INDIANA BUSINESS : Bancorp Reports Third Quarter Results of Operations

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

The Company recorded a net loss of ($347,893), or ($.23) per share, for the quarter. This compares to the essentially breakeven results for the quarter ending September 30, 2009. The loss was primarily due to a provision expense of $630,000 charged during the 2010 quarter. The majority of the provision expense was due to the writedown of a set of problem loans in anticipation of sale at a discount, which is expected to close later this year.

Net interest income was essentially flat, at $771,382 for the 2010 quarter, compared to $775,189 in the year earlier quarter, despite an 11.7% decrease in interest income and loan fees. The decrease in interest income and loan fees reflected a smaller loan portfolio and a lower yielding investment portfolio. The Company was able to maintain net interest income due the favorable downward re-pricing of deposit balances.

Non-interest income increased by $96,114, or 189%, in the third quarter of 2010, as compared to the quarter ending September 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 third quarter of 2010 declined by $42,405, or 6.25%, relative to the 2009 quarter. The lower non-interest expense reflected lower salaries and benefits ($11,108) and lower other real estate owned expense ($37,695).

Total assets have declined 4.5% from $91,706,998 at September 30, 2009 to $87,538,270 at September 30, 2010. The contraction of the balance sheet is a result of management's decision to exit relationships with customers with higher credit risk profiles, and higher yielding securities in the investment portfolio being called due to the current low interest rate environment. Total loans decreased by 5.4%, from $72,499,880 at September 30, 2009 to $68,562,232 at September 30, 2010. The investment portfolio decreased by 28%, from $7,049,850 at September 30, 2009 to $5,105,084 at September 30, 2010. Given the continuing low returns offered in the bond market, management has decided to invest the proceeds of these redemptions in highly liquid but low yielding interest bearing deposits.

Deposit balances contracted by less than 3% from $74,150,077 for the third quarter of 2009 to $72,187,486 for the third quarter of 2010. The liquidity generated by the payoff of some loans and the early redemption of securities has been more than adequate to meet cash flow needs. The liquidity being maintained by the Company and the low interest rate environment have led to substantially reduced interest expense from $479,402 during the third quarter of 2009 to $336,798 during the third quarter of 2010. This represents a 30% reduction in one of the single largest expense categories.

Non-performing assets (consisting of non-accrual loans and other real estate owned) totaled $6,323,023 at September 30, 2010, compared to $3,282,805 at September 30, 2009. Although this is a substantial increase year over year, it should be noted that the current level of non-performing assets represents a 19% decrease from June 30, 2010 levels.

The allowance for loan losses was $1,439,496 at September 30, 2010 which represents 2.1% of total loans. The bank's regulatory capital ratios exceeded the amounts needed to be considered ?well capitalized? at September 30, 2010.

President and CEO, James S. Young stated, ?Problem loan management continues to be our current focus and progress was made in our third quarter. Total non-performing assets were reduced 19% and our portfolio of repossessed real estate is almost 100% leased, providing positive cash flow to us. We continue to work with borrowers on a one-to-one basis in an effort, if possible, to return their loans to performing status or the next best possible resolution. As I have stated before, these loans were originated from 2005 through 2007 and were negatively impacted by the depression of values in the real estate market.? Young continues, ?Turning to things that are more controllable, we continue to be pleased with our ability to control non-interest expense, lower our funding costs and generate gains from the sale of newly originated government guaranteed commercial loans.?

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; our ability to improve credit quality and successfully dispose of problem assets; 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 September 30					As of and for the Nine Months Ending September 30
Operating Data		2010			2009		2010			2009
Net Interest Income		771,382			775,189		2,236,505			2,318,804
Provision for Loan Losses		630,000			133,888		1,896,250			193,888
Noninterest Income		146,972			50,858		342,992			101,148
Noninterest Expense		636,247			678,647		2,034,861			2,142,395
Net Income (Loss)		(347,893	)		13,510		(1,351,614	)		83,669
Per Share Data
Net Earnings (Loss) per share		(.23	)		NM		(.90	)		.06
Weighted Average Shares Outstanding		1,503,270			1,484,100		1,503,270			1,484,100

		As of
Balance Sheet Data		September 30, 2010		December 31, 2009		September 30, 2009
Total Assets		87,538,270		88,328,662		91,706,998
Total Loans		68,562,232		71,921,993		72,499,880
Allowance for Loan Losses		1,439,496		1,130,697		1,405,000
Investment Securities		5,105,084		6,535,600		7,049,850
Total Deposits		72,187,486		72,385,957		74,150,077
Total Shareholders' Equity		8,497,437		9,775,612		9,869,242

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