[FRONT COVER]


N o w   M o r e   T h a n   E v e r . . .
F i r s t   i n   H o m e t o w n   B a n k i n g



                                    2 0 0 1
                           A n n u a l   R e p o r t





                     [LOGO-NORTHEAST INDIANA BANCORP, INC.]

<PAGE>

President's Message To Our Shareholders
--------------------------------------------------------------------------------
Dear Shareholders,

As our Financial  Institution enters its 90th year of service,  it is a pleasure
to report that 2001 was a profitable year for Northeast  Indiana Bancorp and its
subsidiary,  First  Federal  Savings  Bank.  For the year,  net  income was $2.0
million,  an  increase  of 53.4% above the $1.3  million  reported  for the year
ending December 31, 2000. This  represents  diluted  earnings per share of $1.25
compared  with $.79 a year ago. Net income growth was a direct result of reduced
provision for loan losses,  gains on sales of loans,  expanded trust revenue and
continued  expense control.  With the strong earnings this past year, your Board
of Directors  authorized  continued  quarterly  cash dividends and increased the
dividend from $.11 to $.12 per share in the fourth  quarter of 2001.  Total cash
dividends paid to shareholders in 2001 amounted to over $735,000.

First Federal's Trust Department and its Financial Services  subsidiary continue
to grow,  and these  services add value to the Company.  At the end of 2001, the
Trust Department held over $34.1 million under asset management which represents
a 36.4% increase from December 31, 2000.  Northeast Indiana  Financial,  Inc., a
wholly owned financial services subsidiary of the Bank increased its assets held
for customers at December 31, 2001 by 9.8% to $12.3 million.

2001 also was a year of change for your  Company.  With the economy  slowing and
interest rates falling dramatically throughout the year, First Federal used this
opportunity to realign its risk exposure and balance sheet volatility. This past
year,  we reduced  our  exposure  in higher  risk  commercial  loans,  sold some
long-term  fixed  rate  mortgages  into the  secondary  market and  reduced  our
balances in rate  sensitive  out-of-area  jumbo  deposits.  At the same time, we
improved our liquidity by increasing  our cash and investment  positions.  While
these actions had a slightly negative affect on income and caused a reduction in
Company assets, management feels it puts us in a much better position for future
growth and profitability.

We remain  optimistic  about the  potential  for the Company in 2002 and beyond.
First Federal  continues to be the premier  financial  institution in our market
area. Our Board of Directors and employees are dedicated to providing innovative
products  delivered with quality service to you, our customers and shareholders,
while continuing our commitment to community banking.

We sincerely appreciate your confidence and will continue to strive to make your
investment in Northeast Indiana Bancorp profitable.


Sincerely,


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


1


<PAGE>

Table Of Contents
--------------------------------------------------------------------------------


         PRESIDENT'S MESSAGE TO OUR SHAREHOLDERS . . . . . . . . . . .  . . .1



         SELECTED CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . .  . . .3



         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION  AND RESULTS OF  OPERATIONS . . . . . . . . . . . .  . . .4
         REPORT OF INDEPENDENT AUDITORS . . . . . . . . . . . . . . . .. . .15
         CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . .  . . 16
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . .  . . . . .20
         STOCKHOLDER  INFORMATION . . . . . . . . . . . . . . . . . . .. . .37
         DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . .. . .38




Description Of Business
--------------------------------------------------------------------------------

Northeast Indiana Bancorp,  Inc.  ("Northeast  Indiana Bancorp") 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")
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.  In  order  to  serve  additional  financial  needs  of area
residents,  First Federal  established a Trust  Department  during 1998, and now
provides brokerage  services via its wholly owned subsidiary,  Northeast Indiana
Financial,  Inc. First Federal has been serving the Huntington  community  since
1912.

                                                                               2
<PAGE>

                  SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>

                                                                                     December 31
                                                          2001           2000           1999           1998           1997
                                                          ----           ----           ----           ----           ----
                                                                                (dollars in thousands)
<S>                                                      <C>            <C>            <C>            <C>            <C>
Selected Financial Condition Data:
----------------------------------
Total assets .......................................     $238,395       $247,094       $254,747       $212,425       $199,369
Securities .........................................       39,671         31,609         33,649         14,187         15,385
Loans receivable, net ..............................      162,830        200,151        208,395        185,906        174,539
Deposits ...........................................      137,030        146,806        143,212        123,336        107,550
Total borrowings ...................................       73,966         72,539         84,754         63,080         63,522
Shareholders' equity ...............................       26,281         26,574         25,655         25,005         27,293

Selected Operations Data:
-------------------------

Total interest income ..............................     $ 17,436       $ 19,565       $ 17,722       $ 16,139       $ 14,316
Total interest expense .............................       10,765         12,485          9,846          9,061          7,950
                                                         --------       --------       --------       --------       --------
 Net interest income ...............................        6,671          7,080          7,876          7,078          6,366
Provision for loan losses ..........................          575          1,591            449            360            265
                                                         --------       --------       --------       --------       --------
Net interest income after provision for loan losses.        6,096          5,489          7,427          6,718          6,101
Total noninterest income ...........................        1,348          1,010            832            731            565
Total noninterest expense ..........................        4,702          4,775          4,194          3,691          3,062
                                                         --------       --------       --------       --------       --------
Income before income taxes .........................        2,742          1,724          4,065          3,758          3,604
Income tax expense .................................          773            441          1,475          1,369          1,411
                                                         --------       --------       --------       --------       --------
Net income .........................................     $  1,969       $  1,283       $  2,590       $  2,389       $  2,193
                                                         ========       ========       ========       ========       ========
Basic earnings per common share(2) .................     $   1.28       $   0.80       $   1.59       $   1.36       $   1.16
Diluted earnings per common share(2) ...............         1.25           0.79           1.54           1.28           1.13

Selected Financial Ratios and Other Data:
----------------------------------------
 Performance Ratios:
  Return on assets (ratio of net income to
   average total assets) .............................       0.81%          0.50%          1.11%          1.17%          1.21%
  Return on equity (ratio of net income to
   average total shareholders' equity) ...............       7.35           4.88          10.15           9.15           8.12
  Interest rate spread information:
   Average during period .............................       2.39           2.39           3.03           2.95           2.91
   End of period .....................................       3.16           2.34           3.02           3.11           2.95
  Net interest margin(1) ............................        2.88           2.90           3.50           3.57           3.63
  Ratio of operating expense to average total assets.        1.94           1.88           1.80           1.81           1.69
  Ratio of average interest-earning assets to
   average interest-bearing liabilities ..............     110.54         109.95         110.74         113.66         115.97
 Quality Ratios:
  Non-performing assets to total assets at end of
   period ............................................       3.03           1.79            .70            .63            .59
  Allowance for loan losses to non-performing loans         28.26          53.99         103.33         120.36         102.40
  Allowance for loan losses to total loans ..........        1.19            .99            .84            .78            .68
 Capital Ratios:
   Total shareholders' equity to total assets at
    end of period .....................................     11.02          10.75          10.07          11.77          13.69
 Average total shareholders' equity to average
   Total assets ......................................      11.07          10.33          10.94          12.80          14.89
 Other Data:
  Dividends declared per share(2) ...................    $  0.450       $  0.410       $  0.345       $  0.293       $  0.268
  Dividend payout ratio .............................       35.16%         51.25%         21.70%         21.54%         23.10%
  Number of full-service offices ....................           3              3              3              3              3
</TABLE>


(1)  Net interest income divided by average interest-earning assets.
(2)  All share and per share amounts have been restated to reflect the 10% stock
     dividends paid on November 23, 1998 to  shareholders  of record November 6,
     1998 and again on November 22, 1999 to  shareholders  of record November 6,
     1999.

3
<PAGE>

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

General
--------------------------------------------------------------------------------

Northeast Indiana Bancorp,  Inc.  ("Northeast  Indiana Bancorp") 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")
as a unitary thrift holding company.  First Federal  conducts  business from its
three  offices  located in  Huntington,  Indiana.  Northeast  Indiana  Bancorp's
primary business activity is its investment in First Federal, and therefore, the
following discussion relates primarily to its operations.

During 1998, First Federal established a trust department which began operations
in the fourth  quarter.  At the end of 2001,  $34.1 million was held under asset
management.   In  February  1999,   Northeast   Indiana  Bancorp  announced  the
establishment of Northeast Indiana Financial, Inc., a wholly-owned subsidiary of
the Bank. Northeast Indiana Financial,  Inc. provides brokerage services through
the purchase of mutual funds, annuities,  stocks and bonds for its customers and
has $12.3 million of assets held for our customers.  Until these  operations are
well  established,  management  expects a slight  negative  impact to net income
although revenues and assets under management continue to increase.

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  policies,  fiscal  policies and financial  institutions  significantly
affect First Federal.  During 2000 in anticipation of inflationary pressures the
Federal  Reserve  raised  short-term  rates three times for a total of 100 basis
points to help the United States economy maintain low inflation. The increase in
interest rate helped cause the economy to slow, as became  evident by the fourth
quarter of 2000.  Due to the  continued  economic  downturn the Federal  Reserve
lowered short-term rates eleven times during 2001 in an attempt to stimulate the
economy.  The  falling  rate  environment  caused the entire loan  portfolio  to
experience a period of renewals and runoffs primarily  occurring during the last
three  quarters of the year.  Also during 2001 First Federal sold  approximately
$12.7 million of its mortgage loan  originations to the secondary  market.  As a
result First  Federal's loan  portfolio  decreased by $37.3 million during 2001.
The net interest margin for First Federal  Savings Bank decreased  slightly from
2.90% as of December  31, 2000 to 2.88% at the end of 2001.  This  decrease  was
partially  due to more  funds  invested  at short  term  rates  along with lower
overall renewal rates.  With the economy still  experiencing  problems  interest
rates should remain stable in the near term.

In periods of rising interest rates there can be no assurance that First Federal
can continue to successfully  market its lending  products or that such interest
rate movements will not adversely affect net income.

Subsequent  to  September   30,  2000,   Northeast   Indiana   became  aware  of
circumstances that had occurred involving loans originated by First Federal to a
single borrower. During the fourth quarter 2000 these loans were written down to
estimated  fair value of the  collateral.  The collateral  included  repossessed
vehicles,  consumer auto leases and  contracts.  The estimated  present value of
leases and contracts  ($1.5  million)  were included in consumer  loans and were
considered  both  non-performing  and  impaired.  As of  December  31,  2001 the
estimated present value of these leases and contracts ($685,000) are included in
consumer loans and are considered both non-performing and impaired. At, December
31, 2001 the balance of impaired loans was $5.9 million,  including $5.3 million
with  allowances  allocated  specifically  to them.  These loans compare to $8.5
million of impaired  loans,  including $4.8 million with allowance  allocated to
them at December 31, 2000.

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.

                                                                               4
<PAGE>

Forward-Looking Statements
--------------------------------------------------------------------------------

When used in this filing and in future filings by Northeast Indiana Bancorp with
the Securities and Exchange Commission, in our 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 our market area, changes in policies by regulatory agencies,  fluctuations in
interest rates, demand for loans in our 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. Northeast Indiana Bancorp
wishes  to  caution   readers   not  to  place   undue   reliance  on  any  such
forward-looking  statements,  which speak only as of the date made,  and advises
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 our  financial  performance  and could  cause our actual
results  for future  periods to differ  materially  from  those  anticipated  or
projected.

Northeast  Indiana Bancorp 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.

5

<PAGE>

Financial  Condition
--------------------------------------------------------------------------------

Northeast  Indiana  Bancorp's  total  assets  decreased  from $247.1  million at
December  31, 2000 to $238.4  million at December  31,  2001, a decrease of $8.7
million,  or 3.6%.  The  decrease  was due  primarily to a decrease in net loans
receivable of $37.3 million or 18.6% and an increase in interest earning cash of
$19.7 million along with an increase of $8.1 million in the securities available
for sale. The overall  reduction in liabilities  was reflected by a $9.8 million
decrease in total deposits, primarily in time deposits.

