[GRAPHIC-PHOTO OF MR. ZAHN]




Stephen E. Zahn
Chairman of the
Board, President and
Chief Executive
Officer



We have now completed our second full year as a public  company and it's hard to
imagine how 1997 could have been more  successful.  We not only met our budgeted
goals,  but in most cases  surpassed our targets by a wide margin.  As a result,
earnings  for 1997 set a new record of $2.2  million  or $1.41 per  share.  This
represents  an increase of 40% over 1996  operating  earnings and an  additional
$0.53 per share.  Returns  for 1997 were  8.12% on  average  equity and 1.21% on
average assets exceeding our budgeted goals of 7.19% and 0.98%, respectively.

During 1997, the Company continued to aggressively grow in order to leverage our
capital. Total assets increased at a near record pace of $29.9 million or 17.6%.
Assets of the Company reached $199.4 million as of December 31, 1997.

Our  deposit  base  increased  over the past twelve  months by $22.2  million or
26.0%. This was accomplished  through  competitive  product pricing,  aggressive
marketing,  excellent  customer service and the introduction of new products and
services  such as  Generations  Gold,  a family  club  checking  account and the
Anytime Line, our new 24 hour voice response system.

In addition to taking measures aimed at increasing our deposit  accounts,  equal
emphasis was directed toward loan portfolio growth. As a result,  total mortgage
loans  increased by $13.9  million and total  commercial  and consumer  loans by
$14.0 million.  Your Company  continues to be the premier  provider of financial
products in the markets we serve.

As we continue to grow, your officers and directors are inherently  aware of our
responsibility  to provide you, our  shareholders,  with an acceptable return on
your investment. To that end your Board of Directors continues to support strong
stock dividend and repurchase programs.  Since becoming a publicly owned company
in June 1995, we have paid a dividend for nine consecutive  quarters  increasing
from  $0.075 in 1995 to our  current  level of $0.085  per share.  In 1997,  the
market  price of our stock  rose from  $13.63 on  December  31, 996 to $22.13 on
December  31,  1997.  This  represents  a  62%  appreciation  in  value  to  our
shareholders.  Also, over the past two years 449,798 shares of company stock has
been  repurchased  and the Company  has been given  approval  to  repurchase  an
additional  145,273  shares.  The Board of Directors will continue to assess the
viability  of all  shareholder  enhancement  strategies  that  promote long term
benefit to our shareholders.

1997 was rewarding in other ways as well.  Throughout the year, your institution
emphasized a total  commitment to Huntington  County and our customers.  We were
honored for our community  support with the R.M. Hafner Business  Citizen of the
Year award. Many of our employees are largely responsible for this award, due to
their dedicated service to community and charitable organizations. We also thank
our employees for their service to customers, a strong reason for our growth and
prosperity.
<PAGE>

In conclusion,  I would like to recognize  long time director  Richard G. Carnes
who passed away this past year.  Dick was a faithful and dedicated  board member
for the past 25 years;  his advice and expertise will be missed. I would like to
thank our  employees  for their  dedication  to this Company and the  community,
which we serve,  and to you our customers and  stockholders  for your  continued
faith and support.

Sincerely,


/S/Stephen E. Zahn
------------------
Stephen E. Zahn
Chairman of the Board,
President, Chief Executive Officer

<PAGE>
TABLE OF CONTENTS

                        PRESIDENT'S LETTER TO STOCKHOLDERS..............      1

                        FINANCIAL HIGHLIGHTS............................     03

                        SELECTED CONSOLIDATED FINANCIAL INFORMATION.....      4

                        MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                        FINANCIAL CONDITION AND RESULTS OF OPERATIONS...      5

                        REPORT OF INDEPENDENT AUDITORS..................     16

                        CONSOLIDATED FINANCIAL STATEMENTS...............     17

                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS......     21

                        STOCKHOLDER INFORMATION.........................     37




                        DESCRIPTION OF BUSINESS

Northeast  Indiana  Bancorp,  Inc.  (the  "Company")  was  formed as a  Delaware
corporation  in March,  1995 for the purpose of issuing  common stock and owning
all of the common  stock of First  Federal  Savings  Bank  ("First  Federal"  or
"Bank") as a unitary thrift holding company. The Bank conducts business from its
three offices located in Huntington,  Indiana.  The principal  business of First
Federal consists of attracting deposits from the general public and making loans
secured by residential real estate.  Historically,  First Federal has been among
the top real estate  lenders and is the largest  financial  institution by asset
size in  Huntington  County.  First  Federal  has been  serving  the  Huntington
community for 85 years.

                                       2
<PAGE>
FINANCIAL HIGHLIGHTS


[GRAPHIC-GRAPH SHOWING TOTAL ASSETS]

[GRAPHIC-GRAPH SHOWING NET INCOME]

[GRAPHIC-GRAPH SHOWING EARNINGS PER SHARE

[GRAPHIC-GRAPH SHOWING RETURN ON ASSETS]

[GRAPHIC-GRAPH SHOWING DIVIDENDS PAID]

[GRAPHIC-GRAPH SHOWING RETURN ON EQUITY]

[GRAPHIC-GRAPH SHOWING PER SHARE MARKET VALUE]



--------------------------------------------------------------------------------

1 End of period
2 Reflects only income after conversion date of June 27, 1995
3 Reflects full year of 1995
4 Only one quarterly cash dividend was paid in 1995


                                       3
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>

                                                                                              December 31
                                                                    1997          1996           1995          1994           1993
SELECTED FINANCIAL CONDITION DATA:                                                      (dollars in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>          <C>             <C>            <C>         <C>
Total assets                                                      $199,369     $ 169,544       $137,569       $115,095    $  96,106
Loans receivable, net                                              174,539       146,855        122,641        104,402       87,725
Securities                                                          15,385        12,388          6,882          5,395        4,275
Deposits                                                           107,550        85,346         68,203         68,533       69,169
Total borrowings                                                    63,522        55,996         37,500         35,500       17,500
Shareholders' equity                                                27,293        26,529         31,033         10,238        8,901

SELECTED OPERATIONS DATA:
Total interest income                                             $ 14,316      $ 11,767        $ 9,644        $ 8,102     $  7,425
Total interest expense                                               7,950         6,197          5,307          4,072        3,192
                                                                  --------     ---------       --------       --------    ---------
 Net interest income                                                 6,366         5,570          4,337          4,030        4,233
Provision for loan losses                                              265           235            251            263          196
                                                                  --------     ---------       --------       --------    ---------
Net interest income after
 provision for loan losses                                           6,101         5,335          4,086          3,767        4,037
Total noninterest income                                               565           402            347            384          284
Total noninterest expense                                            3,062         3,208          2,364          1,938        1,846
                                                                  --------     ---------       --------       --------    ---------
Income before income taxes                                           3,604         2,529          2,069          2,213        2,475
Income tax expense                                                   1,411           962            750            876          993
                                                                  --------     ---------       --------       --------    ---------
Net income                                                        $  2,193     $   1,567       $  1,319       $  1,337    $   1,482
                                                                  ========     =========       ========       ========    =========

Basic earnings per common share (2)                                 $ 1.41         $ .88          $ .39            N/A          N/A
Diluted earnings per common share (2)                               $ 1.37         $ .87          $ .39            N/A          N/A

SELECTED FINANCIAL RATIOS AND OTHER DATA:
Performance Ratios:
 Return on assets (ratio of net
  income to average total assets)                                     1.21%         1.03 %         1.04%          1.22%        1.65%
 Return on equity (ratio of net
  income to average total equity)                                     8.12          5.43           6.55          13.77        18.07
 Interest rate spread information:
 Average during period                                                2.91          2.90           2.80           3.51         4.53
 End of period                                                        2.95          2.70           2.77           2.83         3.92
 Net interest margin (1)                                              3.63          3.81           3.57           3.82         4.88
 Ratio of operating expense to
  average total assets                                                1.69          2.12           1.87           1.81         2.06
 Ratio of average interest-earning assets
  to average interest-bearing liabilities                           115.97        121.48         117.70         107.93       105.76
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                               <C>          <C>             <C>            <C>         <C>
Quality Ratios:
 Non-performing assets to total assets
  at end of period                                                     .58           .42            .21            .29          .07
 Allowance for loan losses to
  non-performing loans                                              102.50        144.00         310.21         205.93       672.06
 Allowance for loan losses to
  loans receivable, net                                                .68           .70            .72            .66          .52

Capital Ratios:
 Shareholders' equity to total assets
  at end of period                                                   13.69         15.65          22.56           8.90         9.26
 Average shareholders' equity to average
  total assets                                                       14.89         19.03          15.92           8.89         9.16

Other Data:
 Number of full-service offices                                          3             3              3              2            2
</TABLE>

(1)Net interest income divided by average interest-earning assets.
(2)All  amounts  have been  restated  to reflect  the  adoption of SFAS No. 128,
Earnings  Per  Share.   1995  earnings  per  share  amounts  are  subsequent  to
conversion.

                                       4
<PAGE>
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
================================================================================
GENERAL

Northeast  Indiana  Bancorp,  Inc.  (the  "Company")  was  formed as a  Delaware
corporation in March 1995 for the purpose of issuing common stock and owning all
of the common stock of First Federal Savings Bank ("First Federal" or "Bank") as
a unitary  thrift  holding  company.  The Bank conducts  business from its three
offices located in Huntington,  Indiana. The Company's primary business activity
is its investment in the Bank, and therefore,  the following  discussion relates
primarily to the operations of the Bank.

The  principal  business  of  savings  banks,   including  First  Federal,   has
historically consisted of attracting deposits from the general public and making
loans secured by residential real estate. First Federal's earnings are primarily
dependent on net interest  income,  the difference  between  interest income and
interest  expense.  Interest  income is a function of the  balances of loans and
investments  outstanding  during the period and the yield earned on such assets.
Interest  expense is a function  of the  balances  of  deposits  and  borrowings
outstanding  during  the same  period and the rates  paid on such  deposits  and
borrowings.  Provisions for loan losses,  service  charge and fee income,  other
noninterest  income,  operating  expenses  and income  taxes also  affect  First
Federal's   earnings.   Operating   expenses   consist   primarily  of  employee
compensation and benefits,  occupancy and equipment  expenses,  data processing,
federal  deposit  insurance   premiums  and  other  general  and  administrative
expenses.

Prevailing  economic  conditions  as  well  as  federal  regulations  concerning
monetary and fiscal  policies and financial  institutions  significantly  affect
First  Federal.  The year of 1997 started with the economy  moderately  reducing
potential  inflationary pressures carried over from the fourth quarter 1996. The
economy has stayed  relatively  stable  during 1997  overall.  Although at times
throughout 1997 we have had fluctuations, the economy was generally favorable to
First Federal's lending growth.  There can be no assurance,  however, in periods
of rising interest  rates,  that the Bank will be able to continue to market its
mortgage  loans  successfully  or that such  interest  rate  movements  will not
adversely affect net income.

Deposit balances are influenced by a number of factors including  interest rates
paid on  competing  personal  investments  and the level of personal  income and
savings within First Federal's market.  Lending activities are influenced by the
demand for  housing as well as  competition  from  other  lending  institutions.
Liquidity  levels and funds available to originate loans may also impact lending
activities.  The  primary  sources  of  funds  for  lending  activities  include
deposits, borrowed funds, loan payments and funds provided from operations.


                                       5
<PAGE>
FINANCIAL CONDITION

First Federal's total assets  increased from $169.5 million at December 31, 1996
to $199.4 million at December 31, 1997, an increase of $29.9 million,  or 17.6%.
The increase was due  primarily  to the  increases in loans of $27.7  million or
18.8% and  securities  of $3.0  million or 24.2%.  Increased  advances  from the
Federal Home Loan Bank ("FHLB") totaling $7.0 million and increased  deposits of
$22.2 million funded this growth.

Approximately  one half of the increase in the loan  portfolio  was comprised of
mortgage  loans,  which  increased  $13.9  million.  Mortgage  loans  secured by
one-to-four  family  residences  increased  $9.8  million  to $109.1  million at
December 31, 1997 and represent  62.5% of First  Federal's loan  portfolio.  The
increase in one to  four-family  mortgage  loans was comprised of a $1.5 million
increase in  adjustable  rate loans and an $8.3  million  increase in fixed rate
loans.  Mortgage  loans  secured by  multi-family  and  commercial  real  estate
increased  $4.0 million to $19.3  million at December 31, 1997 and  construction
loans secured by residential and non-residential  real estate decreased $153,000
to $10.6 million.

