 2004 versus $364,000 during the same period of 2003.
The increased net charge-offs were primarily related to loan
balances charged off in 2004 where specific reserves had been
allocated during the prior year periods and to a lesser extent,
continued softness in the consumer portion of the loan portfolio.
Because of these net charge-offs along with the increasing loan
balances outstanding, the Company decided to make a $37,500
provision for loan loss during the quarter and year ended December
31, 2004 compared to no provision for loan loss during the prior
year. Excluding the impairment write-down discussed above of
$735,500, non- interest income would have been $1.5 million for the
year ended December 31, 2004 compared to $1.7 million for the year
ended December 31, 2003. A decline in refinancing activity led to a
sharp decrease in net gain on the sale of loans to $89,000 in the
current twelve month period from $510,000 in the year earlier
twelve month period. This decline was partially offset by a
significant increase in service charges on deposit accounts and
increases in other income between the same periods. Brokerage fees
also rose sharply during the quarter ended December 31, 2004 from
an acquisition of a local brokerage firm completed late June 2004.
Non-interest expenses increased to $5.5 million for the year ended
December 31, 2004 compared to $5.0 million for the year ended
December 31, 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 higher
average share price in 2004 compared to 2003, 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. Excluding the impairment write-down
discussed previously, net income would have increased $38,000 or
9.0% to $460,000 for the three months ended December 31, 2004 from
$422,000 for the three months ended December 31, 2003. The net
income that would have been posted for the quarter ended December
31, 2004 of $460,000, without impairment write-down, would have
been the strongest quarterly earnings report of 2004 even with the
Company taking its first provision for loan loss of the fiscal year
2004 in that quarter in the amount of $37,500. The quarterly
improvements came primarily from increased net interest income of
$158,000, a sharp increase of 94% or $83,000 in service charges on
deposit accounts, and another sharp increase of $63,000 in
brokerage fees partially offset by the provision for loan loss of
$37,500 and an increase in non-interest expense of $201,000 all
occurring between the quarter ended December 31, 2004 and the
quarter ended December 31, 2003. Total assets at December 31, 2004
of $228.7 million compared to December 31, 2003 assets of $227.4
million. Net loans receivable increased $11.1 million or 6.8% to
$174.8 million at December 31, 2004 from $163.7 million at December
31, 2003. Deposits increased to $124.0 million at December 31, 2004
from $122.0 million at December 31, 2003. The increase in net loans
receivable was primarily funded by security maturities and
paydowns, cash equivalents and new deposits. Increases in Savings,
NOW, Time Deposits and Non-interest bearing checking accounts were
partially offset by a decline in MMDA balances between year end
2004 and year end 2003. Shareholders' equity at December 31, 2004
was $26.0 million compared to the $27.2 million reported at
December 31, 2003. The company repurchased 107,326 shares of
treasury stock, at an average cost of $21.83, for a total cost of
approximately $2.3 million during the year ended December 31, 2004.
In the opinion of management, these repurchases help leverage
Northeast Indiana Bancorp's remaining equity and tend to improve
return on shareholders' equity. Northeast Indiana Bancorp has
approximately 55,000 shares that may be repurchased under the
current stock repurchase program, which was previously announced.
The book value of NEIB's stock was $18.33 per common share as of
December 31, 2004. The number of outstanding common shares was
1,420,779. The last reported trade of the stock on December 31,
2004 was $20.10 per common share. Northeast Indiana Bancorp, Inc.
management and directors have been investigating the possibility of
de-listing its stock and de-registering with the Securities and
Exchange Commission ("SEC"). The Company is primarily concerned
with the escalating costs and additional allocation of management's
time that is becoming necessary under the Sarbanes-Oxley Act of
2002. This concern is further heightened under the pending
implementation of Section 404 that will impact the Company
beginning with the fiscal year ended December 31, 2005. This
de-registering strategy would reduce future expenses associated
with SEC reporting requirements as well as NASDAQ filing fees, but
would also result in the Company's common stock no longer being
quoted on the NASDAQ Stock Market. In order to de-register, the
Company must first have fewer than 300 shareholders of record. The
Company currently has 450 shareholders of record. The Company is
currently exploring possible methods of reducing shareholders below
300 and the costs of any such possible transactions. The Company's
shares trade infrequently and residents of Indiana hold many
shares. Therefore, it is management's belief that any negative
impact on the liquidity of the shares as a result of de-registering
and de-listing would be minimal. 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 December 31, December 31,
