NE Indiana Bancorp announces earnings

Northeast Indiana Bancorp, Inc., (OTCQB: NIDB), the parent company of First Federal Savings Bank, has announced net income of $1.17 million ($0.97 per diluted common share) for the first quarter ended March 31, 2023 compared to earnings from the quarter ended March 31, 2022 of $1.78 million ($1.49 per diluted common share). The current three months earnings equate to an annualized return on average assets (ROA) of 1.04% and a return on average equity (ROE) of 10.75% compared to an ROA of 1.70% and an ROE of 15.07% for the prior year quarter ended March 31, 2022. The decline was related to the increase in interest expense compared to interest income due to the historic increase in interest rates, provision for loan loss expense due to the new CECL accounting standard and several investments made for the benefit of future growth.

Total assets increased $6.6 million, or 5.9% on an annualized basis, to $452.1 million at March 31, 2023 compared to total assets of $445.5 million at December 31, 2022. Total loans increased $5.0 million, or 6.2% on an annualized basis, to $325.7 million at March 31, 2023 compared to total loans of $320.8 million at December 31, 2022. Total deposits increased $3.9 million, or 4.3% on an annualized basis, to $370.7 million at March 31, 2023 compared to $366.8 million at December 31, 2022.

Shareholders’ equity increased $691,000 to $43.8 million at March 31, 2023 compared to $43.1 million at December 31, 2022. The increase in shareholders’ equity was a result of accumulated other comprehensive income increasing $278,000 due to a slight improvement in the fair value of the investment portfolio and net income for the first quarter. This increase was partially offset by a decline in retained earnings of $398,000 for the initial entry to implement the new CECL accounting standard. The book value of NIDB stock increased $0.22 to $36.02 per common share as of March 31, 2023 compared to $35.80 at December 31, 2022. The number of outstanding common shares was 1,216,335 as of March 31, 2023.

Net interest income decreased $116,000 in the first quarter of 2023 compared to the same period in 2022. The decrease was a result of a 45 basis point decline in net interest margin to 3.35%, partially offset by an increase in average earning assets of $38.8 million for the first quarter of 2023 compared to the first quarter of 2022. The decline in net interest margin was primarily due to an increase of 164 basis points in costs of interest-bearing liabilities of 2.02% in the first quarter of 2023 compared to 0.38% in the first quarter of 2022 compared to an increase of 88 basis points in yield on interest earning assets to 4.97% in the first quarter of 2023 compared to 4.09% in the first quarter of 2022.

Non-interest income declined $135,000 in first quarter of 2023 compared to the same period in 2022. The decrease was a result of a decline of $177,000 in gain on sale of loans due to slower mortgage refinances in the first quarter of 2023 compared to the first quarter of 2022. Non-interest expense increased $481,000 in the first quarter of 2023 compared to the first quarter of 2022. The increase in non-interest expense is primarily due to investments made in 2022 to increase capacity for future growth and a new branch location that opened in the second quarter of 2022.

Michael S. Zahn, president/CEO said, “The historic increase in interest rates had a negative impact on our margin, but our commercial loan pipeline continues to be strong. We believe the investments that have been made position us well for the future.”