First  Federal  also offers a variety of consumer  loans  including  automobile,
credit card,  commercial,  home equity and second mortgage loans. Total consumer
and  commercial  business  loans  increased  $14.0  million to $41.2  million at
December 31, 1997.  Automobile  loans  comprise  $11.6 million of total consumer
loans while home equity and second mortgage loans represent another $6.2 million
at December 31, 1997.

Total deposits  increased  $22.2 million to $107.5 million at December 31, 1997.
This  year's  26.0%  growth was due to  aggressive  advertising  and  pricing of
selected products for a limited time slightly above local market competitors.

Total borrowed funds increased $7.5 million, from $56.0 million to $63.5 million
at December  31, 1997.  Borrowed  funds  consist of advances  from the FHLB with
various interest rates and stated maturities  ranging through 2002. The increase
in advances was utilized to fund  increases in loans and  investments,  as total
deposit  growth  was not  sufficient  to fund  our  growth  in  earning  assets.
Management  plans to continue to utilize  FHLB  advances in  conjunction  with a
continued  aggressive  approach to  increasing  our deposit  base as a source of
funds which will provide the necessary funding for loan demand.  First Federal's
borrowing limit at the FHLB as of December 31, 1997, was $66 million.


                                       6
<PAGE>
RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED
DECEMBER 31, 1997 AND 1996

General.  Net income for the year ended  December  31,  1997 was a record  $2.19
million,  an  increase  of  $625,000  compared  to net income for the year ended
December 31, 1996.  This  increase  was  primarily  the result of an increase in
noninterest  income  of  $163,000,  increases  in  net  interest  income  before
provision for loan losses of $795,000,  and a decrease in non-interest  expenses
of $145,000,  partially  offset by  increases  in  provision  for loan losses of
$30,000 and income tax expense of $448,000. Further details regarding changes in
the major categories of income and expense are discussed below.

Interest Income. Interest income increased $2.55 million, or 21.66%, from $11.77
million to $14.32  million for the year ended December 31, 1997. The increase in
interest  income was primarily  the result of an increase in interest  income on
mortgage  loans of $1.46 million and an increase in interest  income on consumer
and other loans of  $230,000.  The  increase in interest  income on loans is due
primarily to an increase in the average balance of the loan portfolio. The yield
on the loan portfolio  increased from 8.16% in 1996 to 8.28% in 1997, due to the
high volume of loans in the  portfolio  which were  originated  or repriced at a
higher interest rate than 1996. Yields are expected to be positively impacted by
increases in commercial and consumer  loans which  typically have interest rates
higher than residential mortgage loans.

Interest Expense. Interest expense has risen $1.75 million, or 28.3%, from $6.20
million to $7.95 million for the year ended  December 31, 1997.  The majority of
this increase was the result of higher  interest  expense on deposits.  Interest
expense on deposits  increased  $954,000 during 1997 due primarily to the higher
average balance of deposits during the year. The increase in interest expense on
borrowed  funds  was due to a  combination  of a  significantly  larger  average
balance of borrowed  funds during the year,  which  increased by $12.73  million
from $46.13  million for 1996 to $58.86 million for 1997, and the higher average
rate paid for borrowed funds during the year.

Net interest income. Net interest income increased $795,000 or 14.28% from $5.57
million to $6.37 million for the year ended December 31, 1997.  First  Federal's
net interest rate spread improved during 1997. The interest rate spread averaged
2.91%  during 1997  compared to 2.90%  during 1996 and was 2.95% at December 31,
1997.  Interest-earning  asset yields  increased  from 8.06% in 1996 compared to
8.16% in 1997, while the average costs of interest bearing liabilities increased
from 5.16% in 1996 compared to 5.25% in 1997.

Provision  for Loan  Losses.  The  provision  for loan losses for the year ended
December  31, 1997 was  $265,000  compared  to  $235,000  in the prior year,  an
increase of $30,000. The provision for loan losses, less net charge-offs for the
year,  increased  the  allowance  for loan losses  $167,000 to $1.19  million at
December 31, 1997, a 16.23% increase  compared to December 31, 1996.  Management
will  continue to record a provision  for loan losses to maintain the  allowance
for loan losses at a level deemed  adequate by  management  based on a quarterly
analysis.

Noninterest  Income.  Noninterest  income  increased  from  $403,000  in 1996 to
$566,000 in 1997. This increase of $163,000 was primarily the result of fees and
service charges on loan and deposit accounts  increasing by $149,000 during 1997
to $423,000 compared to 1996 income of $274,000.
<PAGE>

Noninterest Expense. Noninterest expense decreased from $3.21 million in 1996 to
$3.06 million in 1997.  This decrease of $145,000,  or 4.55%,  was primarily the
result of the one time FDIC assessment for the recapitalization of the SAIF fund
of $453,000  taken in  September  1996.  The  increase in salaries  and employee
benefits of $190,000 was mostly a result of  additional  staff and normal salary
increases.

Income Tax Expense.  Income tax expense increased from $962,000 in 1996 to $1.41
million in 1997 due primarily to increased earnings before income taxes.


                                       7
<PAGE>
                            COMPARISON OF YEARS ENDED
                           DECEMBER 31, 1996 AND 1995

General.  Net income for the year ended December 31, 1996 was $1.57 million,  an
increase of  $248,000  compared  to net income for the year ended  December  31,
1995.  This  increase  was  primarily  the result of an increase in  noninterest
income  of  $56,000  and  increases  in net  interest  income  of $1.23  million
partially offset by an increase in non-interest  expenses of $844,000 and income
tax expense of $212,000, respectively.  Further details regarding changes in the
major categories of income and expense are discussed below.

Interest Income.  Interest income increased $2.13 million, or 22.10%, from $9.64
million to $11.77  million for the year ended December 31, 1996. The increase in
interest  income was primarily  the result of an increase in interest  income on
mortgage  loans of $1.49 million and an increase in interest  income on consumer
and other loans of  $423,000.  The  increase in interest  income on loans is due
primarily to an increase in the average balance of the loan portfolio. The yield
on the loan portfolio  increased from 8.06% in 1995 to 8.16% in 1996, due to the
high volume of loans in the  portfolio  which were  originated  or repriced at a
higher interest rate than 1995.

Interest  Expense.  Interest  expense has risen $890,000,  or 16.8%,  from $5.31
million to $6.20 million for the year ended  December 31, 1996.  The majority of
this increase was the result of higher interest  expense of $485,000 on borrowed
funds.  This  increase  was due to a  significantly  larger  average  balance of
borrowed  funds during the year,  which  increased by $11.57 million from $34.56
million  for 1995 to  $46.13  million  for 1996  partially  offset  by the lower
average  rate paid for  borrowed  funds  during  the year.  Interest  expense on
deposits  increased  $405,000  during 1996 due primarily to higher average rates
paid for money market deposits and the higher average balance of deposits during
the year.

Net interest  income.  Net interest income increased $1.23 million or 28.4% from
$4.34  million to $5.57  million for the year ended  December  31,  1996.  First
Federal's  net interest  rate spread  improved  during 1996.  The interest  rate
spread averaged 2.90% during 1996 compared to 2.80% during 1995 and was 2.70% at
December 31, 1996. The increase in net interest spread during 1996 was primarily
due to an increase in the average  rates on interest  earning  assets.  Mortgage
loans averaged 8.06% in 1995 compared to 8.16% in 1996,  while the average costs
of interest bearing liabilities remained almost stable at 5.15% in 1995 compared
to 5.16% in 1996.

Provision  for Loan  Losses.  The  provision  for loan losses for the year ended
December  31, 1996 was  $235,000  compared  to  $251,000  in the prior  year,  a
decrease of $16,000. The provision for loan losses, less net charge-offs for the
year of $188,000,  increased  the  allowance for loan losses to $1.03 million at
December 31, 1996, a 16.7% increase compared to December 31, 1995.

Noninterest  Income.  Noninterest  income  increased  from  $347,000  in 1995 to
$403,000 in 1996.  This increase of $56,000 was primarily the result of fees and
service charges on loan and deposit  accounts  increasing by $36,000 during 1996
to $274,000 compared to 1995 income of $238,000.
<PAGE>

Noninterest Expense. Noninterest expense increased from $2.36 million in 1995 to
$3.21 million in 1996.  This increase of $844,000,  or 35.7%,  was primarily the
result of  increases  in FDIC  expense of $343,000  including  the one time FDIC
assessment  for the  recapitalization  of the  SAIF  fund of  $453,000  taken in
September 1996. This FDIC assessment  represents  53.7% of the total increase in
the 1996 noninterest  expense compared to 1995. The increase in compensation and
benefits of $241,000 was mostly a result of recording additional benefit expense
of $205,000  related to the stock  incentive  plans approved by  shareholders in
January 1996.  Occupancy and equipment and office supplies also increased due to
increased  volume and the first full year of  operating  the North  Office.  For
1997,  the Bank's  expense  for FDIC  deposit  insurance  will  decrease  as the
assessment  rate is  expected  to be  reduced  from  $0.23  per $100 of  insured
deposits in 1996 to $0.0648 per $100 of insured deposits in 1997.

Income Tax  Expense.  Income tax  expense  increased  from  $750,000  in 1995 to
$962,000 in 1996 due primarily to increased earnings before income taxes.


                                       8
<PAGE>
ASSET/LIABILITY MANAGEMENT

First Federal,  like other financial  institutions,  is subject to interest rate
risk to the extent that its interest-bearing  liabilities reprice on a different
basis than its  interest-earning  assets.  Office of Thrift Supervision  ("OTS")
regulations provide a Net Portfolio Value ("NPV") approach to the quantification
of interest  rate risk.  In essence,  this approach  calculates  the  difference
between the present  value of  liabilities,  expected cash flows from assets and
cash flows from off-balance-sheet contracts.

Management has  established  maximum  limits for changes in net portfolio  value
resulting  from changes in interest rates based on  consideration  of the Bank's
portfolio mix of interest-earning assets and interest-bearing  liabilities along
with  management's  objectives for managing these portfolios in varying interest
rate environments. Management monitors various indicators of interest rate risk,
including NPV, and  expectations  regarding  interest rate movements  along with
consideration  of the Bank's  overall  capital  levels to  determine  acceptable
levels of interest rate risk.  The Bank's  interest-earning  assets are composed
primarily of loans, especially mortgage loans. Management has offered adjustable
rate loan  products  to assist in the  management  of  interest  rate  risk.  At
December  31, 1997,  adjustable  rate loans  comprised  52.26% of the gross loan
portfolio.  The interest rate exposure as outlined in the NPV table reflects the
Bank's exposure to a rising interest rate  environment due to the  concentration
of longer term  mortgage  loans funded by relatively  shorter-term  deposits and
FHLB  advances.  In  addition,  the  interest  rate  risk  is also  impacted  by
adjustable  rate loans which are tied to indices  which lag behind market rates.
Management is aware of First  Federal's  interest rate risk exposure in a rising
interest rate environment.  To address this interest rate risk,  management will
continue to market adjustable rate mortgage loans and review longer term funding
sources.  Management also considers the current capital position of the Bank and
the  composition of the loan portfolio and monitors these factors in conjunction
with its strategic plan of offering  various mortgage loan products to customers
in the Bank's  market area.  Nonetheless,  the Bank's  interest  rate  exposure,
particularly in a rising interest rate environment, will grow, especially to the
extent that loan demand produces balance sheet growth.

Presented in the following table, as of December 31, 1997, is an analysis of the
Bank's  estimated  interest  rate  risk  as  measured  by  changes  in  NPV  for
instantaneous  and sustained  parallel shifts in interest rates, up and down 300
basis  points in 100  point  increments.  Assumptions  used in  calculating  the
amounts in this table are those assumptions utilized by the OTS in assessing the
interest rate risk of the thrifts it regulates. NPV is calculated by the OTS for
the purposes of interest rate risk assessment and should not be considered as an
indicator of value of the Bank.