2004 2003 Interest-earning cash and cash equivalents $1,142,340
$6,849,198 Noninterest earning cash and cash equivalents 2,242,859
2,483,881 Total cash and cash equivalents 3,385,199 9,333,079
Securities available for sale 38,903,998 43,687,318 Securities held
to maturity estimated market value of $60,000 and $150,000 at
December 31, 2004 and December 31, 2003 60,000 150,000 Loans held
for sale - - Loans receivable, net of allowance for loan loss
December 31, 2004 $1,357,505 and December 31, 2003 $1,772,109
174,800,272 163,676,825 Accrued interest receivable 830,837 798,722
Premises and equipment 2,175,981 2,061,781 Investments in limited
liability partnerships 1,370,919 1,602,147 Cash surrender value of
life insurance 5,159,178 4,352,129 Other assets 1,985,839 1,732,531
Total Assets $228,672,223 $227,394,532 LIABILITIES AND
STOCKHOLDERS' EQUITY Deposits 123,950,768 122,009,736 Borrowed
Funds 77,066,576 76,545,485 Accrued interest payable and other
liabilities 1,608,346 1,644,751 Total Liabilities 202,625,690
200,199,972 Retained earnings - substantially restricted 26,046,533
27,194,560 Total Liabilities and Shareholders' Equity $228,672,223
$227,394,532 CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
Twelve Months Ended December 31, December 31, 2004 2003 2004 2003
Total interest income $3,071,645 $2,987,812 $12,103,226 $12,368,715
Total interest expense 1,431,383 1,505,554 5,715,241 6,519,296 Net
interest income $1,640,262 $1,482,258 $6,387,985 $5,849,419
Provision for loan losses 37,500 - 37,500 - Net interest income
after provision for loan losses $1,602,762 $1,482,258 $6,350,485
$5,849,419 Service charges on deposit accounts 170,129 87,602
529,665 360,389 Net gain (loss) on securities (735,500) 6,030
(716,364) 18,427 Net gain on sale of loans 13,928 33,154 89,164
510,369 Net gain (loss) on sale of repossessed assets 11,588
(8,923) 884 48,110 Trust and brokerage fees 76,782 16,905 131,275
151,107 Other income 184,186 170,017 685,746 650,975 Total
noninterest income $(278,887) $304,785 $720,370 $1,739,377 Salaries
and employee benefits 832,154 676,541 3,106,407 2,607,819 Occupancy
122,648 105,283 456,225 463,926 Data processing 161,461 155,609
645,002 667,745 Deposit insurance premiums 4,718 4,661 18,840
19,733 Professional fees 60,461 51,025 257,495 248,978
Correspondent bank charges 53,373 54,959 216,063 210,273 Other
expense 194,898 180,606 777,122 750,880 Total noninterest expenses
$1,429,713 $1,228,684 $5,477,154 $4,969,354 Income before income
tax expenses $(105,838) $558,359 $1,593,701 $2,619,442 Income tax
expenses 169,410 136,840 611,479 689,468 Net Income $(275,248)
$421,519 $982,222 $1,929,974 NORTHEAST INDIANA BANCORP CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Three Months Ended
Twelve Months Ended December 31, December 31, 2004 2003 2004 2003
Basic Earnings per common share (0.20) 0.30 0.69 1.36 Dilutive
Earnings per share (0.20) 0.29 0.67 1.31 Net interest margin 2.96%
2.81% 2.97% 2.78% Return on average assets (0.47)% 0.75% 0.43%
0.87% Return on average equity (4.24)% 6.24% 3.70% 7.22% Average
shares outstanding - primary 1,381,620 1,420,728 1,415,729
1,419,417 Average shares outstanding - diluted 1,381,620 1,435,438
1,463,908 1,477,455 Allowance for loan losses: Balance at beginning
of period $1,461,051 $1,856,347 $1,772,109 $2,135,630 Charge-offs:
One-to-four family - - 2,907 25,954 Commercial real estate 49,531 -
257,749 235,722 Commercial 73,460 59,611 73,460 160,099 Consumer
38,593 54,946 274,399 226,134 Gross charge-offs 161,584 114,557
608,515 647,909 Recoveries: One-to-four family - - - - Commercial
real estate - - - - Commercial - - 10,000 96,000 Consumer 20,538
30,319 146,411 188,388 Gross recoveries 20,538 30,319 156,411
284,388 Net charge-offs (recoveries) 141,046 84,238 452,104 363,521
Additions charged to operations 37,500 - 37,500 - Balance at end of
period $1,357,505 $1,772,109 $1,357,505 $1,772,109 Net loan
charge-offs (recoveries) to average loans (1) 0.31% 0.20% 0.26%
0.23% Nonperforming assets (000's) At December 31, At September 30,
Loans: 2004 2004 Non-accrual $1,713 $1,493 Past 90 days or more and
still accruing - - Troubled debt restructured - - Total
nonperforming loans 1,713 1,493 Real estate owned 204 150 Other
repossessed assets 7 12 Total nonperforming assets $1,924 $1,655
Nonperforming assets to total assets 0.84% 0.72% Nonperforming
loans to total loans 0.97% 0.86% Allowance for loan losses to
nonperforming loans 79.30% 97.86% Allowance for loan losses to net
loans receivable 0.77% 0.84% Nonperforming assets (000's) At June
30, At December 31, Loans: 2004 2003 Non-accrual $1,342 $2,413 Past
90 days or more and still accruing - - Troubled debt restructured -
- Total nonperforming loans 1,342 2,413 Real estate owned 1,099 162
Other repossessed assets - 3 Total nonperforming assets $2,441
$2,578 Nonperforming assets to total assets 1.08% 1.13%
Nonperforming loans to total loans 0.81% 1.46% Allowance for loan
losses to nonperforming loans 110.58% 73.44% Allowance for loan
losses to net loans receivable 0.89% 1.07% At December 31, 2004
2003 Stockholders' equity as a % of total assets 11.39% 11.96% Book
value per share $18.33 $18.28 Common shares outstanding- EOP
1,420,779 1,487,514 (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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