Most  segments of the loan  portfolio  decreased  during 2001.  The decrease was
mostly  attributable to mortgage loans, which decreased $27.8 million.  Mortgage
loans secured by one-to-four family residences  decreased $21.9 million to $95.8
million at December 31, 2001 and  represent  58.8% of First  Federal's  net loan
portfolio.  The decrease in one-to-four family mortgage loans was comprised of a
$2.4  million  decrease  in fixed rate  loans and a $19.5  million  decrease  in
adjustable rate loans. First Federal sold approximately $12.7 million fixed rate
one-to-four  family mortgages  during 2001 which  contributed to the decrease in
mortgage loans. Additionally, we were not as aggressive with our mortgage rates,
which resulted in loan runoff as customers refinanced mortgage loans.

Mortgage loans secured by multi-family and commercial real estate decreased $5.1
million to $23.8 million at December 31, 2001 and construction  loans secured by
residential and non-residential real estate decreased $825,000 to $6.4 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  decreased  $8.5  million  to $42.0  million at
December 31, 2001.  Automobile  loans  comprise  $12.8 million of total consumer
loans while home equity and second mortgage loans represent another $8.6 million
at December 31, 2001.

Future  loan growth and  profitability  related  thereto,  is  dependent  on the
economy.  First  Federal  currently  anticipates  moderate  growth in  mortgages
compared  to the last few years and will  continue  to sell long term fixed rate
mortgages to the  secondary  market while  planning to keep more of the 15 to 20
year term fixed rate mortgages in our portfolio.  First Federal will continue to
provide commercial and consumer lending and anticipates non-residential mortgage
lending to increase as a percentage of total loans. Non-mortgage lending exposes
the Company to additional credit risks.

Total  deposits  decreased  $9.8 million to $137.0 million at December 31, 2001.
The 6.7%  decrease in 2001 was  primarily  due to a decrease  in interest  rates
associated  with  short  term jumbo  time  deposits.  A  decrease  in jumbo time
deposits  from  outside of our market area of $9.9  million  contributed  to the
total jumbo time  deposit  decrease of $12.1  million.  First  Federal  remained
competitive in the local market and was more  aggressive  with longer term rates
in an attempt to lengthen deposit maturities.

Total borrowed funds increased $1.4 million, from $72.5 million to $73.9 million
at December 31, 2001. Borrowed funds include advances from the Federal Home Loan
Bank with variable  interest rates and stated  maturities  ranging through 2011.
The  balance of FHLB  advances  was $65.0  million,  down from $67.4  million at
December 31, 2000.

The remaining FHLB advances  include  prepayment  penalties and consist of $14.0
million  maturing in 2003 and 2004.  In addition,  $51.0 million of the advances
outstanding  at December  31, 2001  contained  options  with dates  ranging from
January 9, 2002  through  December 21,  2005,  whereby the interest  rate may be
adjusted by the FHLB,  at which time the advances may be repaid at the option of
First Federal without penalty. First Federal's borrowing limit at the FHLB as of
December 31, 2001, was $67.9 million based on collateral. Borrowings at December
31, 2001 also include various  repurchase  agreements that were offered starting
in 1999. The balance of securities sold under repurchase  agreements at December
31, 2001 was $9.0 million, up from $5.0 million at December 31, 2000.

                                                                               6

<PAGE>

Results of Operations
--------------------------------------------------------------------------------

                            Comparison of Years Ended
                           December 31, 2001 and 2000

General.  Net income for the year ended  December  31, 2001 was $2.0  million as
compared to net income of $1.3 million for 2000,  an increase of  $686,000.  The
increase in net income was  primarily  the result of a decrease in provision for
loan  losses of $1.0  million  that was  offset by a $409,000  reduction  in net
interest income along with a $338,000  improvement in non-interest  income.  The
increase in earnings was  partially  offset by an increase of $332,000 in income
tax expense.  Further  details  regarding the changes in the income and expenses
are discussed below.

Interest  Income.  Interest  income  decreased  $2.1  million  or 10.9% to $17.4
million for the year ended  December 31, 2001.  The decrease in interest  income
was  primarily  the result of mortgage  loan  interest  income  decreasing  $1.0
million to $11.1  million  along with a decrease of $880,000 to $4.0  million in
consumer and other loan interest  income.  The average yield for the year on the
loan  portfolio  decreased  to 8.19%  in 2001  compared  to  8.24% in 2000.  The
decrease in loan interest  income occurred as a result of a reduction in average
balances of loans  outstanding in 2001 compared to 2000, and lower average rates
during 2001.

Interest Expense. Interest expense for 2001 decreased $1.7 million or 13.8% over
2000 interest  expense.  The majority of the decrease was due to lower  interest
costs for borrowings, which decreased 83 basis points in 2001, compared to 2000.
The average rate for time deposits  decreased 11 basis points from 2000 to 2001.
The average  rate for money  market  accounts  decreased  by 132 basis points to
3.63% for 2001 along with a decrease of 14 basis  points in the average rate for
savings accounts.

Net interest income.  Net interest income  decreased  $409,000 or 5.8% from $7.1
million to $6.7 million for the year ended December 31, 2001. The average spread
held steady at 2.39%. Average  interest-earning assets margin decreased to 2.88%
from 2.90% due to a decrease in income  earnings  products  offered  during 2001
that was offset by a similar decrease in interest-bearing liabilities offered in
2001.

Provision  for Loan Losses.  The provision for loan losses for 2001 was $575,000
compared to $1.6 million in 2000, a decrease of $1.0 million.  The provision for
loan losses less net charge-offs for the year resulted in a $46,000  decrease in
the allowance for loan losses.  The allowance for loan losses of $2.0 million at
December 31, 2001 was a 2.3% decrease compared to December 31, 2000.  Management
will  continue  to maintain  the  allowance  for loan  losses at a level  deemed
adequate by management based on its quarterly analysis. This analysis includes a
review of our mix of loans by major  product  lines.  We continue to monitor our
allowance  for loan  losses in relation to the  overall  economic  downturn  the
economy is experiencing.

Noninterest  income.  Noninterest  income increased from $1.0 million in 2000 to
$1.3 in 2001. The majority of this change  occurred as a result of our increases
in net gain on sale of loans to $234,000  in 2001  compared to $22,000 for 2000,
an  increase of  $212,000.  Other  service  charges and fees of $739,000 in 2001
increased by $103,000  compared to $637,000  for 2000.  This  increase  included
$79,000 in  additional  loan fees and an  increase  in ATM  operating  income of
$47,000.

Noninterest  expense.  Total noninterest  expense decreased from $4.8 million to
$4.7 million or $73,000.  Salaries and employee benefits  decreased  $235,000 in
2001 over 2000, the result of a reduction in the cost  associated  with employee
benefits. This decrease was offset by higher insurance cost and higher personnel
costs, a result of hiring  additional staff and salary  increases.  During 2001,
data  processing  costs  increased  $60,000  primarily  due to higher volume and
additional  processing  costs  incurred  as we expand our product  lines.  Other
expenses  increased by $52,000 mainly due to increased Social Security Taxes and
an increase in office supplies and postage cost for 2001.

Income tax expense. Income tax expense increased from $441,000 to $773,000. This
increase was due to higher taxable income for 2001 partially  reduced by the tax
benefits  from  the   investment  in  low-income   housing   limited   liability
partnerships.

                           Comparison of Years Ended
                           December 31, 2000 and 1999

General.   Net  income  for  the  year  ended   December  31,  2000  provided  a
disappointing year of $1.3 million in earnings,  a decrease of $1.3 million over
net income of $2.6 million for 1999.  This reduction in net income was primarily
the result of a decrease in net interest income along with additional  provision
for loan losses needed to adequately fund the allowance for loan losses,  offset
by a slight increase in non-interest income. The reduced net income was also the
result of an increase in  non-interest  expense.  The  reduction in earnings was
partially offset by a reduction of income tax expense. Further details regarding
the changes in the income and expenses are discussed below.


7

<PAGE>


Results of Operations(Continued)
--------------------------------------------------------------------------------

Interest  Income.  Interest  income  increased  $1.8  million  or 10.4% to $19.6
million for the year ended  December 31, 2000.  The increase in interest  income
was primarily the result of mortgage loan interest income increasing $798,000 to
$12.1  million and an increase of $459,000 to $4.9 million in consumer and other
loan  interest  income.  The  average  yield for the year on the loan  portfolio
increased  to 8.24% in 2000  compared  to 8.08% in 1999.  The  increase  in loan
interest  income was due to a combination  of higher  average  balances of loans
outstanding in 2000 compared to 1999 and higher average rates during 2000.

Interest Expense. Interest expense for 2000 increased $2.6 million or 26.8% over
1999 interest  expense.  The majority of the increase was due to higher interest
costs for FHLB advances,  which  increased 85 basis points in 2000,  compared to
1999. The average rate for time deposits  increased 75 basis points from 1999 to
2000. The average rate for money market accounts increased by 64 basis points to
4.95% for 2000.

Net interest income.  Net interest income decreased  $796,000 or 10.1% from $7.9
million to $7.1 million for the year ended December 31, 2000. The average spread
decreased by 64 basis points to 2.39%.  Average  interest-earning  assets margin
decreased to 2.90% due to slower  increases in income earnings  products offered
during 2000 offset by a larger  increase in the rates paid for  interest-bearing
liabilities.

Provision  for Loan  Losses.  The  provision  for loan  losses for 2000 was $1.6
million compared to $449,000 in 1999, an increase of $1.1 million. The provision
for  loan  losses  less net  charge-offs  for the year  resulted  in a  $234,000
increase in the allowance for loan losses. The allowance for loan losses of $2.0
million at December 31, 2000 was a 13.3% increase compared to December 31, 1999.
Management  will  continue to maintain the  allowance for loan losses at a level
deemed  adequate by management  based on its quarterly  analysis.  This analysis
includes  reviewing  our mix of loans by major  product  lines.  We continued to
increase  our  allowance  for loan  losses  in 2000  because  of our  growth  in
commercial  and consumer  lending and these types of lending  making up a larger
portion of the overall loan portfolio.  Due to the loan losses mentioned earlier
and as a result of our review  process,  the  provision  for loan losses for the
year ended December 31, 2000 was increased over the provision for the year ended
December 31, 1999. Over half of the charge-offs for the year ended December 2000
were due to losses from two borrowers.

Noninterest  income.  Noninterest income increased from $832,000 in 1999 to $1.0
million in 2000.  The majority of this change was due to our  increases in other
service  charges  and fees to $637,000  in 2000  compared to $488,000  for 1999,
which was a $149,000 increase.

Noninterest  expense.  Noninterest  expense  increased from $4.2 million to $4.8
million or $581,000.  Salaries and employee benefits  increased $405,000 in 2000
over 1999, the result of higher  personnel  costs,  additional  staff and salary
increases. During 2000, data processing costs increased $41,000 primarily due to
higher volume and additional  processing costs incurred as we expand our product
lines.  Correspondent  bank charges and other expenses  increased  mainly due to
increased volume in deposits and loans in the first three quarters of 2000.

Income tax expense.  Income tax expense decreased from $1.5 million to $441,000.
This decrease was due to lower taxable income for 2000  additionally  reduced by
the tax benefits from the  investment in low-income  housing  limited  liability
partnerships.


                                                                               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 First
Federal'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 First Federal's overall capital levels to
determine   acceptable   levels  of   interest   rate  risk.   First   Federal'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, 2001,  adjustable  rate loans
comprised  35.7% of the total loan  portfolio.  The  interest  rate  exposure as
outlined  in the NPV table  reflects  our  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,  which we would  categorize as moderately high in comparison
to our peers,  management will continue to market adjustable rate mortgage loans
when possible and review longer term funding sources.  Management also considers
the current  capital  position of First Federal 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 our market area.  As
stated  earlier,  First Federal is now using the  secondary  market to assist in
managing our interest rate risk  exposure.  We are also making  adjustable  rate
commercial  loans  when  possible.  Nonetheless,  our  interest  rate  exposure,
particularly in a rising interest rate environment, will grow, especially to the
extent  that loan demand  produces  increases  in balance  sheet  growth.  While
management monitors and, from time to time, takes actions to adjust our interest
rate risk, we believe a rising  interest rate  environment  will have an adverse
impact on our profitability.