                                       9
<PAGE>
<TABLE>
<CAPTION>
                               December 31, 1997


                                                                                           Net Portfolio Value as % of
                                           Net Portfolio Value                             Present Value of Assets
                   Change In Rates      $ Amount     $ Change     % Change                   NPV Ratio     Change
                                         (Dollars in Thousands)
----------------------------------------------------------------------------------------------------------------------
<S>                       <C>           <C>          <C>            <C>                        <C>         <C>

                          +300 bp       $16,588      $(11,416)      (41)                        8.71       (504) bp
                          +200           20,681        (7,323)      (26)                       10.60       (315)
                          +100           24,557        (3,447)      (12)                       12.30       (145)
                             0           28,004             -          -                       13.75          -
                          -100           30,719         2,715        10                        14.84        109
                          -200           32,761         4,757        17                        15.61        186
                          -300           34,776         6,772        24                        16.36        261
</TABLE>

In the event of a 300 basis point change in interest  rates based upon estimates
as of December  31, 1997,  the Bank would  experience a 24% increase in NPV in a
declining  rate  environment  and  a  41%  decrease  in  NPV  in a  rising  rate
environment.  During periods of rising rates,  the value of monetary  assets and
liabilities decline.  Conversely,  during periods of falling rates, the value of
monetary assets and liabilities increase. However, the amount of change in value
of specific  assets and liabilities due to changes in rates is not the same in a
rising rate  environment as in a falling rate  environment  (i.e., the amount of
value  increase  under a specific rate decline may not equal the amount of value
decrease  under  an  identical  upward  rate  movement).   Based  upon  the  NPV
methodology,  the increased level of interest rate risk  experienced by the Bank
in recent  periods was due to the increased use of  relatively  short-term  FHLB
advances to fund its investment in loans with  substantially  longer  maturities
than the advances and the Bank's use of an interest rate index which lags behind
market  rate  indices to adjust the  interest  rate on its ARM loans  originated
prior to December 1997. To the extent that the Bank continues to use liabilities
with  shorter  terms to maturity  than the assets in which it invests,  the Bank
will continue to experience  increased  levels of interest rate risk in a rising
interest rate  environment.  In evaluating First Federal's  exposure to interest
rate risk, certain shortcomings  inherent in the method of analysis presented in
the foregoing table must be considered. For example, although certain assets and
liabilities may have similar maturities or periods to repricing,  they may react
in different  degrees to changes in market  interest  rates.  Also, the interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes in market  interest  rates,  while interest rates on other types may lag
behind  changes in market rates.  Further,  in the event of a change in interest
rates,  prepayments and early withdrawal levels could deviate significantly from
those assumed in calculating the table.  Finally,  the ability of many borrowers
to service their debt may decrease in the event of an interest rate increase. As
a result,  the actual  effect of  changing  interest  rates may differ from that
presented in the foregoing table.

                                       10
<PAGE>
AVERAGE BALANCES, INTEREST RATES AND YIELDS

The following  table presents for the periods  indicated the total dollar amount
of interest  income  from  average  interest  earning  assets and the  resultant
yields, as well as the interest expense on average interest bearing liabilities,
expressed both in dollars and rates.  No tax equivalent  adjustments  were made.
All average balances are daily average  balances.  Non-accruing  loans have been
included in the table as loans carrying a zero yield.
<PAGE>
<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                              1 9 9 7                             1 9 9 6                           1 9 9 5
------------------------------------------------------------------------------------------------------------------------------------
                                  Average    Interest                  Average   Interest                Average    Interest
                                Outstanding   Earned/   Yield/       Outstanding  Earned/  Yield/      Outstanding   Earned/  Yield/
                                  Balance      Paid      Rate          Balance     Paid     Rate         Balance      Paid     Rate
------------------------------------------------------------------------------------------------------------------------------------
                                                                          (Dollars in Thousands)
<S>                              <C>          <C>       <C>           <C>         <C>       <C>          <C>         <C>       <C>
Interest-Earning Assets:
  Loans receivable(1)            $159,095     $13,167    8.28%        $133,508    $10,897   8.16%        $111,496    $8,990    8.06%
  Securities                       10,659         709    6.66            8,479        551   6.50            3,708       209    5.64
  FHLB stock                        3,054         244    7.99            2,411        189   7.84            2,006       158    7.88
  Other interest-earning
     assets                         2,670         195    7.29            1,632        130   7.97            4,143       287    6.93
                                 --------     -------                 --------    -------                --------    ------
      Total interest earning
        assets(1)                 175,478      14,315    8.16          146,030     11,767   8.06          121,353     9,644    7.95

Non-interest earning assets         6,001                                5,587                              5,088
      Total assets               $181,479                             $151,617                           $126,441
                                 ========                             ========                           ========

Interest-Bearing Liabilities:
  Savings                         $ 9,655         265    2.75         $ 10,465        288   2.75         $ 12,752       375    2.94
  Money market                     14,232         719    5.05            8,793        437   4.97            4,246       137    3.23
  Demand and NOW                    8,960         148    1.65            8,276        184   2.22            8,101       208    2.57
  Time deposit accounts            59,608       3,416    5.73           46,549      2,685   5.77           43,448     2,469    5.68
  Borrowings                       58,859       3,402    5.78           46,128      2,603   5.64           34,560     2,118    6.13
                                 --------     -------                 --------    -------                --------    ------
     Total interest bearing
        liabilities               151,314       7,950    5.25          120,211      6,197   5.16          103,107     5,307    5.15

Non-interest bearing liabilities    3,142                                2,539                              3,208
                                 --------                             --------                           --------
    Total liabilities             154,456                              122,750                            106,315
                                 --------                             --------                           --------
    Total equity                   27,023                               28,867                             20,126
                                 --------                             --------                           --------
    Total liabilities and
        equity                   $181,479                             $151,617                           $126,441
                                 ========                             ========                           ========
Net interest income                           $ 6,365                             $ 5,570                            $4,337
                                              =======                             =======                            ======
Net interest rate spread                                 2.91%                              2.90%                              2.80%
Net interest earning assets      $ 24,164                             $ 25,819                           $ 18,246
                                 ========                             ========                           ========
Net yield on average
 interest-earning assets                                 3.63%                              3.81%                              3.57%
                                                         ====                               ====                               ====
Average interest-earning assets to
 average interest-bearing liabilities              1.16x                              1.21x                              1.18x
                                                   ====                               ====                               ====
</TABLE>
(1) Calculated net of deferred loan fees, loan  discounts,  loans in process and
allowance for loan losses.

                                       11
<PAGE>
The following table presents the weighted  average yields on loans,  investments
and other interest-earning assets, and the weighted average rate on deposits and
borrowings and the resultant interest rate spreads at the dates indicated.
<TABLE>
<CAPTION>

                                                                        At December 31,
                                                        1997                 1996          1995
------------------------------------------------------------------------------------------------
<S>                                                     <C>                  <C>           <C>
         Weighted average yield on:

             Loans receivable                           8.38%                8.15%         8.09%

             Securities and FHLB stock                  6.90                 6.64          6.61

             Other interest-earning assets              5.65                 7.01          6.01

               Combined weighted average yield
                 on interest-earning assets             8.26                 8.01          7.98


         Weighted average rate on:

             Savings deposits                           2.75                 2.75          2.74

             Money market                               5.10                 5.01          3.45

             Demand and NOW deposits                    1.53                 2.23          2.26

             Time deposit accounts                      5.76                 5.69          5.83

             Borrowings                                 5.83                 5.84          5.99

               Combined weighted average rate on
                 interest-bearing liabilities           5.31                 5.31          5.21

         Spread                                         2.95                 2.70          2.77

</TABLE>


Due in part to more loans being made to consumer and  commercial  customers  and
the  increase  in rates  overall  on the assets  and  liabilities,  the Bank has
experienced  a  widening  of its  average  interest  rate  spread  from 2.70% at
December  31,  1996 to 2.95% at December  31,  1997.  A narrowing  of the Bank's
interest  rate spread may have the effect of  reducing  net  interest  income in
future periods.

                                       12
<PAGE>
RATE/VOLUME ANALYSIS

The following  schedule presents the dollar amount of changes in interest income
and  interest  expense  for major  components  of  interest-earning  assets  and
interest-bearing  liabilities.  It distinguishes  between the changes related to
outstanding  balances  and that due to the changes in interest  rates.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information is provided on changes  attributable to (i) changes in volume (i.e.,
changes  in  volume  multiplied  by old rate) and (ii)  changes  in rate  (i.e.,
changes in rate multiplied by old volume).  For purposes of this table,  changes
attributable  to both rate and volume,  which  cannot be  segregated,  have been
allocated  proportionately  to the  change  due to volume  and the change due to
rate.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Year Ended December 31,
                                                                 1997 vs. 1996                              1996 vs. 1995
                                                              Increase                                    Increase
                                                             (Decrease)            Total                 (Decrease)         Total
                                                               Due to            Increase                  Due to         Increase
                                                        Volume       Rate       (Decrease)         Volume       Rate     (Decrease)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                  (Dollars in Thousands)
<S>                                                    <C>           <C>         <C>               <C>          <C>         <C>
Interest-earning assets:
    Loans receivable                                   $2,116        $154        $2,270            $1,795       $ 112       $1,907
    Securities                                            145          13           158               306          36          342
    FHLB stock                                             51           4            55                32          (1)          31
    Other interest-
      earning assets                                       77         (12)           65              (209)         52         (157)
                                                       ------        ----        ------            ------       -----       ------
    Total interest-
      earning assets                                   $2,389        $159        $2,548            $1,924       $ 199       $2,123
                                                       ======        ====        ======            ======       =====       ======

Interest-bearing liabilities:
    Savings                                             $ (22)      $  (1)        $ (23)            $ (64)      $ (23)       $ (87)
    Money market                                          275           7           282               200         100          300
    Demand and
      NOW                                                  14         (50)          (36)                4         (28)         (24)
    Certificate
      accounts                                            748         (17)          731               177          39          216
    Borrowings                                            734          65           799               781        (296)         485
                                                       ------        ----        ------            ------       -----       ------
         Total interest-
          bearing
          liabilities                                  $1,749         $ 4        $1,753            $1,098       $(208)         890
                                                       ======        ====        ======            ======       =====       ======

Net interest income                                                              $  795                                     $1,233
</TABLE>

                                       13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

First Federal's primary sources of funds are deposits,  borrowings from the FHLB
and  principal and interest  payments on loans.  While  scheduled  repayments of
loans are a predictable source of funds,  deposit flows and mortgage prepayments
are greatly  influenced  by general  interest  rates,  economic  conditions  and
competition.  First Federal has managed this  fluctuation in its source of funds
through borrowings from the FHLB.

A standard measure of liquidity for thrift institutions is the ratio of cash and
eligible  investments to a certain  percentage of net  withdrawable  savings and
borrowings due within one year. As of December 31, 1997, First Federal's average
liquidity  ratio  was  5.55%,  of  which  60.74%  was  comprised  of  short-term
investments.

During the year ended  December 31,  1997,  there was a net decrease in cash and
cash  equivalents  of $1.9  million.  The major  source of funds during the year
included net additional borrowings of $7.0 million from the FHLB and an increase
in deposits  of $22.2  million  which were used to fund a net  increase of $28.0
million in loans and a $3.0 million increase in securities.

During the year ended  December 31,  1996,  there was a net increase in cash and
cash equivalents of $2.0 million.  The major source of funds during the year was
a net increase of $18.5 million of  borrowings  from the FHLB and an increase in
deposits  of $17.1  million  which  were  used to fund a net  increase  of $24.5
million in loans and a $5.5 million increase in securities.

During the year ended  December 31,  1995,  there was a net increase in cash and
cash equivalents of $1.9 million.  The major source of funds during the year was
a net increase of $2.0 million of borrowings from the FHLB and proceeds of $19.5
million  (which  is net of ESOP  shares  acquired)  from the  sale of the  stock
received  when the Bank  converted  on June 27,  1995.  These  funds  were  used
primarily to support the $18.5 million net increase in loans.

Under currently effective capital regulations,  savings associations must meet a
1.5% tangible capital  requirement,  a 3.0% core capital requirement and a total
risk-based  capital to risk weighted assets ratio of 8.0%. At December 31, 1997,
First  Federal's  tangible  capital ratio was 11.9%,  its core capital ratio was
11.9% and its  risk-based  capital  to risk  weighted  assets  ratio was  19.8%.
Therefore,   First   Federal's   capital   significantly   exceeds  all  capital
requirements currently in effect.

