Exhibit 99.1
FOR IMMEDIATE RELEASE
JANUARY 21, 2005
FOR ADDITIONAL INFORMATION
CONTACT: RANDY J. SIZEMORE
SR VICE PRESIDENT, CFO
(260) 358-4680
NORTHEAST INDIANA BANCORP, INC.
ANNOUNCES YEAR END 2004 AND FOURTH QUARTER EARNINGS
HUNTINGTON, INDIANA, -- 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.
-MORE-
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.
-MORE-
Shareholder's 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 shareholder's 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.
-MORE-
NORTHEAST INDIANA BANCORP
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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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
===========================
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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
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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
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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 --
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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, At June 30, At December 31,
Loans: 2004 2004 2004 2003
---- ---- ---- ----
Non-accrual $ 1,713 $ 1,493 $ 1,342 $ 2,413
Past 90 days or more and still accruing - - - -
Troubled debt restructured - - - -
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Total nonperforming loans 1,713 1,493 1,342 2,413
Real estate owned 204 150 1,099 162
Other repossessed assets 7 12 - 3
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Total nonperforming assets $ 1,924 $ 1,655 $ 2,441 $ 2,578
=============================================================
Nonperforming assets to total assets 0.84% 0.72% 1.08% 1.13%
Nonperforming loans to total loans 0.97% 0.86% 0.81% 1.46%
Allowance for loan losses to nonperforming loans 79.30% 97.86% 110.58% 73.44%
Allowance for loan losses to net loans receivable 0.77% 0.84% 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.