Presented  below,  as of December 31, 2001 and December 31, 2000, is an analysis
of First  Federal'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.  Due to current low interest rates the
change in rates does not include results for the minus 200 basis points or minus
300 basis points scenarios.  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 First Federal.

During 2001, our rate  sensitivity  showed a slight increase over last year from
(221) bp at December 31, 2000 to (233) bp as of December 31, 2001 based on a 200
basis point increase in rates. The rising rate scenarios  reflect the decreasing
Net Portfolio Value (NPV) of equity.

<TABLE>
<CAPTION>
                                 At December 31, 2001

                                                         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>
    +300 bp       $ 18,853     $(10,382)       (36)%         8.14 %    (370)bp
    +200            22,516       (6,719)       (23)          9.51      (233)
    +100            26,148       (3,087)       (11)         10.80      (104)
       0            29,235           --         --          11.84        --
    -100            30,892        1,657          6          12.34        50
    -200                --           --         --             --        --
    -300                --           --         --             --        --
</TABLE>

9

<PAGE>

Asset/Liability Management(Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                               At December 31, 2000
                                                         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>
    +300 bp        $16,343     $(10,083)       (38)%       6.97 %      (359)bp
    +200            20,051      (6,375)        (24)        8.35        (221)
    +100            23,474      (2,952)        (11)        9.57         (99)
       0            26,426          --          --        10.56          --
    -100            28,419       1,993           8        11.17          61
    -200            29,552       3,126          12        11.47          91
    -300            31,068       4,642          18        11.89         133
</TABLE>


Due to the current low  interest  rate  environment,  the OTS's NPV model is not
calculating  results  for the minus 200 bp or minus  300 bp  scenario.  Based on
these limitations,  in the event of a 200 basis point increase in interest rates
compared to a 100 basis point  decrease in interest rates using NPV estimates as
of December 31, 2001,  First Federal would experience a 23% decrease in NPV in a
rising rate environment,  while experiencing a 6% increase in NPV in a declining
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 First
Federal in recent periods was due to the increased use of relatively  short-term
deposits and FHLB advances to fund the  investment  in loans with  substantially
longer  maturities and our prior use of an interest rate index which lags behind
market rate  indices to adjust the interest  rate on  Adjustable  Rate  Mortgage
(ARM)  loans  originated  prior to June 2000.  Effective  May 1, 1999,  ARM loan
applications  are tied to the weekly one year Constant  Maturity  Treasury (CMT)
which is a current index. To the extent that we continue to use liabilities with
shorter terms to maturity  than the assets in which we invest,  we 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.

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                   -------------------------------------------------------------------------------------------------
                                                  2 0 0 1                           2 0 0 0                         1 9 9 9
                                      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)                $ 184,684  $  15,134    8.19%   $ 207,119    $ 17,063    8.24%  $ 195,504   $  15,806    8.08%
  Securities                            27,070      1,469    5.43       28,376       1,844    6.50      21,948       1,395    6.36
  FHLB stock                             4,913        365    7.43        4,913         405    8.24       4,026        322     8.00
  Other interest-earning assets         14,751        468    3.17        3,550         253    7.13       3,297        199     6.04
                                     ---------  ---------            ---------    --------           ---------   ---------
     Total interest earning
       assets(1)                       231,418     17,436    7.53      243,958      19,565    8.02     224,775      17,722    7.88
                                     ---------  ---------            ---------    --------           ---------   ---------
Non-interest earning assets             10,479                          10,549                           8,315
                                     ---------                       ---------                       ---------
     Total assets                    $ 241,897                       $ 254,507                       $ 233,090
                                     =========                       =========                       =========

Interest-bearing liabilities:
  Savings                            $   9,390        176    1.87      $ 9,738         196    2.01   $   9,970         199    2.00
  Money market                          18,558        674    3.63       18,092         895    4.95      21,602         930    4.31
  NOW                                   11,443        176    1.54       11,013         165    1.50      11,185         170    1.52
  Time deposits                        100,257      6,027    6.01       90,979       5,564    6.12      79,487       4,271    5.37
  Borrowed funds                        69,709      3,712    5.32       92,065       5,665    6.15      80,734       4,276    5.30
                                     ---------  ---------            ---------    --------           ---------   ---------
     Total interest bearing
       liabilities                     209,357     10,765    5.14      221,887      12,485    5.63     202,978       9,846    4.85
                                     ---------  ---------            ---------    --------           ---------   ---------
Non-interest bearing liabilities         5,766                           6,339                           4,607
                                     ---------                       ---------                       ---------
     Total liabilities                 215,123                         228,226                         207,585

     Total shareholders'
       equity                           26,774                          26,281                          25,505
                                     ---------                       ---------                       ---------
     Total liabilities and
       shareholders' equity          $ 241,897                       $ 254,507                       $ 233,090
                                     =========                       =========                       =========

Net interest income                             $   6,671                         $  7,080                        $  7,876
                                                =========                         ========                        ========
Net interest rate spread                                     2.39%                            2.39%                           3.03%
                                                             ====                             ====                            ====
Net interest earning assets          $ 22,061                         $ 22,071                        $ 21,197
                                     ========                         ========                        ========
Net yield on average interest-
  earning assets                                             2.88%                            2.90%                           3.50%
                                                             ====                             ====                            ====

Average interest-earning assets to
  average interest-bearing liabilities                       1.11x                            1.10x                           1.11x
                                                             ====                             ====                            ====
</TABLE>

(1)  Calculated net of deferred loan fees, loan discounts,  loans in process and
     allowance for loan losses.  Also includes  Loans Held for Sale net of lower
     of cost or market.

11

<PAGE>

Interest Rate Spread
--------------------------------------------------------------------------------

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 resulting interest rate spreads at the dates indicated.

                                                    At December 31,
                                                    ---------------
                                               2001      2000      1999
                                               ----      ----      ----
Weighted average yield on:
  Loans receivable . . . . . . . . . . . . .   8.07%     8.41%     8.14%
  Investment securities . . . . . . . . . . .  5.30      6.82      6.72
  Other interest-earning assets . . . . . . .  1.71      6.12      4.96
     Combined weighted average yield on
       interest-earning assets . . . . . . .   7.56      8.16      7.91
Weighted average rate on:
  Savings . . . . . . . . . . . . . . . . . .  1.49      2.00      2.00
  Money market . . . . . . . . . . . . . . .   2.18      5.27      4.28
  NOW . . . . . . . . . . . . . . . . . . . .  1.24      1.55      1.53
  Time deposits . . . . . . . . . . . . . . .  5.09      6.54      5.65
  Borrowed funds . . . . . . . . . . . . . .   5.47      6.17      4.91
  Repurchase agreements . . . . . . . . . . .  1.60      5.77      5.38
     Combined weighted average rate on
       interest-bearing liabilities . . . . .  4.40      5.82      4.89

Spread . . . . . . . . . . . . . . . . . . .   3.16      2.34      3.02


The loans  receivable  yield,  which is the largest portion of interest  income,
decreased  34 basis points to 8.07%,  a 4.0%  decrease at the end of period 2001
yield compared to 8.41% at the end of 2000. The overall  weighted  average yield
decreased 60 basis points to 7.56% at the end of 2001 down from 8.16% at the end
of 2000, a 7.4% decrease.  Interest-bearing  liabilities  rate changes were also
lower on the major liability  products.  Time deposits decreased to 5.09% at the
end of 2001  compared to 6.54% at the end of 2000,  a 145 basis point  decrease.
Money  market  accounts  decreased  309 basis points to 2.18% at the end of 2001
compared  to  5.27%  at the end of  2000,  a  58.6%  decrease.  Borrowing  rates
decreased 70 basis points in 2001 to 5.47% compared to 6.17% at the end of 2000.
The repurchase agreements reflect the end of period rates paid on our repurchase
accounts that  compliment our sweep  accounts which were  introduced in 1999 for
commercial customers. The combined interest-bearing liabilities weighted average
rates  decreased  to  4.40% at the end of 2001  compared  to 5.82% at the end of
2000.  This 142 basis points  decrease in interest costs compared to the earning
assets yields smaller  decrease of 60 basis points caused the spread to widen to
3.16% at the end of 2001 compared to 2.34% at the end of 2000, an 82 basis point
improvement over 2000.




                                                                              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:

o Changes in volume (i.e., changes in volume multiplied by old rate)
o 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,
                             -------------------------------------------------------------------------
                                           2001 vs. 2000                         2000 vs. 1999
                             -----------------------------------     ---------------------------------
                                    Increase           Increase           Increase           Increase
                                   (Decrease)         (Decrease)         (Decrease)         (Decrease)
                                     Due to                                Due to
                              Volume         Rate       Total        Volume       Rate         Total
                              ------         ----       -----        ------       ----         -----
                                                       (Dollars in Thousands)
<S>                          <C>          <C>          <C>          <C>          <C>          <C>
Interest-earning assets:
  Loans receivable           $(1,839)     $   (90)     $(1,929)     $   953      $   304      $ 1,257
  Securities                     (82)        (293)        (375)         417           32          449
  FHLB stock                      --          (40)         (40)          73           10           83
  Other interest-
     earning assets              422         (207)         215           16           38           54
                             -------      -------      -------      -------      -------      -------
  Total interest-
     earning assets          $(1,499)     $  (630)     $(2,129)     $ 1,459      $   384      $ 1,843
                             =======      =======      =======      =======      =======      =======

Interest-bearing
  liabilities:
     Savings                 $    (7)     $   (13)     $   (20)     $    (5)     $     2      $    (3)
     Money market                 23         (244)        (221)        (163)         128          (35)
     NOW                           7            4           11           (3)          (2)          (5)
     Time deposits               559          (96)         463          661          632        1,293
     Borrowed funds           (1,256)        (697)      (1,953)         645          744        1,389
                             -------      -------      -------      -------      -------      -------
  Total interest-
     bearing
     liabilities             $  (674)     $(1,046)     $(1,720)     $ 1,135      $ 1,504      $ 2,639
                             =======      =======      =======      =======      =======      =======

Net interest income                                    $  (409)                               $  (796)
                                                       =======                                =======
</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 improved its  liquidity  position by increasing
cash and investments while reducing balances in rate sensitive jumbo deposits.

A 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, 2001, First Federal's  average liquidity
ratio was 25.54%, of which 83.4% was comprised of short-term investments.

During the year ended  December 31,  2001,  there was a net increase in cash and
cash  equivalents  of $19.7  million.  The major source of funds during the year
included  proceeds from sale of long-term  fixed rate mortgages to the secondary
market of $12.7 million, proceeds from called investments and principal payments
of $18.6 million  along with a net decrease in loans  providing  $33.8  million.
These  proceeds  were used to purchase  $26.6 million in  securities,  allowed a
decrease  in  deposits  of $9.8  million  including  rate  sensitive  jumbo time
deposits,  reduced FHLB advances by $2.4 million and  purchased  $2.1 million of
Northeast Indiana Bancorp stock.

During the year ended  December 31,  2000,  there was a net increase in cash and
cash equivalents of $677,000. The major source of funds during the year included
an increase in deposits of $3.6  million,  proceeds from  maturities,  principal
payments and sales of securities  of $7.9  million,  and a net decrease in loans
providing  $6.4  million.  These  proceeds were used to fund a decrease of $13.0
million in borrowed funds, $5.1 million in securities  purchased and $731,000 to
purchase stock of Northeast Indiana Bancorp.

Under currently effective capital regulations,  savings associations must meet a
4.0% core capital  requirement and a total capital to risk weighted assets ratio
of 8.0%. At December 31, 2001,  First Federal's core capital ratio was 10.2% and
its total  capital to risk  weighted  assets ratio was 17.9%.  Therefore,  First
Federal's capital  significantly  exceeds all capital requirements  currently in
effect.