During 1997 the Company completed its third stock repurchase program which began
in September 1996. The Company also received  approval from the OTS to begin its
fourth stock repurchase program. The stock when purchased becomes treasury stock
and can be used for general corporate  purposes.  The fourth repurchase  program
was approved in July 1997 for 10% of the  outstanding  shares or 176,273 shares.
The Company had repurchased  31,000 of these shares at the end of December 1997.
At December  31,  1997,  the Company  had 449,798  shares of treasury  stock and
1,732,327 shares outstanding.
<PAGE>
IMPACT OF INFLATION AND CHANGING PRICES

The  financial  statements  have been  prepared  in  accordance  with  generally
accepted  accounting  principles,  which  require the  measurement  of financial
position  and  operating   results  in  terms  of  historical   dollars  without
consideration  for changes in the relative  purchasing  power of money over time
due to inflation.  The impact of inflation can be found in the increased cost of
the Company's  operations.  Nearly all the assets and liabilities of the Company
are financial,  unlike most  industrial  companies.  As a result,  the Company's
performance  is  directly  impacted  by changes  in  interest  rates,  which are
indirectly  influenced by inflationary  expectations.  The Company's  ability to
match the financial assets to the financial  liabilities in its  asset/liability
management  will tend to minimize the change of interest  rates on the Company's
performance.  Changes in investment  rates do not  necessarily  move to the same
extent as changes in the price of goods and services.



                                       14
<PAGE>
IMPACT OF THE YEAR 2000

The Company has  conducted a  comprehensive  review of its  computer  systems to
identify  applications  that could be affected by the "Year 2000" issue, and has
developed  an  implementation  plan to address  the issue.  The  Company's  data
processing is performed primarily by a third party servicer. The Company and the
Bank also utilize  software and hardware which is under  maintenance  agreements
with third party vendors,  consequently  the Company and Bank are very dependent
on those vendors to conduct its business. The Company has already contacted each
vendor to request time tables for year 2000  compliance and expected  costs,  if
any, to be passed along to the Company.  To date,  the Company has been informed
that its primary service  providers  anticipate that all  reprogramming  efforts
will be completed by December 31, 1998,  allowing the Company  adequate time for
testing. Certain other vendors have not yet responded, however, the Company will
pursue other  options if it appears that these vendors will be unable to comply.
Management  does not  expect  these  costs to have a  significant  impact on its
financial position or results of operations  however,  there can be no assurance
that the vendors' systems will be 2000 compliant, consequently the Company could
incur incremental costs to convert to another vendor. The Company has identified
certain hardware and software equipment that will not be Year 2000 compliant and
intends to purchase new equipment and software prior to December 31, 1998. These
capital expenditures are not expected to be material.


FORWARD-LOOKING STATEMENTS

When  used  in this  filing  and in  future  filings  by the  Company  with  the
Securities  and Exchange  Commission,  in the Company's  press releases or other
public  or  shareholder  communications,  or in oral  statements  made  with the
approval of an authorized  executive  officer,  the words or phrases "would be,"
"will  allow,"  "intends  to," "will likely  result,"  "are  expected to," "will
continue," "is anticipated,"  "estimate,"  "project" or similar  expressions are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
risks and  uncertainties,  including  but not  limited to  changes  in  economic
conditions  in the  Company's  market  area,  changes in policies by  regulatory
agencies,  fluctuations  in interest  rates,  demand for loans in the  Company's
market area and competition,  all or some of which could cause actual results to
differ  materially from historical  earnings and those presently  anticipated or
projected.

The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made, and advise readers that various  factors,  including  regional
and  national  economic  conditions,  substantial  changes  in  levels of market
interest rates, credit and other risks of lending and investment  activities and
competitive  and  regulatory  factors,  could  affect  the  Company's  financial
performance  and could cause the Company's  actual results for future periods to
differ materially from those anticipated or projected.

The Company does not undertake,  and specifically  disclaims any obligation,  to
update any  forward-looking  statements to reflect  occurrences or unanticipated
events or circumstances after the date of such statements.


                                       15
<PAGE>

                         [GRAPHIC-LOGO OF CROWE CHIZEK]

                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
Northeast Indiana Bancorp, Inc.
Huntington, Indiana



We have  audited  the  accompanying  consolidated  balance  sheets of  Northeast
Indiana  Bancorp,  Inc.  as of  December  31,  1997  and  1996  and the  related
consolidated  statements  of income,  changes in  shareholders'  equity and cash
flows for the years ended  December 31,  1997,  1996 and 1995.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Northeast Indiana
Bancorp, Inc. as of December 31, 1997 and 1996 and the results of its operations
and its cash  flows for the years  ended  December  31,  1997,  1996 and 1995 in
conformity with generally accepted accounting principles.




                                                /s/Crowe, Chizek and Company LLP
                                                --------------------------------
                                                   Crowe, Chizek and Company LLP



South Bend, Indiana
February 6, 1998


                                       16
<PAGE>
<TABLE>
<CAPTION>
                                       NORTHEAST INDIANA BANCORP, INC.
                                        CONSOLIDATED BALANCE SHEETS
                                        December 31, 1997 and 1996

                                                                             1997                 1996
                                                                        ------------         ------------
<S>                                                                     <C>                  <C>
ASSETS
Interest-earning cash and cash equivalents                              $  3,036,847         $  4,017,411
Noninterest earning cash and cash equivalents                              1,782,839            2,654,963
                                                                        ------------         ------------
  Total cash and cash equivalents                                          4,819,686            6,672,374
Interest-earning deposits in financial institutions                          100,000              100,000
Securities available for sale                                             14,628,590           11,496,031
Securities held to maturity (fair value: $756,846 - 1997
 and $891,236 - 1996)                                                        756,846              892,036
Loans receivable, net of allowance for loan losses
 of $1,194,000 in 1997 and $1,027,300 in 1996                            174,538,907          146,854,690
Accrued interest receivable                                                  511,950              363,563
Premises and equipment, net                                                1,964,374            2,009,026
Other assets                                                               2,048,244            1,156,400
                                                                        ------------         ------------
  Total assets                                                          $199,368,597         $169,544,120
                                                                        ============         ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits                                                         $  2,502,911         $  1,847,734
Savings, NOW and MMDA                                                     35,968,057           30,274,738
Time deposits                                                             69,078,818           53,223,768
                                                                        ------------         ------------
  Total deposits                                                         107,549,786           85,346,240
Borrowed funds                                                            63,521,682           55,995,650
Accrued expenses and other liabilities                                     1,004,495            1,673,114
                                                                        ------------         ------------
  Total liabilities                                                      172,075,963          143,015,004

Shareholders' equity
  Preferred stock, no par value, 500,000 shares authorized;
   -0- shares issued                                                               -                    -
  Common stock, $.01 par value: 4,000,000 shares
   authorized; 2,182,125 shares issued; shares
    outstanding: 1,732,327 - 1997 and 1,810,586 - 1996                        21,821               21,821
  Additional paid in capital                                              21,350,326           21,253,458
  Retained earnings, substantially restricted                             13,956,340           12,338,919
  Unearned employee stock ownership plan shares                           (1,309,275)          (1,454,750)
  Unearned recognition and retention plan shares                            (621,817)            (820,109)
  Net unrealized appreciation on securities available
   for sale, net of tax                                                       41,672               15,799
  Treasury stock, 449,798 and 371,539 common shares, at
   cost, at December 31, 1997 and 1996                                    (6,146,433)          (4,826,022)
                                                                        ------------         ------------
      Total shareholders' equity                                          27,292,634           26,529,116
                                                                        ------------         ------------
        Total liabilities and shareholders' equity                      $199,368,597         $169,544,120
                                                                        ============         ============
</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
                                       17
<PAGE>
<TABLE>
<CAPTION>
                                           NORTHEAST INDIANA BANCORP, INC.
                                          CONSOLIDATED STATEMENTS OF INCOME
                                    Years ended December 31, 1997, 1996 and 1995
--------------------------------------------------------------------------------------------------------------------
                                                                    1997                1996                 1995
<S>                                                            <C>                 <C>                  <C>
Interest income
  Loans, including fees                                        $13,167,279         $10,897,032          $ 8,989,561
  Taxable securities                                               921,263             707,048              331,244
  Non-taxable securities                                            32,587              33,394               36,132
  Deposits with banks                                              194,647             129,581              286,837
                                                               -----------         -----------          -----------
    Total interest income                                       14,315,776          11,767,055            9,643,774

Interest expense
  Deposits                                                       4,547,834           3,593,583            3,188,996
  Borrowed funds                                                 3,402,363           2,603,092            2,117,798
                                                               -----------         -----------          -----------
    Total interest expense                                       7,950,197           6,196,675            5,306,794
                                                               -----------         -----------          -----------

Net interest income                                              6,365,579           5,570,380            4,336,980
                                                               -----------         -----------          -----------

Provision for loan losses                                          265,300             235,155              250,648
                                                               -----------         -----------          -----------

Net interest income after
 provision for loan losses                                       6,100,279           5,335,225            4,086,332

Noninterest income
  Service charges on deposit accounts                              245,304             151,666              140,127
  Loan servicing fees                                              177,584             122,190               97,288
  Net realized gain on sale of securities                                -                 348                    -
  Other                                                            142,698             128,363              109,637
                                                               -----------         -----------          -----------
    Total noninterest income                                       565,586             402,567              347,052

Noninterest expense
  Salaries and employee benefits                                 1,530,579           1,340,887            1,099,642
  Occupancy                                                        318,945             279,894              229,918
  Data processing                                                  311,537             274,985              160,963
  Insurance expense                                                 54,829             605,593              262,652
  Professional fees                                                147,319             137,080               85,114
  Correspondent bank charges                                       142,466             143,398              136,757
  Other expense                                                    556,648             426,320              389,291
                                                               -----------         -----------          -----------
    Total noninterest expense                                    3,062,323           3,208,157            2,364,337
                                                               -----------         -----------          -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                            <C>                 <C>                  <C>
Income before income taxes                                       3,603,542           2,529,635            2,069,047

Income tax expense                                               1,410,563             962,090              749,759
                                                               -----------         -----------          -----------
Net income                                                     $ 2,192,979         $ 1,567,545          $ 1,319,288
                                                               ===========         ===========          ===========

Basic earnings per common share                                     $ 1.41               $ .88                $ .39
                                                                    ======               =====                =====
Diluted earnings per common share                                   $ 1.37               $ .87                $ .39
                                                                    ======               =====                =====
</TABLE>

The  accompanying  nots are an  integral  part of these  consolidated  financial
statements.

                                       18
<PAGE>
<TABLE>
<CAPTION>
                                              NORTHEAST INDIANA BANCORP, INC.
                                CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                       Years Ended December 31, 1997, 1996 and 1995


                                                                                               Unearned
                                                                                               Employee            Unearned
                                                            Additional                          Stock             Recognition
                                             Common           Paid in        Retained         Ownership          and Retention
                                             Stock            Capital         Earnings       Plan Shares         Plan Shares
------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>              <C>               <C>               <C>
Balance, January 1, 1995 ............     $       --       $                $ 10,238,265      $       --        $       --

Proceeds from the sale of
 2,182,125 shares of common stock,
  net of conversion costs ...........           21,821       21,189,036             --                --                --

Purchase of 174,570 ESOP shares .....             --               --               --          (1,745,700)             --

Cash dividends ($.075 per share) ....             --               --           (163,660)             --                --

14,548 shares committed to
 be released under the ESOP .........             --             26,248             --             145,475              --

Change in net unrealized
 appreciation on securities available
  for sale, net of tax ..............             --               --               --                --                --

Net income ..........................             --          1,319,288             --                --                --
                                          ------------     ------------     ------------      ------------      ------------

Balance, December 31, 1995 ..........           21,821       21,215,284       11,393,893        (1,600,225)             --

Cash dividends ($.305 per share) ....             --               --           (622,519)             --                --

Purchase of 371,539 shares
 of treasury stock ..................             --               --               --                --                --

14,548 shares committed to be
 released under the ESOP ............             --             38,174             --             145,475              --

Purchase of 75,936 shares for RRP ...             --               --               --                --          (1,025,136)

Amortization of RRP contributions ...             --               --               --                --             205,027

Change in net unrealized
 appreciation on securities available
  for sale, net of tax ..............             --               --               --                --                --

Net income ..........................             --               --          1,567,545              --                --
                                          ------------     ------------     ------------      ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                       <C>              <C>              <C>               <C>               <C>
Balance, December 31, 1996 ..........           21,821       21,253,458       12,338,919        (1,454,750)         (820,109)

Cash dividends ($.325 per share) ....             --               --           (575,558)             --                --

Purchase of 78,859 shares of
 treasury stock .....................             --               --               --                --                --

Sale of 600 shares of treasury stock              --              1,000             --                --                --

14,548 shares committed to be
 released under the ESOP ............             --             95,868             --             145,475              --

Purchase of 500 shares for RRP ......             --               --               --                --              (7,625)

Amortization of RRP contributions ...             --               --               --                --             205,917

