INDIANA BUSINESS : Bancorp Reports Second Quarter Results of Operations

Indiana Business Bancorp (OTCBB:IBBI), the holding company for Indiana Business Bank, announced results for the three months ended June 30, 2010.

The Company recorded a net loss of ($484,678), or ($.32) per share, for the quarter. This compares to a profit of $37,907, or $.03 per share for the quarter ending June 30, 2009. The loss was primarily due to a provision expense of $706,250 charged during the 2010 quarter. The increased provision primarily related to a single commercial real estate borrowing relationship that was restructured. The underlying real estate was reappraised in June at a value substantially less than the original appraised value obtained in 2006. As a result of this new information, the book value of the restructured loan was written down to reflect the current appraised value of the real estate, underlying cash flows, and general market conditions.

Net interest income for the second quarter of 2010 declined $70,823, or 9.7%, from the same quarter of 2009. The decrease reflected the contraction of the loan portfolio at June 30, 2010 by almost $4.0 million compared to June 30, 2009. The contraction of the portfolio is in keeping with management's decision to exit relationships with customers with higher credit risk profiles. Also, many new relationships added during the year involved loans with government guaranties which were immediately sold, while retaining only 10% of this new business in the loan portfolio.

Non-interest income increased by $93,446, or 129%, in the second quarter of 2010, as compared to the quarter ending June 30, 2009. Non-interest income consists primarily of gains on SBA loan sales, service charge income and other fee income.

Non-interest expense (generally salaries and other operating expenses) in the second quarter of 2010 declined by $121,042, or 15.2%, relative to the 2009 quarter. The lower non-interest expense reflected lower salaries and benefits ($27,084) and lower FDIC insurance expense ($35,235) in the 2010 quarter.

Although loans, the largest earning asset category, decreased in 2010 from 2009, total assets moderately increased by 1.4% from $88,752,860 at June 30, 2009, to $89,968,676 at June 30, 2010. The investment portfolio decreased by 34% from $6,540,900 at June 30, 2009 to $4,318,600 at June 30, 2010 as higher yield bonds were redeemed during the year. Given the current low interest rate environment in the bond market, management has decided to invest the proceeds of these redemptions in highly liquid but low yielding interest bearing deposits.

The low interest rate environment has had some positive impact. As deposits have matured over the period, they have been replaced with lower cost funding. Management expects to continue to take advantage of these market conditions for the balance of the year.

The allowance for loan losses was $1,547,551 at June 30, 2010, which represents 2.2% of total loans. This ratio compares favorably with other banks management considers to be peers. The bank's regulatory capital ratios exceeded the amounts needed to be considered ?well capitalized? at June 30, 2010.

President and CEO, James S. Young, stated, ?We are pleased with our ability to control non-interest expense, lower our funding costs and generate non-interest income and asset growth from originating government guaranteed commercial loans. We continue to manage our non-performing assets in order to return them to performing status, by working with borrowers in restructuring or renegotiating debt, or some other satisfactory resolution. These relationships, the majority of which were originated between 2005 and 2007, have been negatively impacted by the depression of values in the real estate market. Problem loan management remains our team's number one priority.?

About Indiana Business Bancorp and Indiana Business Bank

Indiana Business Bancorp is a bank holding company whose operations are conducted through its subsidiary, Indiana Business Bank, a state-chartered, locally-owned and managed commercial bank formed for the purpose of providing highly-personalized banking services for small to medium-sized businesses, their owners and professional services firms in the Indianapolis, Indiana metropolitan area. The bank provides a full line of commercial banking loan, deposit, and cash management services that are delivered in a highly personalized manner by experienced banking professionals. The bank specializes in serving the commercial and consumer banking needs of small to medium sized businesses and their owners, and professionals located primarily throughout Central Indiana.

We routinely post important information for investors on our website, http://www.indianabb.com in the ?About? section under ?Investor Relations?. We intend to use this website as a means of providing financial and other information to investors and other interested parties. Accordingly, investors should monitor our website, in addition to following our press releases and other presentations. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Indiana Business Bank and Indiana Business Bancorp's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties which may cause actual results to differ materially from expected results, including: changes in general, regional and local economic conditions, and their effect on interest rates; the impact of the downturn in housing and the adverse conditions in the credit markets; competition among banks and other financial intermediaries within the Indianapolis metropolitan market; risks that borrowers may default on their loans; and changes in regulations and accounting policies affecting financial institutions.

UNAUDITED
		As of and for the Three Months Ending June 30					As of and for the Six Months Ending June 30
Operating Data		2010		2009			2010		2009
Net Interest Income		732,242		803,065			1,465,123		1,543,615
Provision for Loan Losses		706,250		40,000			1,266,250		60,000
Noninterest Income		166,001		72,555			196,020		108,290
Noninterest Expense		676,671		797,713			1,396,616		1,521,746
Net Income (Loss)		(484,678)		37,907			(1,003,723)		70,159
Per Share Data
Net Earnings (Loss) per share		(.32)		.03			(.67)		.05
Weighted Average Shares Outstanding		1,503,270		1,484,100			1,503,270		1,484,100

As of
Balance Sheet Data		June 30, 2010		December 31, 2009		June 30, 2009
Total Assets		89,968,676		88,341,401		88,752,860
Total Loans		70,743,878		70,314,937		74,673,037
Allowance for Loan Losses		1,547,551		1,130,698		1,285,182
Investment Securities		4,318,600		6,535,600		6,540,900
Total Deposits		73,065,996		72,385,956		70,181,415
Total Shareholders' Equity		8,814,852		9,774,803		9,831,133

Indiana Business Bancorp
At the Company:
Gregory Gault, Executive Vice President, 317-218-2181
[e-mail]
or
At Executive Media:
Guy Johnson, 317-231-7000 Ext. 202
[e-mail]