During 2001,  Northeast  Indiana Bancorp  completed its seventh stock repurchase
program  which began in August 2000;  79,000  shares of stock were  purchased in
2001 related to this program.  Northeast Indiana Bancorp  implemented its eighth
stock  repurchase  program in  September  2001.  Northeast  Indiana  Bancorp had
repurchased  63,000 of the shares authorized under the eighth repurchase plan as
of December 31, 2001.  Shares were also  repurchased  upon the exercise of stock
options in 2001 in accordance with the stock option plan agreement. As the stock
is repurchased,  it becomes treasury stock and can be used for general corporate
purposes.  At December 31, 2001 we had  1,090,016  shares of treasury  stock and
1,550,656 shares outstanding.


Impact of Inflation and Changing Prices
--------------------------------------------------------------------------------

The  Financial  Statements  have been  prepared in  accordance  with  accounting
principles generally accepted in the United States of America, 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 Northeast  Indiana  Bancorp's  operations.  Nearly all of our
assets and liabilities are financial,  unlike most  industrial  companies.  As a
result,  Northeast Indiana Bancorp's performance is directly impacted by changes
in interest rates, which are indirectly influenced by inflationary expectations.
Our 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
our performance. Changes in investment rates do not necessarily move to the same
extent as changes in the price of goods and services.




                                                                              14
<PAGE>

                           [LETTERHEAD 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,  2001  and  2000  and the  related
consolidated  statements  of income,  changes in  shareholders'  equity and cash
flows for the years ended  December 31,  2001,  2000 and 1999.  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 auditing standards generally accepted
in the  United  States of  America.  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, 2001 and 2000 and the results of its operations
and its cash  flows for the years  ended  December  31,  2001,  2000 and 1999 in
conformity with accounting principles generally accepted in the United States of
America.




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


South Bend, Indiana
February 13, 2002



15

<PAGE>

                         NORTHEAST INDIANA BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2001 and 2000
<TABLE>
<CAPTION>
                                                                          2001              2000
                                                                          ----              ----
<S>                                                                 <C>                <C>
ASSETS
Interest earning cash and cash equivalents                          $  23,541,599      $   3,208,993
Noninterest earning cash and cash equivalents                           2,750,133          3,367,273
                                                                    -------------      -------------
     Total cash and cash equivalents                                   26,291,732          6,576,266
Securities available for sale                                          39,365,026         31,226,026
Securities held to maturity (fair value: 2001 - $306,000;
  2000 - $383,000)                                                        306,000            383,000
Loans held for sale, net of unrealized losses of $3,278 in 2001         1,543,422                 --
Loans receivable, net of allowance for loan losses of
  $1,954,900 in 2001 and $2,001,172 in 2000                           162,830,186        200,151,133
Accrued interest receivable                                               753,000            895,612
Premises and equipment, net                                             2,298,102          2,244,179
Investments in limited liability partnerships                           1,546,177          1,703,839
Other assets                                                            3,460,884          3,914,247
                                                                    -------------      -------------
     Total assets                                                   $ 238,394,529      $ 247,094,302
                                                                    =============      =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits - noninterest bearing                               $   4,579,159      $   4,571,661
Savings                                                                 9,261,040          9,265,835
NOW and MMDA                                                           31,350,364         30,896,868
Time deposits                                                          91,839,448        102,071,754
                                                                    -------------      -------------
     Total deposits                                                   137,030,011        146,806,118
Borrowed funds                                                         73,966,411         72,538,670
Accrued expenses and other liabilities                                  1,117,069          1,175,757
                                                                    -------------      -------------
     Total liabilities                                                212,113,491        220,520,545

Shareholders' equity
  Preferred stock, no par value; 500,000 shares
     authorized; 0 shares issued                                               --                 --
  Common stock, $.01 par value; 4,000,000 shares
     authorized; 2,640,672 shares issued;
     2001 - 1,550,656 shares outstanding;
     2000 - 1,692,536 shares outstanding                                   26,407             26,407
  Additional paid in capital                                           28,874,771         28,817,843
  Retained earnings, substantially restricted                          12,447,813         11,213,771
  Unearned employee stock ownership plan shares                          (620,566)          (766,395)
  Unearned recognition and retention plan shares                          (12,555)           (21,196)
  Accumulated other comprehensive income (loss) net of tax                 20,979            (55,418)
  Treasury stock, at cost; 2001 - 1,090,016 shares;
     2000 - 948,136 shares                                            (14,455,811)       (12,641,255)
                                                                    -------------      -------------
     Total shareholders' equity                                        26,281,038         26,573,757
                                                                    -------------      -------------
       Total liabilities and shareholders' equity                   $ 238,394,529      $ 247,094,302
                                                                    =============      =============
</TABLE>



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

                                                                              16
<PAGE>

                        NORTHEAST INDIANA BANCORP, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                   2001             2000            1999
                                                   ----             ----            ----
Interest income
<S>                                             <C>              <C>               <C>
Loans, including fees                           $15,133,873    $ 17,062,817     $15,805,546
  Taxable securities                              1,814,294       2,227,100       1,692,134
  Non-taxable securities                             19,635          22,317          25,031
  Deposits with financial institutions              468,105         253,305         198,964
                                                -----------    ------------     -----------
     Total interest income                       17,435,907      19,565,539      17,721,675

  Interest expense
  Deposits                                        7,052,334       6,820,286       5,569,243
  Borrowed funds                                  3,712,402       5,665,012       4,276,240
                                                -----------    ------------     -----------
     Total interest expense                      10,764,736      12,485,298       9,845,483
                                                -----------    ------------     -----------
Net interest income                               6,671,171       7,080,241       7,876,192

     Provision for loan losses                      575,212       1,590,546         448,647
                                                -----------    ------------     -----------

Net interest income after provision for loan
  losses                                          6,095,959       5,489,695       7,427,545

Noninterest income
  Service charges on deposit accounts               374,350         362,188         343,928
  Net loss on sale of securities                         --         (11,886)             --
  Net gain on sale of loans                         234,034          22,531              --
  Other service charges and fees                    739,520         636,760         488,199
                                                -----------    ------------     -----------
     Total noninterest income                     1,347,904       1,009,593         832,127

Noninterest expense
  Salaries and employee benefits                  2,295,714       2,530,911       2,126,443
  Occupancy                                         462,486         440,456         408,578
  Data processing                                   631,802         571,854         530,758
  Deposit insurance premium                          26,969          27,335          74,016
  Professional fees                                 236,434         200,755         130,901
  Correspondent bank charges                        226,944         233,658         227,953
  Other expense                                     821,560         769,989         695,798
                                                -----------    ------------     -----------
     Total noninterest expense                    4,701,909       4,774,958       4,194,447
                                                -----------    ------------     -----------
Income before income taxes                        2,741,954       1,724,330       4,065,225

  Income tax expense                                772,577         440,887       1,475,288
                                                -----------    ------------     -----------
Net income                                      $ 1,969,377    $  1,283,443     $ 2,589,937
                                                ===========    ============     ===========

Basic earnings per common share                 $      1.28    $       0.80     $      1.59
                                                ===========    ============     ===========
Diluted earnings per common share               $      1.25    $       0.79     $      1.54
                                                ===========    ============     ===========
</TABLE>


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

17

<PAGE>

                        NORTHEAST INDIANA BANCORP, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  Years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>

                                                                                          Unearned                     Accumulated
                                                                                          Employee      Unearned          Other
                                                           Additional                       Stock       Recognition   Comprehensive
                                                 Common     Paid in        Retained       Ownership   and Retention   Income (Loss),
                                                 Stock      Capital        Earnings      Plan Shares   Plan Shares     Net of Tax
                                                 -----      -------        --------      -----------   -----------     ----------
<S>                                             <C>       <C>            <C>             <C>            <C>          <C>
Balance, January 1, 1999                        $24,005   $ 25,128,717   $ 12,166,794    $(1,163,800)   $(433,672)   $  44,105
Net income                                           --             --      2,589,937             --           --           --
Other comprehensive loss:
  Net change in unrealized gains (losses)
     on securities available for sale                --             --             --             --           --     (975,223)
  Total tax effect                                   --             --             --             --           --      387,376
                                                                                                                       -------
     Total other comprehensive loss                  --             --             --             --           --     (587,847)

Total comprehensive income                           --             --             --             --           --           --
Cash dividends ($.35 per share)                      --             --       (617,467)            --           --           --
Purchase of 84,020 shares of treasury stock          --             --             --             --           --           --
Issuance of 2,453 shares of treasury stock upon
  exercise of stock options                          --         (3,298)            --             --           --           --
Tax effect of stock plans                            --         16,733             --             --           --           --
17,603 shares committed to be released
  under the ESOP                                     --         93,570             --        145,475           --           --
Purchase of 550 treasury stock shares for RRP        --          1,983             --             --       (8,063)          --
Amortization of RRP contributions, net of
  5,281 RRP shares forfeited                         --             --             --             --      211,884           --
Issuance of 240,206 common shares from
  declaration of 10% stock dividend               2,402      3,495,718     (3,498,120)            --           --           --
                                                -------   ------------   ------------    -----------    ---------    ---------
Balance, December 31, 1999                       26,407     28,733,423     10,641,144     (1,018,325)    (229,851)    (543,742)
Net income                                           --             --      1,283,443             --           --           --
  Other comprehensive income:
     Net change in unrealized gains (losses)
       on securities available for sale, net of
       reclassification adjustments                  --             --             --             --           --      806,828
     Total tax effect                                --             --             --             --           --     (318,504)
                                                                                                                    ----------
       Total other comprehensive income              --             --             --             --           --      488,324

Total comprehensive income                           --             --             --             --           --           --
Cash dividends ($.41 per share)                      --             --       (710,816)            --           --           --
Purchase of 64,922 shares of treasury stock          --             --             --             --           --           --
Issuance of 4,422 shares of treasury stock upon
  exercise of stock options                          --         (5,942)            --             --           --           --
30,500 shares committed to be released
  under the ESOP                                     --         90,233             --        251,930           --           --
Purchase of 500 treasury stock shares for RRP        --            129             --             --       (5,656)          --
Amortization of RRP contributions, net of
  984 RRP shares forfeited                           --             --             --             --      214,311           --
                                                -------   ------------   ------------    -----------    ---------    ---------
Balance, December 31, 2000                       26,407     28,817,843     11,213,771       (766,395)     (21,196)     (55,418)
Net income                                           --             --      1,969,377             --           --           --
Other comprehensive income:
  Net change in unrealized gains (losses)
     on securities available for sale                --             --             --             --           --      128,141
  Total tax effect                                   --             --             --             --           --      (51,744)
                                                                                                                     ---------
     Total other comprehensive income                --             --             --             --           --       76,397

Total comprehensive income                           --             --             --             --           --           --
Cash dividends ($.45 per share)                      --             --       (735,335)            --           --           --
Purchase of 169,492 shares of treasury stock         --             --             --             --           --           --
Issuance of 27,612 shares of treasury stock
upon exercise of stock options                       --        (35,474)            --             --           --           --
Tax effect of stock plans                            --         24,064             --             --           --           --
17,588 shares committed to be released
  under the ESOP                                     --         68,338             --        145,829           --           --
Amortization of RRP contributions                    --             --             --             --        8,641           --
                                                -------   ------------   ------------    -----------    ---------    ---------
Balance, December 31, 2001                      $26,407   $ 28,874,771   $ 12,447,813    $  (620,566)   $ (12,555)   $  20,979
                                                =======   ============   ============    ===========    =========    =========
</TABLE>


<TABLE>
<CAPTION>
                                                                    Total
                                                   Treasury      Shareholders'
                                                    Stock           Equity
                                                    -----           ------
<S>                                              <C>             <C>
Balance, January 1, 1999                          $(10,761,513)   $ 25,004,636
Net income                                                  --       2,589,937
Other comprehensive loss:
  Net change in unrealized gains (losses)
     on securities available for sale                       --
  Total tax effect                                          --