Change in net unrealized
 appreciation on securities available
  for sale, net of tax ..............             --               --               --                --                --

Net income ..........................             --               --          2,192,979              --                --
                                          ------------     ------------     ------------      ------------      ------------

Balance, December 31, 1997 ..........     $     21,821     $ 21,350,326     $ 13,956,340      $ (1,309,275)     $   (621,817)
                                          ============     ============     ============      ============      ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                              Net
                                          Unrealized
                                         Appreciation
                                        on Securities
                                          Available                            Total
                                          For Sale,          Treasury       Shareholders'
                                          Net of Tax          Stock            Equity
-----------------------------------------------------------------------------------------
<S>                                       <C>              <C>               <C>
Balance, January 1, 1995 ............     $       --       $       --        $ 10,238,265

Proceeds from the sale of
 2,182,125 shares of common stock,
  net of conversion costs ...........             --               --          21,210,857

Purchase of 174,570 ESOP shares .....             --               --          (1,745,700)

Cash dividends ($.075 per share) ....             --               --            (163,660)

14,548 shares committed to
 be released under the ESOP .........             --               --             171,723

Change in net unrealized
 appreciation on securities available
  for sale, net of tax ..............            2,272             --               2,272

Net income ..........................             --               --           1,319,288
                                          ------------     ------------      ------------

Balance, December 31, 1995 ..........            2,272             --          31,033,045

Cash dividends ($.305 per share) ....             --               --            (622,519)

Purchase of 371,539 shares
 of treasury stock ..................             --         (4,826,022)       (4,826,022)

14,548 shares committed to be
 released under the ESOP ............             --               --             183,649

Purchase of 75,936 shares for RRP ...             --               --          (1,025,136)

Amortization of RRP contributions ...             --               --             205,027

Change in net unrealized
 appreciation on securities available
  for sale, net of tax ..............           13,527             --              13,527

Net income ..........................             --               --           1,567,545
                                          ------------     ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                       <C>              <C>               <C>
Balance, December 31, 1996 ..........           15,799       (4,826,022)       26,529,116

Cash dividends ($.325 per share) ....             --               --            (575,558)

Purchase of 78,859 shares of
 treasury stock .....................             --         (1,328,211        (1,328,211)

Sale of 600 shares of treasury stock              --              7,800             8,800

14,548 shares committed to be
 released under the ESOP ............             --               --             241,343

Purchase of 500 shares for RRP ......             --               --              (7,625)

Amortization of RRP contributions ...             --               --             205,917

Change in net unrealized
 appreciation on securities available
  for sale, net of tax ..............           25,873             --              25,873

Net income ..........................             --               --           2,192,979
                                          ------------     ------------      ------------

Balance, December 31, 1997 ..........     $     41,672     $ (6,146,433)     $ 27,292,634
                                          ============     ============      ============
</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       19
<PAGE>
<TABLE>
<CAPTION>
                                              NORTHEAST INDIANA BANCORP, INC.
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       Years ended December 31, 1997, 1996 and 1995

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                1997                  1996                  1995
<S>                                                                         <C>                   <C>                   <C>
Cash flows from operating activities
Net income                                                                  $ 2,192,979           $ 1,567,545           $ 1,319,288
Adjustments to reconcile net income
 to net cash from operating activities
  Net (gain) loss on sale of premises and equipment                                (152)                  421                 2,289
  Gain on sale of securities                                                           -                 (348)                    -
  Gain on sale of foreclosed real estate                                         (1,335)               (6,879)                    -
  Provision for loan losses                                                     265,300               235,155               250,648
  Depreciation and amortization                                                 144,898               186,555               113,950
  Reduction of obligation under ESOP                                            241,343               183,649               171,723
  Amortization of RRP                                                           205,917               205,027                     -
  Net change in other assets                                                   (381,807)             (247,136)               32,586
  Net change in accrued interest receivable                                    (148,387)             (130,639)              (83,517)
  Net change in accrued expenses and other liabilities                         (668,619)              823,528                 8,009
                                                                            -----------           -----------           -----------
    Total adjustments                                                          (342,842)            1,249,333               495,688
                                                                            -----------           -----------           -----------
      Net cash from operating activities                                       1,850,137            2,816,878             1,814,976

Cash flows from investing activities
  Proceeds from maturities and principal payments
   of securities held to maturity                                               135,190                93,870                67,770
  Proceeds from maturities and principal payments
   of securities available for sale                                           1,716,890             2,600,000                     -
  Proceeds from sale of securities available for sale                                  -            2,100,348                     -
  Purchases of securities available for sale                                 (4,803,829)          (10,316,095)           (1,551,154)
  Net change in interest earning deposits in financial
   institutions                                                                        -                    -              (100,000)
  Proceeds from sale of participation loans                                     351,500                     -                      -
  Purchase of loans                                                          (3,261,911)                    -            (2,690,155)
  Net change in loans                                                       (25,136,614)          (24,469,186)          (15,799,442)
  Expenditures on premises and equipment                                       (110,826)              (22,455)             (860,152)
  Proceeds from sale of premises and equipment                                    5,948                    50                 4,150
  Proceeds from sale of foreclosed real estate                                   98,843                26,990                     -
                                                                            -----------           -----------           -----------
      Net cash from investing activities                                    (31,004,809)          (29,986,478)          (20,928,983)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                         <C>                   <C>                   <C>
Cash flows from financing activities
  Advances from FHLB                                                         56,000,000            58,000,000            17,000,000
  Repayment of FHLB advances                                                (48,998,968)          (39,500,000)          (15,000,000)
  Dividends paid                                                               (575,558)             (622,519)             (163,660)
  Proceeds from issuance of stock, net of
   conversion costs and stock acquired by ESOP                                         -                     -           19,465,157
  Purchase of treasury stock                                                 (1,335,836)           (5,851,158)                    -
  Sale of treasury stock                                                          8,800                     -                     -
  Net change in deposits                                                     22,203,546            17,143,310              (329,573)
                                                                            -----------           -----------           -----------
      Net cash from financing activities                                     27,301,984            29,169,633            20,971,924
                                                                            -----------           -----------           -----------

 Net change in cash and cash equivalents                                     (1,852,688)            2,000,033             1,857,917

 Cash and cash equivalents at beginning of year                               6,672,374             4,672,341             2,814,424
                                                                            -----------           -----------           -----------
Cash and cash equivalents at end of year                                     $4,819,686            $6,672,374            $4,672,341
                                                                            ===========           ===========            ==========
Cash paid for:
  Interest                                                                   $7,909,627            $6,154,009            $5,268,413
  Income taxes                                                                1,573,308             1,034,925               803,594

Non-Cash Transactions:
  Investment in obligation relative to limited partnership                     $525,000                   $ -                   $ -
  Transfer from loans to other real estate                                       97,508                20,112                     -
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       20
<PAGE>
               Note 1 - Summary of Significant Accounting Policies

Organization  and  Principles  of  Consolidation:   The  consolidated  financial
statements  include  the  accounts  of  Northeast  Indiana  Bancorp,  Inc.  (the
"Company")  and its  wholly-owned  subsidiary,  First Federal  Savings Bank (the
"Bank"). Northeast Indiana Bancorp, Inc. was organized for the purpose of owning
all of the  outstanding  stock of First Federal  Savings Bank.  All  significant
intercompany  transactions  and balances have been eliminated in  consolidation.
Financial information presented herein, prior to the conversion to stock form of
ownership,  reflects the  financial  position,  results of  operations  and cash
flows, and concentration of credit risk of the Bank.

Nature  of  Business:  The  primary  source  of income  for the  Company  is the
origination  of commercial  and  residential  real estate loans in  northeastern
Indiana.  Loans secured by real estate mortgages  comprise  approximately 77% of
the loan portfolio at December 31, 1997 and are primarily secured by residential
mortgages.

Use of Estimates:  To prepare financial  statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available  information.  These estimates and  assumptions  affect the amounts
reported in the financial  statements and the disclosures  provided,  and future
results  could differ.  The  collectibility  of loans,  fair values of financial
instruments, and status of contingencies are particularly subject to change.

Cash Flow Reporting:  Cash and cash equivalents are defined as cash and due from
banks and short-term  interest earning deposits in financial  institutions  with
original maturities under 90 days. Net cash flows are reported for customer loan
and deposit  transactions  as well as  interest-earning  deposits  in  financial
institutions.

Securities:  Securities  are  classified  as held to  maturity  and  carried  at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Securities are classified as available for sale when they might be
sold before maturity.  Securities  available for sale are carried at fair value,
with unrealized  holding gains and losses reported  separately in  shareholders'
equity,  net of tax.  Securities  are  classified as trading when held for short
term periods in  anticipation  of market  gains,  and are carried at fair value.
Securities  are  written  down to fair value when a decline in fair value is not
temporary.

Gains and  losses  on sales  are  determined  using  the  amortized  cost of the
specific  security  sold.  Interest  income  includes  amortization  of purchase
premiums and discounts.

Loans: Loans are reported at the principal balance outstanding,  net of deferred
loan  fees and costs  and the  allowance  for loan  losses.  Interest  income is
reported on the interest  method and includes  amortization of net deferred loan
fees and costs over the loan term.

Interest income is not reported when full loan repayment is in doubt,  typically
when  payments  are past due over 90 days.  Payments  received on such loans are
reported as principal reductions.
<PAGE>

Allowance  for Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance,  increased  by  the  provision  for  loan  losses  and  decreased  by
chargeoffs less recoveries.  Management estimates the allowance balance required
based on past loan loss  experience,  known and inherent risks in the portfolio,
information about specific borrower situations and estimated  collateral values,
economic conditions, and other factors. Allocations of the allowance may be made
for specific loans,  but the entire allowance is available for any loan that, in
management's judgment, should be charged-off.

Loan  impairment  is  reported  when full  payment  under the loan  terms is not
expected.  Impaired  loans are carried at the present  value of expected  future
cash flows discounted at the loan's effective interest rate or at the fair value
of the  collateral  if the  loan  is  collateral  dependent.  A  portion  of the
allowance  for loan losses is allocated  to impaired  loans if the value of such
loans is less than the unpaid balance.  If these allocations cause the allowance
for loan losses to require increase,  such increase is reported in the provision
for loan losses.


                                       21
<PAGE>
Note 1 - Summary of Signifcant Accounting Policies (continued)

Commercial  loans and mortgage  loans secured by other  properties are evaluated
individually  for  impairment.   Smaller-balance   homogeneous   loans  such  as
residential  first mortgage loans,  are evaluated for impairment in total.  When
analysis of borrower  operating results and financial  condition  indicates that
underlying  cash flows of the borrower's  business are not adequate to meet debt
service requirements,  the loan is evaluated for impairment.  Impaired loans, or
portions thereof, are charged-off when deemed uncollectible.

Other Real  Estate:  Real estate  acquired in  settlement  of loans is initially
reported at estimated fair value at acquisition.  After acquisition, a valuation
allowance reduces the reported amount to the lower of the initial amount or fair
value less costs to sell. Expenses, gains and losses on disposition, and changes
in the valuation allowance are reported as a net loss on other real estate.

Premises and Equipment:  Asset cost is reported net of accumulated depreciation.
Depreciation  expense  is  calculated  on  the  straight-line  method  over  the
estimated  useful lives of the assets  ranging from 3 to 40 years.  These assets
are reviewed for impairment  when events indicate the carrying amount may not be
recoverable.

Income  Taxes:  The Company  records  income tax expense  based on the amount of
taxes due on its tax return plus deferred taxes computed on the expected  future
tax consequences of temporary  differences  between the carrying amounts and tax
bases of assets and liabilities, using enacted tax rates.

Off-Balance-Sheet Financial Instruments: Off-balance sheet financial instruments
represent  credit  instruments,  such as loan commitments and standby letters of
credit and similar items. The face amount of credit  instruments  represents the
exposure to loss assuming customer  collateral or ability to repay is worthless.
No gain or loss is  recognized  on  derivatives  until cash payments are made or
received, except for credit losses which are recognized when probable.

Stock Compensation:  Expense for employee  compensation under stock option plans
is based on Opinion 25, with expense  reported only if options are granted below
market price at grant date. Pro forma disclosures of net income and earnings per
share are provided as if the fair value method of Financial  Accounting Standard
No. 123 were used for stockbased compensation.

Earnings Per Share: Basic earnings per share is based on weighted-average common
shares  outstanding.  Diluted  earnings per share  further  assumes issue of any
dilutive potential common shares. The accounting standard for computing earnings
per share was revised for 1997, and all earnings per share  previously  reported
are restated to follow the new standard.

