Indiana Business Bancorp Reports Results of Operations for the Periods Ended December 31, 2011

Indiana Business Bancorp (OTCBB: IBBI), the holding company for Indiana Business Bank, announced results for the quarter and year ended December 31, 2011.

The Company recorded a profit of $203,230, or $0.13 per share for the quarter ended December 31, 2011. This compares to a net loss of ($386,246), or ($0.27) per share for the quarter ended December 31, 2010.

Year-to-date earnings for 2011 totaled $549,228, or $0.36 per share for the full year, which compares to a loss of ($1,737,858), or ($0.16) per share for the prior year. This improvement is attributed to lower provision expense and related credit costs, higher non-interest income, lower non-interest expense, and a much improved net interest margin.

Net interest income for the year 2011 was 6% lower than 2010. This was primarily a result of lower loan balances as the Bank exited a number of less than satisfactory lending relationships. However, throughout the year the Bank was able to improve its net interest margin as lower yielding assets left the portfolio, previously non-accruing loans became healthy enough to return to accruing status, and higher cost time deposits matured and were either renewed at much lower market rates or allowed to run off. Yields on earning assets improved from 5.18% in 2010 to 5.30% in 2011, and the cost of funds declined from 1.66% to 1.25% over the same period. The net interest margin improved from 3.52% in 2010 to 4.04% in 2011.

Non-interest income of $572,631 for 2011 represents a 6% improvement over 2010 results. Included in non-interest income was $440,876 in gains on the sale of Small Business Administration loans. This compares to $159,280 in gains recorded during 2010.

Non-interest expense (generally salaries and other operating expenses) declined by $412,852 or 15% compared to the previous year. The savings is primarily a result of lower salary expense, lower FDIC expense and lower credit administration costs.

The provision for loan loss declined from $2,521,250 during 2010 to $515,000 during 2011. This reflects the improving credit profile of our portfolio, lower loan balances and the resolution of several problem loan situations during 2011. At December 31, 2011, the allowance for loan loss was $1,468,949 which represents 2.7% of total loans.

Non-accrual loans, OREO (Other Real Estate Owned) and renegotiated loans totaled $5,697,744 at December 31, 2011, down 18% from December 31, 2010. Non-performing assets, which consist of non-accrual loans, OREO, and loans past due more than 90 days were $3,131,942 at year end, down 45% from the prior year. These improvements are the result of collateral liquidations, OREO sales, and the improved operations of several borrowers.

The Bank ended the year with a risk based capital ratio of more than 17%. All of the Bank’s capital ratios substantially exceeded the amounts needed to be considered “well capitalized” at December 31, 2011.

President and CEO, James S. Young stated, “Our team worked hard throughout the year to achieve strong 2011 results. We reduced troubled assets and sold all but one OREO property to improve our credit profile. We reduced the cost of funds to drive a strong net interest margin, substantially increased gains on SBA loan sales and achieved a 15% reduction in non-interest expense to close out the year with a solid bottom line.” Young added, “We look forward to an improvement upon these results for 2012.”

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: the impact of a slowdown or recession on our borrowing customers; volatility in the financial markets; general, regional and local economic conditions and their effect on interest rates; 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.