     Total other comprehensive loss                         --        (587,847)
                                                                  ------------
Total comprehensive income                                  --       2,002,090
Cash dividends ($.35 per share)                             --        (617,467)
Purchase of 84,020 shares of treasury stock         (1,166,525)     (1,166,525)
Issuance of 2,453 shares of treasury stock upon
  exercise of stock options                             27,114          23,816
Tax effect of stock plans                                   --          16,733
17,603 shares committed to be released
  under the ESOP                                            --         239,045
Purchase of 550 treasury stock shares for RRP            6,080              --
Amortization of RRP contributions, net of
  5,281 RRP shares forfeited                           (58,913)        152,971
Issuance of 240,206 common shares from
  declaration of 10% stock dividend                         --              --
                                                  ------------    ------------
Balance, December 31, 1999                         (11,953,757)     25,655,299
Net income                                                  --       1,283,443
  Other comprehensive income:
     Net change in unrealized gains (losses)
       on securities available for sale, net of
       reclassification adjustments                         --
     Total tax effect                                       --

       Total other comprehensive income                     --         488,324
                                                                  ------------
Total comprehensive income                                  --       1,771,767
Cash dividends ($.41 per share)                             --        (710,816)
Purchase of 64,922 shares of treasury stock           (730,927)       (730,927)
Issuance of 4,422 shares of treasury stock upon
  exercise of stock options                             48,879          42,937
30,500 shares committed to be released
  under the ESOP                                            --         342,163
Purchase of 500 treasury stock shares for RRP            5,527              --
Amortization of RRP contributions, net of
  984 RRP shares forfeited                             (10,977)        203,334
                                                  ------------    ------------
Balance, December 31, 2000                         (12,641,255)     26,573,757
Net income                                                  --       1,969,377
Other comprehensive income:
  Net change in unrealized gains (losses)
     on securities available for sale                       --
  Total tax effect                                          --

     Total other comprehensive income                       --          76,397
                                                                  ------------
Total comprehensive income                                  --       2,045,774
Cash dividends ($.45 per share)                             --        (735,335)
Purchase of 169,492 shares of treasury stock        (2,118,144)     (2,118,144)
Issuance of 27,612 shares of treasury stock
upon exercise of stock options                         303,588         268,114
Tax effect of stock plans                                   --          24,064
17,588 shares committed to be released
  under the ESOP                                            --         214,167
Amortization of RRP contributions                           --           8,641
                                                  ------------    ------------
Balance, December 31, 2001                        $(14,455,811)   $ 26,281,038
                                                  ============    ============
</TABLE>




       The accompanying notes are an integral part of these consolidated
                             financial statements.
                                                                              18
<PAGE>




                        NORTHEAST INDIANA BANCORP, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                              2001                2000               1999
                                                                              ----                ----               ----
<S>                                                                      <C>                <C>                 <C>
Cash flows from operating activities
  Net income                                                              $  1,969,377      $   1,283,443      $   2,589,937
  Adjustments to reconcile net income
     to net cash from operating activities
       Depreciation and amortization                                           409,445            392,626            239,731
       Provision for loan losses                                               575,212          1,590,546            448,647
       Net (gain) loss on sale of:
         Foreclosed real estate and repossessed assets                         (26,760)            68,474             13,925
         Premises and equipment                                                  4,429             14,251               (160)
         Securities available for sale                                              --             11,886                 --
         Loans held for sale                                                  (234,034)           (22,531)                --
       Originations of loans held for sale                                 (13,962,342)        (1,158,650)                --
       Proceeds from loans sold                                             12,652,954          1,181,181                 --
       Reduction of obligation under ESOP                                      214,167            342,163            239,045
       Amortization of RRP                                                       8,641            203,334            152,971
       Net change in:
         Other assets                                                            4,128         (1,331,881)          (114,685)
         Accrued interest receivable                                           142,612            (55,645)          (352,574)
         Accrued expenses and other liabilities                                (58,688)            49,750            121,908
                                                                          ------------      -------------      -------------
           Total adjustments                                                  (270,236)         1,285,504            748,808
                                                                          ------------      -------------      -------------
             Net cash from operating activities                              1,699,141          2,568,947          3,338,745

Cash flows from investing activities
  Net decrease in interest-bearing deposits in financial institutions               --            100,000                 --
  Purchases of securities available for sale                               (26,559,506)        (5,129,734)       (25,002,756)
  Proceeds from maturities and principal payments of:
     Securities available for sale                                          18,549,112            393,361          4,539,207
     Securities held to maturity                                                77,000             73,463             71,913
  Proceeds from sale of securities available for sale                               --          7,479,825                 --
  Purchases of loans                                                           (79,997)        (1,006,837)        (2,400,000)
  Proceeds from sale of participation loans                                  2,300,000                 --            273,049
  Net change in loans                                                       33,773,116          6,396,582        (20,932,437)
  Proceeds from sale of foreclosed real estate and
     repossessed assets                                                      1,200,931            533,682            170,261
  Expenditures on premises and equipment                                      (310,600)          (213,296)          (244,245)
  Proceeds from sale of premises and equipment                                      --                600                350
                                                                          ------------      -------------      -------------
           Net cash from investing activities                               28,950,056          8,627,646        (43,524,658)
Cash flows from financing activities
  Net change in deposits                                                    (9,776,107)         3,594,525         19,876,011
  Advances from FHLB                                                        29,000,000        149,000,000        101,000,000
  Repayment of FHLB advances                                               (31,399,663)      (162,099,085)       (82,598,967)
  Payments of demand notes                                                    (175,000)          (465,000)          (641,250)
  Net change in other borrowed funds                                         4,002,404            848,836          3,913,861
  Dividends paid                                                              (735,335)          (710,816)          (617,467)
  Purchase of treasury stock                                                (2,118,144)          (730,927)        (1,166,525)
  Sale of treasury stock                                                       268,114             42,937             23,816
                                                                          ------------      -------------      -------------
           Net cash from financing activities                              (10,933,731)       (10,519,530)        39,789,479
                                                                          ------------      -------------      -------------
Net change in cash and cash equivalents                                     19,715,466            677,063           (396,434)
Cash and cash equivalents at beginning of year                               6,576,266          5,899,203          6,295,637
                                                                          ------------      -------------      -------------
Cash and cash equivalents at end of year                                  $ 26,291,732      $   6,576,266      $   5,899,203
                                                                          ============      =============      =============
Cash paid for:
  Interest                                                                $ 10,815,628      $  12,540,501      $   9,754,294
  Income taxes                                                                 727,300            851,975          1,442,300
Non-cash transactions:
  Investment in obligation relative to limited partnership                $         --      $     500,000      $          --
  Transfer from loans to other real estate and repossessed assets              752,616          1,263,152            122,474

</TABLE>


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

19

<PAGE>

                         NORTHEAST INDIANA BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 2001, 2000 and 1999


Note 1 - Summary Of Significant Accounting Policies
--------------------------------------------------------------------------------

Nature of Operations and Principles of Consolidation: The consolidated financial
statements include the accounts of Northeast Indiana Bancorp,  Inc.  ("Northeast
Indiana  Bancorp") and its wholly-owned  subsidiary,  First Federal Savings Bank
("First Federal") and its wholly owned subsidiary  Northeast Indiana  Financial,
Inc.  ("Northeast  Indiana  Financial"),  together referred to as "the Company".
Northeast  Indiana  Bancorp was  organized  for the purpose of owning all of the
outstanding stock of First Federal Savings Bank.  Intercompany  transactions and
balances have been eliminated in consolidation.

The primary source of income for Northeast Indiana Bancorp is the origination of
commercial and  residential  real estate loans in  northeastern  Indiana.  Loans
secured by real estate mortgages comprise  approximately 83% and 81% of the loan
portfolio  at  December  31,  2001  and  2000,  and  are  primarily  secured  by
residential mortgages.

Use of Estimates: To prepare the consolidated financial statements in conformity
with accounting  principles  generally accepted in the United States of America,
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
allowance  for  loan  losses  and  fair  values  of  financial  instruments  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  securities  sold  under  agreements  to
repurchase with original maturities of 90 days or less.

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 in other comprehensive  income
or loss and shareholders'  equity,  net of tax. Other securities such as Federal
Home Loan Bank stock are carried at cost.

Interest income includes amortization of purchase premium or discount. Gains and
losses on sales are based on the amortized cost of the security sold. Securities
are written down to fair value when a decline in fair value is not temporary.

Loans:  Loans  that  management  has the  intent  and  ability  to hold  for the
foreseeable  future or until  maturity or payoff are  reported at the  principal
balance outstanding, net of unearned interest, deferred loan fees and costs, and
an allowance  for loan losses.  Loans held for sale are reported at the lower of
cost or market, on an aggregate basis.

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 the loan is
impaired or payments are past due over 90 days.  Payments received on such loans
are reported as principal reductions.

Allowance  for Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance for probable credit losses, increased by the provision for loan losses
and decreased by charge-offs less recoveries. Management estimates the allowance
balance required using past loan loss  experience,  the nature and volume of 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 losses
are charged against the allowance when management believes the  uncollectibility
of a loan balance is confirmed.


                                                                              20
<PAGE>


Note 1 - Summary Of Significant Accounting Policies (Continued)
--------------------------------------------------------------------------------

A loan is  impaired  when full  payment  under the loan  terms is not  expected.
Impairment  is evaluated in total for  smaller-balance  loans of similar  nature
such as  residential  mortgage,  consumer,  and  credit  card  loans,  and on an
individual loan basis for other loans.  If a loan is impaired,  a portion of the
allowance is allocated so that the loan is reported,  net, at the present  value
of  estimated  future cash flows using the loan's  existing  rate or at the fair
value of collateral if repayment is expected solely from the  collateral.  Loans
are evaluated  for  impairment  when payments are delayed,  typically 90 days or
more, or when it is probable that all principal and interest amounts will not be
collected according to the original terms of the loan.

Foreclosed  Assets:Assets  acquired  through or instead of loan  foreclosure are
initially recorded at the lower of the loan balance or fair value when acquired,
establishing a new cost basis. If the value subsequently  declines,  a valuation
allowance is recorded  through  expense.  Costs after  acquisition are expensed.
Foreclosed assets totaled $302,629 and $724,184 at December 31, 2001 and 2000.

Premises and  Equipment:  Land is carried at cost.  Premises and  equipment  are
stated at cost less  accumulated  depreciation.  Depreciation  is computed  over
asset useful lives on the straight line basis.

Long-term Assets:  These assets are reviewed for impairment when events indicate
their  carrying  amount may not be  recoverable  from future  undiscounted  cash
flows. If impaired, the assets are recorded at discounted amounts.

Securities Sold Under  Repurchase  Agreements:Substantially  all securities sold
under repurchase  agreements  represent  amounts advanced by various  customers.
Securities  are  pledged to cover  these  liabilities,  which are not covered by
federal deposit insurance.

Stock Compensation:  Employee  compensation  expense under stock option plans is
reported if options  are granted  below  market  price at grant date.  Pro forma
disclosures of net income and earnings per common share are shown using the fair
value method of SFAS No. 123 to measure  expense for options granted after 1994,
using an option pricing model to estimate fair value.

Income Taxes: Income tax expense is the total of the current year income tax due
or refundable  and the change in deferred tax assets and  liabilities.  Deferred
tax assets and liabilities are the expected future tax amounts for the temporary
differences  between  carrying  amounts and tax bases of assets and liabilities,
computed  using enacted tax rates.  A valuation  allowance,  if needed,  reduces
deferred tax assets to the amount expected to be realized.

Employee  Stock  Ownership  Plan: The cost of shares issued to the ESOP, but not
yet allocated to participants,  is shown as a reduction of shareholders' equity.
Compensation  expense  is  based  on the  market  price  of  shares  as they are
committed to be released to  participant  accounts.  Dividends on allocated ESOP
shares reduce retained  earnings;  dividends on unearned ESOP shares reduce debt
and accrued interest.

Financial Instruments: Financial instruments include credit instruments, such as
commitments to make loans and standby letters of credit, issued to meet customer
financing  needs.  The face amount for these items  represents  the  exposure to
loss, before considering customer collateral or ability to repay. Such financial
instruments are recorded when they are funded.

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares  outstanding  during the period.
ESOP and RRP shares  are  considered  outstanding  for this  calculation  unless
unearned.  Diluted  earnings  per common share  includes the dilutive  effect of
additional potential common shares issuable under stock options.