Fair Value of Financial  Instruments:  Fair values of financial  instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. Fair value  estimates  involve  uncertainties  and
matters  of  significant   judgment  regarding  interest  rates,   credit  risk,
prepayments,  and other factors,  especially in the absence of broad markets for
particular  items.   Changes  in  assumptions  or  in  market  conditions  could
significantly affect the estimates.
<PAGE>

Future Accounting Changes:  New accounting standards have been issued which will
require future reporting of comprehensive  income (net income plus holding gains
and losses on available for sale securities) and may require  redetermination of
industry segment financial information.

Reclassifications:   Some  items  in  prior   financial   statements  have  been
reclassified to conform with the current presentation.

                                       22
<PAGE>
Note 2 - Securities

         Year-end securities were as follows:
<TABLE>
<CAPTION>
                                                                               Gross                  Gross
                                                       Amortized            Unrealized             Unrealized               Fair
                                                         Cost                  Gains                 Losses                 Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                     <C>                   <C>                  <C>
Available for sale - 1997
  U.S. Government agencies                            $ 4,047,866             $     -               $ (3,507)            $ 4,044,359
  Mutual funds                                            735,584                   -                      -                 735,584
  Mortgage-backed                                       6,526,147              74,992                 (2,492)              6,598,647
  Equity securities                                     3,250,000                   -                      -               3,250,000
                                                      -----------             ------                --------             -----------
                                                      $14,559,597             $74,992               $ (5,999)            $14,628,590
                                                      ===========             =======               ========             ===========

Available for sale - 1996
  U.S. Government agencies                            $ 1,797,805                $  -               $(10,727)            $ 1,787,078
  Mutual funds                                            697,358                   -                      -                 697,358
  Mortgage-backed                                       6,124,711              38,833                 (1,949)              6,161,595
  Equity securities                                     2,850,000                   -                      -               2,850,000
                                                      -----------             ------                --------             -----------
                                                      $11,469,874             $38,833               $(12,676)            $11,496,031
                                                      ===========             =======               ========             ===========

Held to maturity - 1997
  States and political
   subdivisions                                       $   639,000             $  -                  $   -                $  639,000
  Other debt securities                                   117,846                -                      -                   117,846
                                                      -----------             ------                --------             -----------
                                                      $   756,846             $  -                  $   -                $  756,846
                                                      ===========             =======               ========             ===========

Held to maturity - 1996
  States and political
   subdivisions                                       $   703,000             $  -                  $  (800)             $  702,200
  Other debt securities                                   189,036                -                        -                 189,036
                                                      -----------             ------                --------             -----------
                                                      $   892,036             $  -                  $  (800)             $  891,236
                                                      ===========             =======               ========             ===========
</TABLE>
                                       23
<PAGE>
Note 2 - SECURITIES (continued)

The  amortized  cost and fair value of debt  securities at December 31, 1997, by
contractual  maturity,  are shown  below.  Expected  maturities  may differ from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.  Securities not due at
a  single  maturity  date,  primarily  mortgage-backed   securities,  are  shown
separately.
<TABLE>
<CAPTION>
                                                          Available for Sale                               Held to Maturity
                                                    Amortized                Fair                   Amortized                 Fair
                                                      Cost                   Value                    Cost                    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                    <C>                        <C>                    <C>
Due in one year or less                            $ 2,999,272            $ 2,998,200                $160,000               $160,000
Due from one to five years                           1,048,594              1,046,159                       -                      -
Due from five to ten years                                   -                      -                 596,846                596,846
Mortgage backed securities                           6,526,147              6,598,647                       -                      -
                                                   -----------            -----------                --------               --------
                                                   $10,574,013            $10,643,006                $756,846               $756,846
                                                   ===========            ===========                ========               ========
</TABLE>
Sales of  securities  available  for sale were as  follows  for the years  ended
December 31:
<TABLE>
<CAPTION>
                                                     1997                1996                     1995
------------------------------------------------------------------------------------------------------
<S>                                                  <C>              <C>                          <C>
   Proceeds                                          $ -              $2,100,348                   $ -
   Gross gains                                         -                     348                     -
   Gross losses                                        -                       -                     -
</TABLE>

Note 3 - Loans Receivable, Net

Year-end loans were as follows:
<TABLE>
<CAPTION>
                                                                                          1997                      1996
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                       <C>
    Mortgage loans (principally conventional)
        Principal balances
            Secured by one-to-four family residences                                $109,079,816              $ 99,325,141
            Secured by other properties                                               19,339,654                15,293,158
            Construction - residential                                                 8,661,893                 8,256,360
            Construction - nonresidential                                              1,934,354                 2,492,913
                                                                                    ------------              ------------
                                                                                     139,015,717               125,367,572
            Less
                Loans in process                                                        (355,314)                 (208,005)
                Undisbursed portion of construction
                  loans                                                               (3,980,594)               (4,380,437)
                Net deferred loan origination fees                                      (125,011)                 (113,593)
                                                                                    ------------              ------------
                    Total mortgage loans                                             134,554,798               120,665,537
</TABLE>
                                       24
<PAGE>
Note 3 - Loans Receivable, Net (continued)
<TABLE>
<CAPTION>
                                                                                         1997                     1996
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                      <C>
    Consumer and other loans
        Principal balances
            Automobile                                                              $ 11,572,940             $  8,820,024
            Credit card                                                                1,297,424                  982,421
            Commercial                                                                14,579,936                9,303,727
            Home equity and second mortgage                                            6,162,479                4,466,938
            Mobile home                                                                2,945,635                  264,021
            Other                                                                      4,619,695                3,379,322
                                                                                    ------------             ------------
                Total consumer and other loans                                        41,178,109               27,216,453
                                                                                    ------------             ------------

        Less
            Allowance for loan losses                                                 (1,194,000)              (1,027,300)
                                                                                    ------------             ------------
                Loans receivable, net                                               $174,538,907             $146,854,690
                                                                                    ============             ============

</TABLE>
Activity in the allowance for loan losses is summarized as follows for the years
ended December 31:
<TABLE>
<CAPTION>


                                                                    1997                   1996                     1995
-------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                    <C>                        <C>
    Balance at beginning of year                              $ 1,027,300             $  880,566                $ 694,000
    Provision charged to income                                   265,300                235,155                  250,648
    Charge-offs                                                  (136,601)              (133,561)                 (73,846)
    Recoveries                                                     38,001                 45,140                    9,764
                                                              -----------             ----------                ---------
    Balance at end of year                                    $ 1,194,000             $1,027,300                $ 880,566
                                                              ===========             ==========                =========
</TABLE>


At December  31, 1997,  loans  individually  evaluated  for  impairment  totaled
approximately  $949,000.  The average balance for impaired loans during 1997 was
approximately $594,000. At year end 1997, the portion of the allowance allocated
to  impaired  loans was  $75,000.  Impaired  loans  were not  material  in 1996.
Interest  recognized  on the accrual and cash bases for  impaired  loans was not
material for all years presented.
<PAGE>


Note 4 - Premises and Equipment, Net

Premises and equipment at December 31 are summarized as follows:
<TABLE>
<CAPTION>

                                                                                          1997                      1996
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>                      <C>
    Land                                                                              $  458,331               $  458,331
    Buildings and leasehold improvements                                               1,625,036                1,568,122
    Furniture, fixtures and equipment                                                    718,310                  681,104
      Total costs                                                                      2,801,677                2,707,557
    Accumulated depreciation and amortization                                           (837,303)                (698,531)
                                                                                      ----------               ----------
                                                                                      $1,964,374               $2,009,026
                                                                                      ==========               ==========
</TABLE>

                                       25
<PAGE>
Note 5 - Deposits

Time  deposits in  denominations  of $100,000 or more  totaled  $27,358,000  and
$14,705,000 at December 31, 1997 and 1996.

At December 31, 1997,  scheduled maturities of time deposits were, for the years
ended December 31:

                              1998                      $ 59,821,634
                              1999                         6,202,533
                              2000                         2,100,384
                              2001                           652,851
                              2002                           301,416
                                                        ------------
                                                        $ 69,078,818
                                                        ============

Note 6 - Borrowed Funds

Borrowed  funds  consisted  of  advances  from the  Federal  Home  Loan  Bank of
Indianapolis  totaling  $62,996,682  at  December  31, 1997 and a demand note of
$525,000 for total borrowings of $63,521,682.  All 1996 borrowings were advances
from the Federal Home Loan Bank of Indianapolis.

The majority of the advances have variable  interest rates ranging from 5.06% to
6.54%. Scheduled maturities at December 31, 1997 are as follows:

                              1998                      $ 51,899,170
                              1999                         8,099,171
                              2000                           599,170
                              2001                           399,171
                              2002                         2,000,000
                                                        ------------
                                                        $ 62,996,682
                                                        ============

At December 31, 1997,  collateral  consisting of qualifying first mortgage loans
totaling approximately $107.7 million and U.S. Government and Agency securities,
including  mortgage-backed  securities,  totaling approximately $10.8 million is
available  to the  Federal  Home Loan Bank of  Indianapolis  to secure  advances
outstanding.  The Bank may borrow up to an  aggregate  of $66  million  from the
Federal Home Loan Bank.

The demand note  relates to an  investment  in a limited  partner  interest in a
partnership formed for the construction,  ownership and management of affordable
housing  projects.  The original  amount of the note was $750,000  with $225,000
funded as of  December  31,  1997.  Payments  are  required  within five days of
written  demand;  however,  the  note may be  prepaid  in full or in part at the
option of maker at any time without  penalty.  The obligation to make payment is
absolute and unconditional. No interest is required by the note.


                                       26
<PAGE>
Note 7 - Employee Benefits

Employee Pension Plan: The Company is part of a  noncontributory  multi-employer
defined benefit pension plan covering substantially all employees.  The trustees
of the Financial  Institutions  Retirement Fund administer the plan. There is no
separate  actuarial  valuation of plan benefits nor  segregation  of plan assets
specifically  for the Company  because the plan is a  multi-employer  plan,  and
separate actuarial valuations are not made with respect to each employer nor are
the plan assets so  segregated.  The pension plan expense was $29,229,  $52,465,
and $50,895 for the years ended December 31, 1997, 1996 and 1995.

401(k) Plan:  The Company has a 401(k) plan for all employees who have completed
one year of service (1,000 hours).  Participants may make deferrals up to 15% of
compensation.  The Company matches 50% of elective  deferrals on the first 6% of
the participant's compensation.  Expense under the plan was $22,776, $17,846 and
$13,787 for the years ended December 31, 1997, 1996 and 1995.

Supplemental Retirement Plan: The Company has a supplemental retirement plan for
the  President  and a deferred  compensation  plan for certain  directors of the
Company.  The Company is recording an expense equal to the change in the present
value of the payment due at retirement based on the projected remaining years of
service using the  projected  unit credit  method.  The balance of the plans was
approximately  $182,000 and $166,000 at year end 1997 and 1996.  The cost of the
plans  charged to expense was  $48,219,  $64,204 and $56,484 for the years ended
December 31, 1997,  1996 and 1995.  The Company has  purchased  insurance on the
lives of the participants in the  supplemental  retirement plan and the deferred
compensation  plan with the Company as beneficiary.  The cash surrender value of
the life insurance was approximately  $847,000 and $809,000 at December 31, 1997
and 1996. The income  derived from the investment in life insurance  included in
other income was $37,806,  $40,071 and $35,981 for the years ended  December 31,
1997, 1996 and 1995.

Employee Stock Ownership Plan (ESOP):  As part of the conversion  transaction in
1995,  the  Company  established  an ESOP for the benefit of  substantially  all
employees.  Contributions to the ESOP are made by the Company and are determined
by the Company's Board of Directors at their  discretion.  The contributions may
be  made  in the  form  of  cash  or the  Company's  common  stock.  The  annual
contributions  may not be greater than the amount  deductible for federal income
tax  purposes  and  cannot  cause the  Company  to  violate  regulatory  capital
requirements.

To fund the plan, the ESOP borrowed  $1,745,700 from the Company for the purpose
of purchasing  174,570 shares of stock at $10 per share.  Principal  payments on
the loan are due in equal  semi-annual  installments  over a twelve-year  period
beginning June 30, 1995.  Interest is payable  semi-annually  during the term of
the loan at 6.65%.  The loan is  collateralized  by the shares of the  Company's
common  stock  purchased  with the  proceeds and will be repaid by the ESOP with
funds from the Bank's  contributions  to the ESOP and  earnings on ESOP  assets.
Dividends  on  allocated  ESOP shares are  recorded  as a reduction  of retained
earnings;  dividends on  unallocated  ESOP shares are recorded as a reduction of
debt.
<PAGE>

Shares  are  allocated  among  participants  each  December  31 on the  basis of
principal repayments made by the ESOP on the loan from the Company, according to
each participant's relative compensation.  Benefits generally become 100% vested
after five years of credited  service.  A participant who terminates  employment
for reasons  other than  death,  normal  retirement  (or early  retirement),  or
disability  prior to the completion of five years of credited  services does not
receive any  benefits  under the ESOP.  Forfeitures  are  reallocated  among the
remaining  participating  employees,  in the same  proportion as  contributions.
Benefits are payable in the form of stock except for fractional shares which are
paid in cash upon termination of employment.

                                       27
<PAGE>
Note 7 - Employee Benefits (continued)

During the years  ended  December  31, 1997 and 1996,  contributions,  including
dividends on unearned ESOP shares, of $98,196 and $96,134 were made to the ESOP.
ESOP compensation expense was $194,064, $134,308 and $158,613 for 1997, 1996 and
1995.  The 14,548  shares  released for  allocation at December 31, 1997 will be
allocated on January 1, 1998.


Shares held by the ESOP at year end are as follows:

                                         1997            1996
--------------------------------------------------------------------------------
Allocated shares                         29,096          14,548
Shares released for allocation           14,548          14,548
Unreleased shares                       130,926         145,474
                                     ----------      ----------
    Total ESOP shares                   174,570         174,570
                                     ==========      ==========
    Fair value of
     unreleased shares               $2,896,738      $1,982,083
                                     ==========      ==========

Recognition  and Retention Plan (RRP): In 1996, the Company's Board of Directors
and shareholders established an RRP for the benefit of officers and directors as
a method of providing a proprietary interest in the Company in a manner designed
to encourage such persons to remain with the Bank. The compensation committee of
the Company  administers the RRP.  Eligible persons will become vested in shares
of common  stock  covered by the award  equally  over a  five-year  period.  The
maximum total shares  available  under the RRP are 87,285.  During 1996,  75,936
shares  were  awarded  to RRP  participants  at $13.50 per  share.  In 1997,  an
additional 500 shares were awarded at $15.25.  The expense  associated  with the
RRP was $205,917 and $205,027 in 1997 and 1996.


Note 8 - Income Taxes

Income tax expense for the years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>

                                          1997                 1996                1995
-----------------------------------------------------------------------------------------
<S>                                  <C>                  <C>                 <C>
        Current federal              $1,154,613           $  850,741          $  664,372
        Deferred federal                (55,894)            (100,203)            (89,538)
        Current state                   327,116              239,901             197,302
        Deferred state                  (15,272)             (28,349)            (22,377)
                                     ----------           ----------          ----------
    Income tax expense               $1,410,563           $  962,090          $  749,759
                                     ==========           ==========          ==========

</TABLE>

                                       28
<PAGE>
Note 8 - Income Taxes (continued)

Total income tax expense differed from the amounts computed by applying the U.S.
federal  income tax rate of 34% to income before income taxes as a result of the
following:
<TABLE>
<CAPTION>
                                                           1997                 1996                1995
----------------------------------------------------------------------------------------------------------
<S>                                                   <C>                  <C>                 <C>
Income taxes at statutory rate                        $1,225,204           $  860,076          $  703,476
Tax effect of:
    State tax, net of federal income tax effect          205,817              139,624             115,450
    Other, net                                           (20,458)             (37,610)            (69,167)
                                                      ----------           ----------          ----------
        Income tax expense                            $1,410,563           $  962,090          $  749,759
                                                      ==========           ==========          ==========

Effective tax rate                                         39.1%                38.0%               36.2%
                                                           ====                 ====                ====
</TABLE>

The components of the net deferred tax asset recorded in the balance sheet as of
December 31 are as follows:
<TABLE>
<CAPTION>
                                                     1997                1996
--------------------------------------------------------------------------------
<S>                                              <C>                 <C>
    Deferred tax assets
        Deferred compensation                    $  72,055           $  65,750
        Bad debts                                  196,844             130,711
        Deferred loan fees                          49,517              44,994
        Unearned compensation                       81,564              81,211
        Other                                        9,698               2,763
                                                 ---------           ---------
                                                   409,678             325,429
    Deferred tax liabilities
        Depreciation                              (120,333)           (121,114)
        Other                                      (41,185)            (10,358)
                                                 ---------           ---------
                                                  (161,518)           (131,472)
    Valuation allowance                                  -                   -
                                                 ---------           ---------
        Net deferred tax asset                  $  248,160           $  193,957
                                                ==========           ==========
</TABLE>
<PAGE>

Retained  earnings at  December  31, 1997 and 1996  include  approximately  $1.3
million for which no deferred  federal income tax liability has been recognized.
This amount  represents an allocation of income to bad debt  deductions  for tax
purposes only. Reduction of amounts so allocated for purposes other than tax bad
debt losses or adjustments  arising from carryback of net operating losses would
create income for tax purposes only,  which would be subject to the then-current
corporate  income tax rate. The unrecorded  deferred income tax liability on the
above  amount  was  approximately  $449,000  at  December  31,  1997  and  1996.
Legislation passed in August 1996 now requires the Company to deduct a provision
for bad debts for tax purposes based on actual loss  experience and to recapture
the excess bad debt  reserve  accumulated  in tax years after 1986.  The related
amount of deferred tax liability,  which must be recaptured,  is $276,000 and is
payable over a six-year period beginning in 1998.

                                       29
<PAGE>
Note 9 - Regulatory Matters

The Bank is subject to regulatory capital  requirements  administered by federal
regulatory  agencies.  Capital adequacy  guidelines and prompt corrective action
regulations involve quantitative  measures of assets,  liabilities,  and certain
off-balance-sheet   items  calculated  under  regulatory  accounting  practices.
Capital amounts and classifications are also subject to qualitative judgments by
regulators  about  components,  risk  weightings,  and  other  factors,  and the
regulators can lower  classifications in certain cases.  Failure to meet various
capital  requirements  can initiate  regulatory  action that could have a direct
material  effect on the  financial  statements.  The  prompt  corrective  action
regulations provide five classifications, including well capitalized, adequately
capitalized,  undercapitalized,  significantly undercapitalized,  and critically
undercapitalized,  although  these  terms  are  not  used to  represent  overall
financial condition.


At year end,  actual Bank  capital  levels (in  millions)  and minimum  required
levels were:
<TABLE>
<CAPTION>
                                                                                                                Minimum Required
                                                                                                                   To Be Well
                                                                                   Minimum Required                Capitalized
                                                                                      For Capital            Under Prompt Corrective
                                                           Actual                  Adequacy Purposes           Action Regulations
                                                     Amount      Ratio            Amount       Ratio            Amount      Ratio
1997
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>         <C>              <C>          <C>              <C>        <C>
Total capital
  (to risk weighted assets)                           $24.8       19.8%            $10.1        8.0%             $12.6      10.0%
Tier 1 (core) capital
  (to risk weighted assets)                            23.7       18.9               5.0        4.0                7.5       6.0
Tier 1 (core) capital
  (to adjusted total assets)                           23.7       11.9               6.0        3.0                N/A        N/A
Tangible capital
  (to adjusted total  assets)                          23.7       11.9               3.0        1.5                N/A        N/A
Tier 1 (core) capital
  (to average assets)                                  23.7       13.0               7.3        4.0                9.1       5.0

------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S>                                                   <C>         <C>              <C>          <C>              <C>        <C>
1996
Total capital
  (to risk weighted assets)                           $22.0       21.8%             $8.1        8.0%             $10.1      10.0%
Tier 1 (core) capital
  (to risk weighted assets)                            21.2       21.0               4.0        4.0                6.1       6.0
Tier 1 (core) capital
  (to adjusted total assets)                           21.2       12.5               5.1        3.0                N/A       N/A
Tangible capital
  (to adjusted total assets)                           21.2       12.5               2.5        1.5                N/A       N/A
Tier 1 (core) capital
  (to average assets)                                  21.2       13.9               6.1        4.0                7.7       5.0
</TABLE>

The Bank at year-end 1997 and 1996 was categorized as well capitalized.
<PAGE>
Regulations  of the Office of Thrift  Supervision  limit the amount of dividends
and other capital distributions that may be paid by savings institutions without
prior approval of the Office of Thrift Supervision.  The regulatory  restriction
is based on a three-tiered  system with the greatest  flexibility being afforded
to  well-capitalized  (Tier  1)  institutions.  The Bank is  currently  a Tier 1
institution.  Accordingly, the Bank can make, without prior regulatory approval,
distributions during a calendar year up to 100% of its net income to date during
the  calendar  year plus an amount that would  reduce by one-half  its  "surplus
capital  ratio" (the excess over its capital  requirements)  at the beginning of
the calendar year. Accordingly,  at December 31, 1997,  approximately $9,058,000
of the Bank's retained  earnings was potentially  available for  distribution to
the Company.

                                       30
<PAGE>
Note  10  -  Commitments  and  Contingencies  and  Financial   Instruments  with
Off-Balance-Sheet Risk
<TABLE>
<CAPTION>

                                               1997                    1996
------------------------------------------------------------------------------
<S>                                        <C>                     <C>
  Fixed rate commitments                   $ 4,159,000             $ 2,440,000
  Variable rate commitments                 14,916,000              16,604,000
  Credit card arrangements                   2,636,000               1,698,000
  Letters of credit                            760,000                  50,000
</TABLE>
\
Most  loan  commitments  have  terms  up to 60 days.  At  year-end  1997,  fixed
commitments have contractual rates ranging from 7.50% to 9.25%. Credit cards are
fixed at 14.9%.  Most variable rate  arrangements  are tied to national  monthly
median  cost of funds,  prime or the U.S.  Treasury  bill rate and have  spreads
between 0% and 5%.

The Company and the Bank are subject to certain claims and legal actions arising
in the  ordinary  course  of  business.  In the  opinion  of  management,  after
consultation  with legal counsel,  the ultimate  disposition of these matters is
not expected to have a material  adverse  effect on the  consolidated  financial
position or results of operations of the Company.

Note 11 - Stock Options

The Company  established a stock option plan during 1996.  Financial  Accounting
Standard No. 123 requires pro forma  disclosures for companies that do not adopt
its  fair  value  accounting  method  for  stock-based  employee   compensation.
Accordingly,  the  following  pro forma  information  presents  net  income  and
earnings per share had the fair value  method been used to measure  compensation
cost for stock option plans.  No compensation  cost was actually  recognized for
stock options for 1997 or 1996.
<TABLE>
<CAPTION>

                                                                                  1997                 1996
-------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                  <C>
    Net income as reported                                                    $2,192,979           $1,567,545
    Pro forma net income                                                       2,022,367            1,398,379

    Basic earnings per common share as reported                                  $  1.41                $ .88
    Diluted earnings per common share as reported                                   1.37                  .87
    Pro forma basic earnings per common share                                       1.30                  .78
    Pro forma diluted earnings per common share                                     1.26                  .78
</TABLE>

In future years,  the pro forma effect of not applying this standard is expected
to increase as additional options are granted.

                                       31
<PAGE>
Stock  option  plans  are used to  reward  employees  and  provide  them with an
additional equity interest. Options are issued for 10-year periods, with vesting
occurring evenly over the first five years. At year-end 1997, 25,780 shares were
authorized for future grants. Information about option grants follows.
<TABLE>
<CAPTION>
                                                 Number              Exercise            Fair Value
                                               of Options              Price              of Grants
---------------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>                  <C>
    Outstanding, beginning of 1996                     -              $      -
    Granted                                      190,932                 11.75             $ 4.43
    Exercised                                          -                     -
                                                 -------              --------
    Outstanding, end of 1996                     190,932                 11.75
    Granted                                        1,500                 15.25               4.82
    Exercised                                       (100)                11.75
                                                 -------              ---------------
    Outstanding, end of 1997                     192,332              $11.75 - $15.25
                                                 =======              ======   ======
</TABLE>

The fair value of options  granted during 1997 is estimated  using the following
weighted-average information: risk-free interest rate of 5.75%, expected life of
10 years,  expected  volatility of stock price of 13.90%, and expected dividends
of 1.61% per year.