Stock  Dividends:   Common  share  amounts  related  to  the  ESOP  plan,  stock
compensation  plans and earnings and  dividends per share are restated for stock
dividends.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive   income  (loss).   Other  comprehensive  income  (loss)  includes
unrealized gains and losses on securities  available for sale, net of tax, which
are also recognized as separate components of shareholders' equity.


21

<PAGE>


Note 1 - Summary Of Significant Accounting Policies(Continued)
--------------------------------------------------------------------------------

Industry  Segment:  Northeast  Indiana  Bancorp and its subsidiary are primarily
organized  to operate in the banking  industry.  Substantially  all revenues and
services are derived from banking products and services in northeastern Indiana.
While Northeast Indiana Bancorp's chief decision makers monitor various products
and services, operations are managed and financial performance is evaluated on a
company-wide  basis.  Accordingly,  all of Northeast  Indiana  Bancorp's banking
operations  are  considered  by  management  to be  aggregated  in one  business
segment.

New Accounting  Pronouncements:  A new accounting standard requires all business
combinations  to be recorded  using the purchase  method of  accounting  for any
transaction  initiated  after June 30,  2001.  Under the  purchase  method,  all
identifiable  tangible and  intangible  assets and  liabilities  of the acquired
company must be recorded at fair value at date of acquisition, and the excess of
cost  over  fair  value  of  net  assets   acquired  is  recorded  as  goodwill.
Identifiable  intangible  assets must be separated from  goodwill.  Identifiable
intangible  assets with finite useful lives will be amortized  under another new
standard,  whereas goodwill, both amounts previously recorded and future amounts
purchased,  will cease  being  amortized  starting  in 2002.  Annual  impairment
testing will be required  for goodwill  with  impairment  being  recorded if the
carrying  amount of goodwill  exceeds its implied fair value.  Adoption of these
standards  on January 1, 2002 will not have a material  effect on the  Company's
consolidated financial statements.

Loss  Contingencies:  Loss  contingencies,  including  claims and legal  actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood  of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there now are such matters that will have
a material effect on the Company's consolidated financial statements.

Dividend  Restriction:  Banking  regulations require maintaining certain capital
levels and may limit the dividends  paid by First  Federal to Northeast  Indiana
Bancorp or by Northeast Indiana Bancorp to shareholders.

Fair Values 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.

                                                                              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 - 2001
     U.S. Government agencies     $ 3,995,755     $  49,295      $         --      $ 4,045,050
     Mutual funds                     898,857            --                --          898,857
     Mortgage-backed               25,249,244       100,758           (48,546)      25,301,456
     States and political
       subdivisions                   268,906         2,257                --          271,163
     FHLB Stock                     4,913,000            --                --        4,913,000
     Equity                         4,004,530        10,000           (79,030)       3,935,500
                                  -----------     ---------      ------------      -----------

                                  $39,330,292     $ 162,310      $   (127,576)     $39,365,026
                                  ===========     =========      ============      ===========

Available for sale - 2000
     U.S. Government agencies     $18,408,303     $      --      $    (49,463)     $18,358,840
     Mutual funds                     865,598            --                --          865,598
     Mortgage-backed                6,903,937            --           (40,932)       6,863,005
     States and political
       subdivisions                   228,595            --            (3,012)         225,583
     FHLB Stock                     4,913,000            --                --        4,913,000
                                  -----------     ---------      ------------      -----------
                                  $31,319,433     $      --      $    (93,407)     $31,226,026
                                  ===========     =========      ============      ===========

Held to maturity - 2001
     States and political
       subdivisions               $   191,000     $      --      $         --      $   191,000
     Other debt securities            115,000            --                --          115,000
                                  -----------     ---------      ------------      -----------
                                  $   306,000     $      --      $         --      $   306,000
                                  ===========     =========      ============      ===========

Held to maturity - 2000
     States and political
       subdivisions               $   268,000     $      --      $         --      $   268,000
     Other debt securities            115,000            --                --          115,000
                                  -----------     ---------      ------------      -----------
                                  $   383,000     $      --      $         --      $   383,000
                                  ===========     =========      ============      ===========
</TABLE>


23

<PAGE>



Note 2 - Securities (Continued)
--------------------------------------------------------------------------------

Contractual  maturities  of debt  securities  at year end 2001 were as  follows.
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                                      $ 3,995,755      $ 4,045,050      $     --      $     --
Due from one to five years                                        20,139           20,428       306,000       306,000
Due from five to ten years                                       248,767          250,735            --            --
Mortgage backed securities                                    25,249,244       25,301,456            --            --
                                                             -----------      -----------      --------      --------
                                                             $29,513,905      $29,617,669      $306,000      $306,000
                                                             ===========      ===========      ========      ========
</TABLE>

Sales of securities available for sale were as follows:

<TABLE>
<CAPTION>
                                                                  2001               2000              1999
                                                                  ----               ----              ----
<S>                                                             <C>                <C>               <C>
Proceeds                                                        $    --            $ 7,479,825       $     --
Gross gains                                                          --                     --             --
Gross losses                                                         --                (11,886)            --

</TABLE>


Securities pledged at year end 2001 and 2000 had a carrying value of $10,588,000
and  $9,549,000,  and were pledged to secure  securities  sold under  repurchase
agreements and Federal Home Loan Bank advances.


Note 3 - Loans Receivable, Net
--------------------------------------------------------------------------------
Year end loans were as follows:

<TABLE>
<CAPTION>

                                                      2001                2000
                                                      ----                ----
<S>                                              <C>                 <C>
Mortgage
  Secured by one-to-four family residences       $  95,777,368       $ 117,682,798
  Secured by other properties                       23,823,754          28,896,465
  Construction - residential                         4,561,695           4,264,083
  Construction - nonresidential                      1,801,401           2,923,481
Automobile                                          12,787,567          14,098,321
Credit card                                          2,431,911           2,652,431
Commercial                                          14,258,860          20,729,529
Home equity and second mortgage                      8,611,814           8,212,495
Other consumer                                       3,879,546           4,822,030
                                                 -------------       -------------
                                                   167,933,916         204,281,633
Net of:
  Loans in process                                    (641,058)           (155,467)
  Undisbursed portion of construction loans         (2,216,913)         (1,745,399)
  Net deferred loan origination fees                  (290,859)           (228,462)
  Allowance for loan losses                         (1,954,900)         (2,001,172)
                                                 -------------       -------------
    Loans receivable, net                        $ 162,830,186       $ 200,151,133
                                                 =============       =============
</TABLE>

                                                                              24

<PAGE>

Note 3 - Loans Receivable, Net(Continued)
--------------------------------------------------------------------------------
Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>

                                                             2001             2000              1999
                                                             ----             ----              ----

<S>                                                      <C>               <C>               <C>
  Balance at beginning of year                           $ 2,001,172       $ 1,766,700       $ 1,454,000
  Provision charged to income                                575,212         1,590,546           448,647
  Charge-offs                                               (835,462)       (1,410,039)         (185,896)
  Recoveries                                                 213,978            53,965            49,949
                                                         -----------       -----------       -----------
  Balance at end of year                                 $ 1,954,900       $ 2,001,172       $ 1,766,700
                                                         ===========       ===========       ===========

Impaired loans were as follows:
                                                                               2001              2000
                                                                               ----              ----
  Year-end loans with no allocated allowance
     for loan losses                                                       $   623,820       $ 3,702,127
  Year-end loans with allocated allowance
     for loan losses                                                         5,318,029         4,770,889
                                                                           -----------       -----------
  Total                                                                    $ 5,941,849       $ 8,473,016
                                                                           ===========       ===========
  Amount of the allowance for loan losses allocated                        $ 1,049,596       $   912,313

  Average of impaired loans during the year                                  5,493,961         3,514,345

  Interest income recognized during impairment                                 392,943            18,748
  Cash-basis interest income recognized                                        373,510            18,748
</TABLE>




  Note 4 - Premises And Equipment, Net
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

  Year end premises and equipment were as follows:
                                                                                2001              2000
                                                                                ----              ----

  <S>                                                                      <C>               <C>
  Land                                                                     $   458,331       $   458,331
  Buildings and leasehold improvements                                       2,009,348         1,942,648
  Furniture, fixtures and equipment                                          1,333,555         1,154,469
                                                                           -----------       -----------
   Total cost                                                                3,801,234         3,555,448
  Accumulated depreciation and amortization                                 (1,503,132)       (1,311,269)
                                                                           -----------       -----------
                                                                           $ 2,298,102       $ 2,244,179
                                                                           ===========       ===========
</TABLE>


Depreciation  expense was  $252,000,  $247,000 and  $217,000 for 2001,  2000 and
1999.


25

<PAGE>

Note 5 - Deposits
--------------------------------------------------------------------------------

Time deposits of $100,000 or more were  $47,207,000  and $59,331,000 at year end
2001 and 2000.

Scheduled maturities of time deposits for the next five years were as follows:


                        2002                 $69,852,686
                        2003                  16,702,791
                        2004                   3,562,907
                        2005                   1,597,498
                        2006                     123,566
                                             -----------
                                             $91,839,448
                                             ===========


Note 6 - Borrowed Funds
--------------------------------------------------------------------------------

Year end borrowed funds were as follows:
                                                    2001            2000
                                                    ----            ----

Federal Home Loan Bank (FHLB) advances          $65,000,000     $67,399,663
Securities sold under repurchase agreements       8,966,411       4,964,007
Demand notes                                             --         175,000
                                                -----------     -----------
                                                $73,966,411     $72,538,670
                                                ===========     ===========

FHLB  advances  have fixed and  variable  interest  rates  ranging from 3.60% to
6.88%. Scheduled maturities and the weighted average interest rate by maturities
at year end 2001 were as follows:

                          2003     $12,000,000         5.09%
                          2004       2,000,000         5.13
                          2007      10,000,000         6.65
                          2008       5,000,000         4.92
                    Thereafter      36,000,000         5.23
                                   -----------
                                   $65,000,000         5.40%
                                   ===========         ====

FHLB  advances  are  secured  by  FHLB  stock,   eligible   mortgage  loans  and
specifically  pledged securities.  At December 31, 2001 and 2000, in addition to
FHLB stock,  collateral  of  approximately  $97.9  million and $124  million was
pledged to the FHLB to secure advances outstanding.

In  addition,  $51,000,000  of the  advances  outstanding  at December  31, 2001
contained  options with dates ranging from January 9, 2002 to December 21, 2005,
whereby  the  interest  rate may be  adjusted  by the  FHLB,  at which  time the
advances may be repaid at the option of First Federal without penalty.


                                                                             26
<PAGE>

Note 6 - Borrowed Funds(Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

An analysis of securities sold under agreements to repurchase is as follows:

                                                         2001             2000
                                                         ----             ----
<S>                                                 <C>              <C>
Highest month end balance                           $ 16,250,277     $ 18,271,163
Average balance                                        7,170,023        7,305,166
Weighted average interest rate during the period            2.99%            5.89%
Weighted average interest rate at end of period             1.60%            5.77%
</TABLE>


Securities  with amortized cost of  approximately  $9,000,000 and $5,000,000 and
fair values of  approximately  $9,122,000 and  $5,006,000,  at year end 2001 and
2000 were pledged as collateral for securities sold under repurchase agreements.

At year end 2001 and 2000,  securities  sold under  agreements to repurchase had
maturities of one day.

The  demand  notes  relate  to  investments  in  limited  partner  interests  in
partnerships formed for the construction, ownership and management of affordable
housing projects. The total original amount of the notes was $1,900,000 for 2001
and  2000,  with  $1,900,000  and  $1,725,000  funded at year end 2001 and 2000.
Payments were required  within five days of written  demand;  however,  the note
could  be  prepaid  in full or in part at the  option  of the  maker at any time
without penalty. The obligation to make payment was absolute and unconditional.


Note 7 - Employee Benefits
--------------------------------------------------------------------------------

Employee Pension Plan: First Federal 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 First Federal  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. Expense for 2001, 2000 and 1999 was approximately
$109,000, $137,000 and $108,000.

401(k) Plan:  Northeast  Indiana Bancorp 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.  Northeast  Indiana Bancorp matches 50% of
elective  deferrals on the first 6% of the participant's  compensation.  Expense
for 2001, 2000 and 1999 was approximately $42,000, $41,000 and $39,000.