The fair value of options  granted during 1996 is estimated  using the following
weighted-average information: risk-free interest rate of 6.15%, expected life of
10 years, expected volatility of stock price of 3.01%, and expected dividends of
2.35% per year.

Options outstanding at year end were as follows:
<TABLE>
<CAPTION>

                                                            1997                 1996
---------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>
    Number of options                                      192,332              190,932
    Minimum exercise price                                  $11.75               $11.75
    Maximum exercise price                                  $15.25               $11.75
    Weighted-average exercise price                         $11.78               $11.75
    Weighted-average remaining option life               8.0 years            9.0 years
</TABLE>


There are 38,086 options  exerciseable at year-end 1997. All options exercisable
have an  exercise  price of $11.75 and a  weighted-average  remaining  term of 8
years.

<PAGE>
Note 12 - Related Party Transactions

Certain  directors and officers of the Company are loan customers.  A summary of
related  party loan  activity for loans  aggregating  $60,000 or more to any one
related party is as follows:

                      Balance - January 1, 1997                      $ 344,698
                          New loans                                  2,323,320
                          Repayments                                  (182,536)
                          Change in persons included                    53,087

                      Balance - December 31, 1997                   $2,538,569


                                       32
<PAGE>
Note 13 - Fair Values of Financial Instruments

The  following  table shows the fair  values of  financial  instruments  and the
related  carrying  amounts at December  31,  1997 and 1996.  Items which are not
financial instruments are not included.
<TABLE>
<CAPTION>

                                                                      1 9 9 7                               1 9 9 6
-----------------------------------------------------------------------------------------------------------------------------
                                                             Carrying        Estimated            Carrying          Estimated
                                                              Amount         Fair Value            Amount          Fair Value
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>                   <C>              <C>
Financial assets
    Cash and cash equivalents and
     interest-earning deposits
      in financial institutions                            $ 4,919,686      $ 4,919,686          $ 6,772,374      $ 6,772,374
    Securities available for sale                           14,628,590       14,628,590           11,496,031       11,496,031
    Securities held to maturity                                756,846          756,846              892,036          891,236
    Loans receivable, net                                  174,538,907      176,470,000          146,854,690      147,769,000
    Accrued interest receivable                                511,950          511,950              363,563          363,563

Financial liabilities
    Deposits                                              (107,549,786)    (107,866,000)         (85,346,240)     (85,633,000)
    Borrowed funds                                         (63,521,682)     (63,469,000)         (55,995,650)     (55,949,000)
    Accrued interest payable                                  (283,427)        (283,427)            (242,855)        (242,855)
</TABLE>

For purposes of the above  disclosures  of estimated  fair value,  the following
assumptions were used as of December 31, 1997 and 1996. The estimated fair value
for  cash  and  cash   equivalents,   interest-earning   deposits  in  financial
institutions,  accrued  interest  receivable  and  accrued  interest  payable is
considered to approximate cost. The estimated fair value for securities is based
on quoted market values for the individual securities or equivalent  securities.
The  estimated  fair  values  for  loans is based on  estimates  of the rate the
Company  would  charge for  similar  such loans at  December  31, 1997 and 1996,
applied for the time period until estimated repayment.  The estimated fair value
for demand and savings  deposits is based on their carrying value. The estimated
fair values for time  deposits and borrowed  funds are based on estimates of the
rate the Company would pay on such  deposits or for such  borrowings at December
31, 1997 and 1996,  applied for the time period until  maturity.  The  estimated
fair value of other financial instruments and off-balance-sheet loan commitments
approximate cost and are not considered significant for this presentation.

While these  estimates of fair value are based on  management's  judgment of the
most appropriate  factors,  there is no assurance that, were the Company to have
disposed of such items at December 31, 1997 or 1996,  the estimated  fair values
would  necessarily  have been  achieved at that date,  since  market  values may
differ depending on various circumstances. The estimated fair values at December
31, 1997 and 1996 should not  necessarily  be  considered to apply at subsequent
dates.


                                       33
<PAGE>
Note 14 - Parent Company Only Condensed Financial Information

Condensed financial information of Northeast Indiana Bancorp, Inc. is as follows
<TABLE>
<CAPTION>


                               CONDENSED BALANCE SHEETS

                              December 31, 1997 and 1996

                                                                   1997                1996
---------------------------------------------------------------------------------------------
<S>                                                           <C>                 <C>
ASSETS

Cash and cash equivalents                                     $   225,944         $  371,124

Loan receivable from Employee Stock Ownership Plan              1,309,275           1,454,750

Loan receivable from subsidiary bank                            2,000,000           3,750,000

Investment in subsidiary bank                                  23,757,476          21,184,450

Other assets                                                        8,899              65,949
                                                              -----------         -----------

    Total assets                                              $27,301,594         $26,826,273
                                                              ===========         ===========

LIABILITIES

Accrued expenses                                              $     8,960         $   297,157

SHAREHOLDERS' EQUITY                                           27,292,634          26,529,116
                                                              -----------         -----------
    Total liabilities and shareholders' equity                $27,301,594         $26,826,273
                                                              ===========         ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                   CONDENSED STATEMENTS OF INCOME

                                      For the years  ended  December  31,  1997, 1996 and
                                    and the period from July 1, 1995  through  December 31, 1995


                                                                            1997                 1996                1995
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>                  <C>                 <C>
Interest income                                                        $   263,767           $  497,921          $  266,012

Operating expenses                                                         166,532              176,014              50,873
                                                                       -----------           ----------          ----------
Income before income taxes and equity in
 undistributed earnings of subsidiary bank                                  97,235              321,907             215,139

Income tax expense                                                          11,774              100,391              85,216
                                                                       -----------           ----------          ----------
Income before equity in undistributed
 earnings of subsidiary bank                                                85,461              221,516             129,923

Equity in undistributed earnings of subsidiary bank                      2,107,518            1,346,029             658,085
                                                                       -----------           ----------          ----------
Net income                                                              $2,192,979           $1,567,545          $  788,008
                                                                        ==========           ==========          ==========

</TABLE>
                                       34
<PAGE>
Note 14 - Parent Company Only Condensed Financial Information (continued)

                       CONDENSED STATEMENTS OF CASH FLOWS

For the years ended  December  31,  1997,  1996 and the period from July 1, 1995
through December 31, 1995
<TABLE>
<CAPTION>
                                                                          1997                 1996                1995
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                  <C>                <C>
Cash flows from operating activities
  Net income                                                           $2,192,979           $1,567,545            $788,008
  Adjustments to reconcile net income to cash
    provided by operations
      Equity in undistributed earnings of subsidiary bank              (2,107,518)          (1,346,029)           (658,085)
      Change in
        Other assets                                                       57,050               73,466            (139,415)
        Accrued expenses                                                 (288,197)             229,806              67,351
                                                                       ----------           ----------         -----------
          Net cash from operating activities                             (145,686)             524,788              57,859

Cash flows from investing activities
  Origination of loan receivable from ESOP                                      -                    -          (1,745,700)
  Origination of loan receivable from subsidiary bank                           -                    -          (8,600,000)
  Repayments on loan receivable from subsidiary bank                    1,750,000            4,850,000                    -
  Repayments on loan receivable from ESOP                                 145,475              145,475             145,475
  Purchase of stock in subsidiary bank                                          -                    -         (10,605,429)
                                                                       ----------           ----------         -----------
          Net cash from investing activities                            1,895,475            4,995,475         (20,805,654)

Cash flows from financing activities
  Dividends paid                                                         (575,558)            (622,519)           (163,660)
  Purchase of treasury stock                                           (1,328,211)          (4,826,022)                   -
  Proceeds from sales of treasury stock                                     8,800                    -                    -
  Proceeds from issuance of common stock,
    net of conversion costs                                                     -                    -          21,210,857
                                                                       ----------           ----------         -----------
          Net cash from financing activities                           (1,894,969)          (5,448,541)         21,047,197
                                                                       ----------           ----------         -----------
Net change in cash and cash equivalents                                  (145,180)              71,722             299,402

Cash and cash equivalents at beginning of period                          371,124              299,402                   -
                                                                       ----------           ----------         -----------
Cash and cash equivalents at end of period                               $225,944             $371,124            $299,402
                                                                       ==========           ==========         ===========
</TABLE>

                                       35
<PAGE>
Note 15 - Earnings Per Share

A  reconciliation  of the numerators and denominators of the earnings per common
share and earnings per common share assuming dilution computations for the years
ended December 31, 1997, 1996 and 1995 is presented below:
<TABLE>
<CAPTION>

                                                                                   Year Ended December 31,
                                                                       1997                   1996                   1995
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                    <C>                    <C>
Earnings Per Share

  Net income available to common
   shareholders (subsequent to conversion)                         $2,192,979             $1,567,545             $  788,008
                                                                   ==========             ==========             ==========
  Weighted average common shares
   outstanding before adjustment                                    1,766,112              2,023,222              2,182,125

  Less: unallocated ESOP shares                                       145,474                160,022                174,570

  Less: non-vested RRP shares                                          61,244                 75,936                      -
                                                                   ----------             ----------             ----------
  Weighted average common shares
   outstanding for basic earnings per share                         1,559,394              1,787,264              2,007,555
                                                                   ----------             ----------             ----------

    Earnings Per Share                                             $     1.41             $      .88             $      .39
                                                                   ==========             ==========             ==========

Earnings Per Share Assuming Dilution

  Net income available to common
   shareholders, per above                                         $2,192,979             $1,567,545              $ 788,008
                                                                   ==========             ==========              =========
  Weighted average common shares
   outstanding                                                      1,559,394              1,787,264              2,007,555

  Add: dilutive effects of assumed conversions
   and exercises of stock options                                      42,758                 10,969                      -
                                                                   ----------             ----------             ----------
  Weighted average common and dilutive
   potential common shares outstanding                              1,602,152              1,798,233              2,007,555

    Earnings Per Share Assuming Dilution                           $     1.37             $      .87             $      .39
                                                                   ==========             ==========             ==========


</TABLE>
                                       36
<PAGE>
STOCKHOLDER INFORMATION

STOCK LISTING INFORMATION

The  Company's  common stock is traded on the NASDAQ  National  Market under the
symbol "NEIB".

STOCK PRICE INFORMATION

The  following  table  sets  forth  the high and low bid  prices  and  dividends
declared per share of common stock for the periods indicated.  The prices do not
represent actual  transactions  and do not include retail markups,  markdowns or
commissions.



                                                                       Dividends
Quarter Ended                   High                 Low               Declared
--------------------------------------------------------------------------------
March 31, 1996                 $13.50               $11.50               $.075
June 30, 1996                  $13.25               $11.50               $.075
September 30, 1996             $13.00               $11.75               $.075
December 31, 1996              $14.00               $12.63               $.080

March 31, 1997                 $15.75               $13.50               $.080
June 30, 1997                  $16.00               $12.50               $.080
September 30, 1997             $20.25               $14.75               $.080
December 31, 1997              $22.13               $18.25               $.085

Dividend payment  decisions are made with  consideration of a variety of factors
including earnings,  financial condition,  market  considerations and regulatory
restrictions.

As of February 26, 1998,  there were  approximately  582 shareholders of record,
not  including  those  shares  held in nominee or street  name  through  various
brokerage firms or banks.

ANNUAL REPORT ON FORM 10-KSB

A copy of the Company's annual report on Form 10-KSB,  filed with the Securities
and Exchange Commission, is available without charge by writing:

                               Darrell E. Blocker
                             Chief Financial Officer
                         Northeast Indiana Bancorp, Inc.
                           648 North Jefferson Street
                            Huntington, Indiana 46750

STOCK TRANSFER AGENT

Inquiries regarding stock transfer,  registration,  lost certificates or changes
in name and address should be directed to the stock transfer agent and registrar
by writing:

                         Registrar and Transfer Company
                                10 Commerce Drive
                           Cranford, New Jersey 07016
<PAGE>

INVESTOR INFORMATION

Stockholders,  investors,  and analysts interested in additional information may
contact Darrell E. Blocker, Chief Financial Officer,  Northeast Indiana Bancorp,
Inc.

                                Corporate Office
                         Northeast Indiana Bancorp, Inc.
                           648 North Jefferson Street
                            Huntington, Indiana 46750
                                 (219) 356-3311


          Special Counsel                             Independent Auditor
   Silver, Freedman & Taff, L.L.P.               Crowe, Chizek and Company LLP
     1100 New York Avenue, N.W.                     330 E. Jefferson Blvd.
       Washington, D.C. 20005                      South Bend, Indiana 46601



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