Supplemental  Retirement Plans: First Federal has a supplemental retirement plan
for the  President  and a deferred  compensation  plan for certain  directors of
First Federal.  First Federal 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  $380,000 and $320,000 at year-end  2001 and 2000.  The
cost of the plans was  approximately  $114,000,  $162,000  and $68,000 for 2001,
2000 and 1999.

First Federal has purchased  insurance on the lives of the  participants  in the
supplemental  retirement  plan and the  deferred  compensation  plan with  First
Federal as  beneficiary.  The cash  surrender  value of the life  insurance  was
approximately  $1,983,000  and  $1,889,000 at year-end 2001 and 2000. The income
derived  from the  investment  in life  insurance  included in other  income was
approximately $94,000, $86,000 and $42,000 for 2001, 2000 and 1999.

Employee  Stock  Ownership  Plan  (ESOP):An  ESOP  exists  for  the  benefit  of
substantially  all  employees.  Contributions  to the ESOP are made by Northeast
Indiana  Bancorp  and  are  determined  by  the  Board  of  Directors  at  their
discretion.  The  contributions may be made in the form of cash or common stock.
The annual  contributions  may not be greater  than the  amount  deductible  for
federal  income tax  purposes  and cannot  cause  Northeast  Indiana  Bancorp to
violate regulatory capital requirements.


27

<PAGE>

Note 7 - Employee Benefits(Continued)
--------------------------------------------------------------------------------

To fund the plan, the ESOP borrowed  $1,745,700  from Northeast  Indiana Bancorp
for the  purpose  of  purchasing  211,261  shares of stock at $8.26  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 Northeast Indiana Bancorp's common stock purchased with the proceeds and will
be repaid by the ESOP with funds from First Federal's  contributions to the ESOP
and earnings on ESOP assets.

Shares  are  allocated  among  participants  each  December  31 on the  basis of
principal  repayments  made  by the  ESOP on the  loan  from  Northeast  Indiana
Bancorp, according to each participant's relative compensation.

Contributions,  including  dividends on unearned ESOP shares, were approximately
$146,000 during 2001, $252,000 for 2000 and $145,000 for 1999. ESOP compensation
expense was approximately  $214,000,  $342,000,  and $239,000 for 2001, 2000 and
1999.


ESOP shares at year end are as follows:
                                           2001          2000
                                           ----          ----

Allocated shares                          110,860       87,706
Shares released for allocation             17,588       30,500
Unreleased shares                          75,129       92,717
Shares vested and withdrawn                 7,684          338
                                         --------     --------

     Total shares                         211,261      211,261
                                         ========     ========

     Fair value of unreleased shares     $939,113     $903,991
                                         ========     ========

Recognition  and Retention  Plan (RRP):  The RRP provides for issue of shares to
directors,  officers and employees. The maximum total shares available under the
RRP was 105,620, and 17,126 shares are available for future grants. During 1999,
550 shares were  awarded at $14.66 and in 2000,  an  additional  500 shares were
awarded at $11.31.  Also in 2000 and 1999,  984 and 5,281 shares were  forfeited
and  added  to  treasury  stock.  The  expense   associated  with  the  RRP  was
approximately $9,000, $203,000 and $153,000 in 2001, 2000 and 1999.



Note 8 - Income Taxes
--------------------------------------------------------------------------------
Income tax expense is summarized as follows:

                          2001           2000            1999
                          ----           ----            ----

Current federal        $ 703,715      $ 527,427      $ 1,301,712
Deferred federal        (130,649)      (163,189)        (182,585)
Current state            203,734        108,667          384,969
Deferred state            (4,223)       (32,018)         (28,808)
                       ---------      ---------      -----------
Income tax expense     $ 772,577      $ 440,887      $ 1,475,288
                       =========      =========      ===========





                                                                              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>
                                                     2001           2000             1999
                                                     ----           ----             ----
<S>                                               <C>             <C>             <C>
Income taxes at statutory rate                    $ 932,264       $ 586,272       $ 1,382,177
Tax effect of:
  State tax, net of federal income tax effect       131,677          50,588           235,066
  Low income housing credit                        (204,100)       (173,465)         (138,000)
  Tax exempt income                                 (73,637)        (36,828)          (22,791)
  Other, net                                        (13,627)         14,320            18,836
                                                  ---------       ---------       -----------
     Income tax expense                           $ 772,577       $ 440,887       $ 1,475,288
                                                  =========       =========       ===========

Effective tax rate                                     28.2%           25.6%             36.3%
</TABLE>


The  components  of the net deferred tax asset  recorded in the balance sheet at
year end are as follows:

<TABLE>
<CAPTION>

                                                           2001             2000
                                                           ----             ----
<S>                                                    <C>              <C>
Deferred tax assets
  Deferred compensation                                $   150,713      $   126,846
  Bad debts                                                682,302          633,174
  Deferred loan fees                                       115,209           90,494
  Unearned compensation                                     85,278           85,270
  Unrealized loss on securities available for sale              --           37,989
  Interest on non-accrual loans                             65,061           65,751
  Other                                                      6,010               --
                                                       -----------      -----------
                                                         1,104,573        1,039,524
Deferred tax liabilities
  Depreciation                                            (109,467)        (104,590)
  Unrealized gain on securities available for sale         (13,755)              --
  Low income housing partnership                          (102,169)         (90,707)
  Other                                                         --          (48,173)
                                                       -----------      -----------
                                                          (225,391)        (243,470)
                                                       -----------      -----------

  Net deferred tax asset                               $   879,182      $   796,054
                                                       ===========      ===========
</TABLE>


Retained  earnings at  December  31, 2001 and 2000  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  $442,000  at  December  31,  2001  and  2000.
Legislation passed in August 1997 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,  was  $276,000
originally and is payable over a six-year period that began in 1998.


29

<PAGE>

Note 9 - Regulatory Matters
--------------------------------------------------------------------------------

First  Federal 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.

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to represent overall financial condition.  If only adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
under-capitalized,  capital  distributions  are limited,  as is asset growth and
expansion, and capital restoration plans are required.

At year end,  actual First  Federal  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
                                    ------     -----      ------      -----    ------       -----
2001
----
<S>                               <C>           <C>     <C>            <C>    <C>           <C>
Total capital                     $    25.6     17.9%   $    11.4      8.0%   $    14.3     10.0%
  (to risk weighted assets)
Tier 1 (core) capital                  24.3     17.0          5.7      4.0          8.6      6.0
  (to risk weighted assets)
Tier 1 (core) capital                  24.3     10.2          9.5      4.0         11.9      5.0
  (to adjusted total assets)
Tier 1 (core) capital                  24.3     10.0          9.7      4.0         12.1      5.0
  (to average assets)

2000
----

Total capital
  (to risk weighted assets)       $    25.7     16.3%   $    12.6      8.0%   $    15.8     10.0%
Tier 1 (core) capital
  (to risk weighted assets)            24.0     15.2          6.3      4.0          9.5      6.0
Tier 1 (core) capital
  (to adjusted total assets)           24.0      9.7          9.9      4.0         12.3      5.0
Tier 1 (core) capital
  (to average assets)                  24.0      9.4         10.2      4.0         12.7      5.0
</TABLE>


First Federal was categorized as well capitalized at year end 2001 and 2000

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.  First Federal is currently a Tier 1
institution.  Accordingly,  First  Federal can make,  without  prior  regulatory
approval,  distributions  during a calendar  year up to 100% of its retained net
income for the calendar  year-to-date  plus retained net income for the previous
two calendar  years as long as First Federal would remain  well-capitalized,  as
defined  by  the  Office  of  Thrift   Supervision   prompt   corrective  action
regulations,  following the proposed  distribution.  Accordingly,  First Federal
must request prior  regulatory  approval to pay  dividends in 2002,  until First
Federal has net income of more than  $511,000,  in which case  dividends  may be
paid for any net income exceeding $511,000.


30
<PAGE>

Note 10 - Commitments And Contingencies And Financial
Instruments With Off-Balance-Sheet Risk
--------------------------------------------------------------------------------

Some financial instruments,  such as loan commitments,  credit lines, letters of
credit, and overdraft  protection,  are issued to meet customer financing needs.
These  agreements to provide credit or to support the credit of others,  as long
as  conditions  established  in the  contract are met,  usually have  expiration
dates.  Commitments  may expire  without being used.  Off-balance-sheet  risk to
credit loss exists up to the face amount of these instruments, although material
losses  are not  anticipated.  The same  credit  policies  are used to make such
commitments as are used for loans, including obtaining collateral at exercise of
the commitment.

Financial instruments with off-balance-sheet risk were as follows at year end.

                                         2001              2000
                                         ----              ----
  Fixed rate commitments            $ 4,968,005        $ 1,185,677
  Variable rate commitments           8,028,718         10,578,435
  Credit card arrangements            3,881,939          4,904,954
  Letters of credit                     804,101            794,101


Most  loan  commitments  have  terms up to 60  days.  At year  end  2001,  fixed
commitments have contractual  interest rates ranging from 5.88% to 8.63%. Credit
card interest rates are fixed at 14.9% or 9.8%. Most variable rate  arrangements
are tied either to the national monthly median cost of funds,  prime rate or the
U.S. Treasury bill rate and have spreads between 0% and 5%.

Certain executives of the Bank have employment  contracts,  which are based upon
changes of control.  The employment  contracts provide for the payment of one to
three years worth of the officers' salaries upon a change of control.


Note 11 - Stock Options
--------------------------------------------------------------------------------

Options to buy stock are granted to directors,  officers and employees under the
stock option and incentive  plan.  Exercise price is the market price at date of
grant. The maximum option term is ten years and options vest over five years. At
year end 2001, 3,771 shares were authorized for future grants.

Statement  of  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 2001, 2000 and 1999.



31
<PAGE>

Note 11 - Stock Options(Continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                       2001           2000           1999
                                                       ----           ----           ----
<S>                                                 <C>            <C>            <C>
  Net income as reported                            $1,969,377     $1,283,443     $2,589,937
  Pro forma net income                               1,956,692      1,102,982      2,412,455
  Basic earnings per common share as reported       $     1.28     $      .80     $     1.59
  Diluted earnings per common share as reported           1.25            .79           1.54
  Pro forma basic earnings per common share               1.27            .69           1.49
  Pro forma diluted earnings per common share             1.25            .68           1.43
</TABLE>


In future years, the pro forma effect of not applying this standard may increase
as additional options are granted. Information about option grants follows:

                                       Number         Exercise       Fair Value
                                     of Options        Price         of Grants
                                     ----------        -----         ---------
   Outstanding, beginning of 1999      210,820
     Granted                             8,250       $   14.66       $   2.43
     Exercised                          (2,456)           9.71
                                       -------
   Outstanding, end of 1999            216,614
     Granted                             5,500           11.31           2.63
     Granted                             2,500           10.19           2.06
     Exercised                          (4,422)           9.71
     Forfeited                          (1,573)           9.71
                                       -------
   Outstanding, end of 2000            218,619
     Granted                             5,000           12.75           2.40
     Exercised                         (27,612)           9.71
                                       -------
   Outstanding, end of 2001            196,007
                                       =======

The fair value of options  granted during 2001, 2000 and 1999 is estimated using
the following  weighted-average  information:  risk-free interest rate of 4.32%,
6.32% and  4.76%,  expected  life of 7 years,  5.5  years and 7 years,  expected
volatility  of stock price of 22.9%,  23.5% and 22.3% and expected  dividends of
3.95%,  3.76%  and  1.92%  per  year.  Options  outstanding  at year end were as
follows:

<TABLE>
<CAPTION>
                                                   2001            2000            1999
                                                   ----            ----            ----
   <S>                                          <C>             <C>             <C>
   Number of options                              196,007         218,619         216,614
   Minimum exercise price                       $    9.71       $    9.71       $    9.71
   Maximum exercise price                           18.49           18.49           18.49
   Weighted-average exercise price                  10.23            9.99           10.06
   Weighted-average remaining option life       4.5 years       5.0 years       6.2 years
</TABLE>



There were 177,842,  159,113 and 117,232  options  exercisable at year end 2001,
2000 and 1999. The  weighted-average  exercise  price of options  exercisable at
year end 2001, 2000 and 1999 was $9.94, $9.86 and $9.78.



                                                                              32

<PAGE>

Note 12 - Related Party Transactions
--------------------------------------------------------------------------------

Certain directors and officers of First Federal 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, 2001                           $ 3,575,358
        New loans                                          257,791
        Repayments                                        (552,038)
        Changes in related parties during the year        (481,892)
                                                       -----------
   Balance - December 31, 2001                         $ 2,799,219
                                                       ===========

Related party deposits were approximately $540,000 and $553,000 at year end 2001
and 2000.

Note 13 - Fair Values Of Financial Instruments

Following  are  carrying  amounts  and  estimated  fair  values  at year end (in
thousands):

<TABLE>
<CAPTION>

                                              2 0 0 1                       2 0 0 0
                                              -------                       -------
                                       Carrying      Estimated       Carrying      Estimated
                                        Amount       Fair Value       Amount       Fair Value
                                        ------       ----------       ------       ----------
   Financial assets:
   -----------------
<S>                                    <C>            <C>            <C>            <C>
     Cash and cash equivalents         $  26,292      $  26,292      $   6,576      $   6,576
     Securities available for sale        39,365         39,365         31,226         31,226
     Securities held to maturity             306            306            383            383
     Loans held for sale                   1,543          1,543             --             --
     Loans receivable, net               162,830        170,585        200,151        201,182
     Accrued interest receivable             753            753            896            896
     Investments in limited
        liability partnerships             1,546          1,546          1,704          1,704

   Financial liabilities:
   ----------------------
     Deposits                           (137,030)      (138,668)      (146,806)      (147,743)
     Borrowed funds                      (73,966)       (73,016)       (72,539)       (72,725)
     Accrued interest payable               (235)          (235)          (286)          (286)
</TABLE>


For purposes of the above  disclosures  of estimated  fair value,  the following
assumptions  were used. The estimated fair value for cash and cash  equivalents,
accrued interest and investments in limited liability partnerships 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  value for loans  held for sale is based on market  quotes.  The
estimated  fair value for loans is based on  estimates of the rate that would be
charged for similar  loans at December  31, 2001 and 2000,  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 value for
time deposits and borrowed funds is based on estimates of the rate that would be
paid on deposits or for  borrowings  at December 31, 2001 and 2000,  applied for
the time period until  maturity.  The  estimated  fair value of other  financial
instruments and off-balance-sheet loan commitments  approximates cost and is 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  Northeast  Indiana
Bancorp  to have  disposed  of such  items at  December  31,  2001 or 2000,  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, 2001 and 2000 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, 2001 and 2000
                                                           2001             2000
                                                           ----             ----
<S>                                                    <C>             <C>
ASSETS
Cash and cash equivalents                              $   891,138     $ 1,522,353
Securities available for sale                              271,163         225,583
Loan receivable from Employee Stock Ownership Plan         727,375         872,850
Investment in subsidiary bank                           24,378,224      23,956,077
Other assets                                                22,049           5,741
                                                       -----------     -----------
Total assets                                           $26,289,949     $26,582,604
                                                       ===========     ===========
LIABILITIES
Accrued expenses                                       $     8,911     $     8,847

SHAREHOLDERS' EQUITY                                    26,281,038      26,573,757
                                                       -----------     -----------
Total liabilities and shareholders' equity             $26,289,949     $26,582,604
                                                       ===========     ===========
</TABLE>


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

<TABLE>
<CAPTION>

                         CONDENSED STATEMENTS OF INCOME
                  Years ended December 31, 2001, 2000 and 1999

                                                     2001            2000              1999
                                                     ----            ----              ----

<S>                                              <C>              <C>              <C>
Interest income                                  $    67,400      $    75,103      $    84,295
Dividends from subsidiary bank                     1,900,000        1,950,000          600,000
                                                 -----------      -----------      -----------

     Total income                                  1,967,400        2,025,103          684,295

Operating expenses                                   187,331          197,972          167,947
                                                 -----------      -----------      -----------

Income before income taxes and equity in
  undistributed earnings of subsidiary bank        1,780,069        1,827,131          516,348

Income tax benefit                                   (84,279)         (72,240)         (62,820)
                                                 -----------      -----------      -----------

Income before equity in undistributed
  earnings of subsidiary bank                      1,864,348        1,899,371          579,168

Equity in undistributed (excess distributed)
  earnings of subsidiary bank                        105,029         (615,928)       2,010,769
                                                 -----------      -----------      -----------

Net income                                       $ 1,969,377      $ 1,283,443      $ 2,589,937
                                                 ===========      ===========      ===========
</TABLE>



                                                                              34

<PAGE>

Note 14 - Parent Company Only Condensed
Financial Information(Continued)
--------------------------------------------------------------------------------

                       CONDENSED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                         2001             2000             1999
                                                         ----             ----             ----
<S>                                                  <C>              <C>              <C>
Cash flows from operating activities
  Net income                                         $ 1,969,377      $ 1,283,443      $ 2,589,937
  Adjustments to reconcile net income to cash
     from operating activities
       Equity in (undistributed) excess
         distributed earnings of subsidiary bank        (105,029)         615,928       (2,010,769)
       Change in
         Other assets                                    (15,426)          (1,899)         117,580
         Accrued expenses                                     64            3,448            1,599
                                                     -----------      -----------      -----------
           Net cash from operating activities          1,848,986        1,900,920          698,347

Cash flows from investing activities
  Repayments on loan receivable from ESOP                145,475          145,475          145,475
  Purchase of securities available for sale              (40,311)         (28,595)              --
                                                     -----------      -----------      -----------
     Net cash from investing activities                  105,164          116,880          145,475

Cash flows from financing activities
  Dividends paid                                        (735,335)        (710,816)        (617,467)
  Purchase of treasury stock                          (2,118,144)        (741,904)      (1,225,438)
  Sale of treasury stock                                 268,114           48,593           31,879
                                                     -----------      -----------      -----------
     Net cash from financing activities               (2,585,365)      (1,404,127)      (1,811,026)
                                                     -----------      -----------      -----------
Net change in cash and cash equivalents                 (631,215)         613,673         (967,204)

Cash and cash equivalents at beginning of year         1,522,353          908,680        1,875,884
                                                     -----------      -----------      -----------
Cash and cash equivalents at end of year             $   891,138      $ 1,522,353      $   908,680
                                                     ===========      ===========      ===========
</TABLE>


35

<PAGE>

Note 15 - Earnings Per Share
--------------------------------------------------------------------------------

A  reconciliation  of the numerators and  denominators of the basic earnings per
common share and diluted  earnings per common share  computations  for the years
ended December 31, is presented below.

<TABLE>
<CAPTION>
                                                       2001             2000             1999
                                                       ----             ----             ----
<S>                                                <C>              <C>              <C>
Basic Earnings Per Common Share

  Net income available to common shareholders      $ 1,969,377      $ 1,283,443      $ 2,589,937
                                                   ===========      ===========      ===========
  Weighted average common shares
     outstanding before adjustment                   1,630,709        1,731,741        1,801,800

  Less: unallocated ESOP shares                        (92,717)        (117,197)        (140,820)

  Less: non-vested RRP shares                           (1,335)         (18,258)         (36,545)
                                                     -----------      -----------      -----------

  Weighted average common shares outstanding
     for basic earnings per common share             1,536,657        1,596,286        1,624,435
                                                   ===========        =========        =========

       Basic Earnings Per Common Share             $      1.28      $       .80      $      1.59
                                                   ===========      ===========      ===========

Diluted Earnings Per Common Share

  Net income available to common
     shareholders, per above                       $ 1,969,377      $ 1,283,443      $ 2,589,937
                                                   ===========      ===========      ===========

  Weighted average common shares outstanding         1,536,657        1,596,286        1,624,435

  Add: dilutive effects of assumed conversions
    and exercises of stock options                      34,287           29,611           58,665
                                                     -----------      -----------      -----------

Weighted average common and dilutive
  shares outstanding for dilutive earnings per
  common share                                       1,570,944        1,625,897        1,683,100
                                                   ===========      ===========      ===========

Diluted Earnings Per Common Share                  $      1.25      $       .79      $      1.54
                                                   ===========      ===========      ===========
</TABLE>



Stock  options for  18,695,  19,195 and 11,880  shares of common  stock were not
considered in computing  diluted  earnings per common shares for the years ended
December 31, 2001, 2000 and 1999 because they were not dilutive.


                                                                              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 source of such
price  information was NASDAQ's monthly trade history report.  The prices do not
represent actual  transactions  and do not include retail markups,  markdowns or
commissions.

                                                                      Dividends
     Quarter Ended                          High           Low        Declared
     -------------                          ----           ---        --------
     March 31, 2000                       $ 12.31        $ 9.88        $  .100
     June 30, 2000                          11.88          9.63           .100
     September 30, 2000                     11.88         11.00           .100
     December 31, 2000                      12.00          8.50           .110

     March 31, 2001                       $ 11.50        $ 9.44        $  .110
     June 30, 2001                          13.20         10.43           .110
     September 30, 2001                     13.95         12.30           .110
     December 31, 2001                      13.90         12.50           .120


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

As of February 12, 2002, there were  approximately  shareholders of record,  not
including  those  shares  held in 467  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:


     W. Elaine Furnish
     Vice President/Controller
     Northeast Indiana Bancorp, Inc.
     100 Frontage Road
     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


INVESTOR INFORMATION
Stockholders,  investors,  and analysts interested in additional information may
contact Stephen E. Zahn, Chairman, President and CEO, Northeast Indiana Bancorp,
Inc.
<TABLE>
<CAPTION>

<S>                                  <C>                                 <C>
Corporate Office                     Special Counsel                     Independent Auditor

Northeast Indiana Bancorp, Inc.      Katten Muchin and Zavis             Crowe, Chizek and Company LLP
648 North Jefferson Street           1025 Thomas Jefferson Street, NW    330 E. Jefferson Blvd.
Huntington, Indiana 46750            East Lobby:  Suite 700              South Bend, Indiana 46624
(260) 356-3311                       Washington, DC  20007-5201
</TABLE>



37

<PAGE>

Directors And Executive Officers
Northeast Indiana Bancorp, Inc.
--------------------------------------------------------------------------------

BOARD OF DIRECTORS                         EXECUTIVE OFFICERS

Stephen E. Zahn                            Stephen E. Zahn
Chairman of the Board                      President and Chief Executive Officer
President and Chief Executive Officer
                                           Dee Ann Hammel
Dan L. Stephan                             Senior Vice President, Secretary
Past State Representative                   and Chief Operations Officer
 Indiana Legislature
Agent                                      Darrell E. Blocker
 Variable Annuity Life Insurance Company   Senior Vice President, Treasurer
                                            and Chief Financial Officer
J. David Carnes
Medical Doctor and Associate               Michael S. Zahn
 Family Practice Associates                Senior Vice President

Michael S. Zahn                            Joseph A. Byers
Senior Vice President                      Senior Vice President and
                                            Senior Trust Officer
Randall C. Rider
President
 Lime City Manufacturing Company, Inc.



Annual Meeting
--------------------------------------------------------------------------------

The Annual Meeting of Stockholders of Northeast  Indiana Bancorp,  Inc., will be
held on May 1, 2002 at 1:00 p.m. at the North location of First Federal  Savings
Bank, 100 Frontage Road, Huntington, Indiana.





                                                                              38

<PAGE>

                                  [BACK COVER]


First Federal Savings Bank
Office Locations

NORTH OFFICE                            DOWNTOWN OFFICE
100 Frontage Road                       648 N. Jefferson Street
Huntington, IN 46750                    Huntington, IN 46750
260/358-4680                            260/356-3311


SOUTH OFFICE                            Northeast Indiana Financial, Inc.
1240 S. Jefferson Street                260/358-2622
Huntington, IN 46750
260/356-5633



                     [LOGO-NORTHEAST INDIANA BANCORP, INC.]



                             WWW.FIRSTFED-NEIB.COM