Table of Contents

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

(Mark One)

                NorthWest Indiana Bancorp                
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (219) 836-9690

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

There were 2,721,392 shares of the registrant’s Common Stock, without par value, outstanding at April 30, 2001.

Table of Contents

NorthWest Indiana Bancorp
Index

Table of Contents

NorthWest Indiana Bancorp
Consolidated Balance Sheets

See accompanying notes to consolidated financial statements.

1

Table of Contents

NorthWest Indiana Bancorp
Consolidated Statements of Income
(unaudited)

See accompanying notes to consolidated financial statements.

2

Table of Contents

NorthWest Indiana Bancorp
Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)

See accompanying notes to consolidated financial statements.

3

Table of Contents

NorthWest Indiana Bancorp
Consolidated Statements of Cash Flows
(unaudited)

See accompanying notes to consolidated financial statements.

4

Table of Contents

Northwest Indiana Bancorp
Notes to Consolidated Financial Statements

Note 1 — Basis of Presentation

      The consolidated financial statements include the accounts of NorthWest Indiana Bancorp (the Bancorp), its wholly-owned subsidiary, Peoples Bank SB (the Bank), and the Bank’s wholly-owned subsidiary, Peoples Service Corporation. The Bancorp has no other business activity other than being a holding company for the Bank. The Bancorp’s earnings are dependent upon the earnings of the Bank. Peoples Service Corporation is inactive. The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all disclosures required by generally accepted accounting principles for complete presentation of financial statements. In the opinion of management, the consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the balance sheets of the Bancorp as of March 31, 2001 and December 31, 2000, and the statements of income, changes in stockholders’ equity and cash flows for the three months ended March 31, 2001 and 2000. The income reported for the three month period ended March 31, 2001 is not necessarily indicative of the results to be expected for the full year.

Note 2 — Use of Estimates

      Preparing financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilites at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the allowance for loan losses, fair values of financial instruments and status of contingencies are particularly susceptible to material change in the near term.

Note 3 — Concentrations of Credit Risk

      The Bancorp grants residential, commercial real estate, commercial business and installment loans to customers in its primary market area of Lake County, in northwest Indiana. Substantially all loans are secured by specific items of collateral including residences, business assets and consumer assets.

Note 4 — Reclassifications

      Certain amounts reported in the December 31, 2000 consolidated financial statements and the March 31, 2000 Form 10-Q have been reclassified to conform to the March 31, 2001 presentation.

Note 5 — Commitments and Contingencies

      The Bancorp is a party to financial instruments in the normal course of business to meet financing needs of its customers and to reduce its own exposure to fluctuating interest rates. These financial instruments include commitments to make loans and standby letters of credit.

      Exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Bancorp uses the same credit policy to make such commitments as it uses for on-balance-sheet items.

      At March 31, 2001 and December 31, 2000, commitments to make loans totaled $59.0 million and $60.5 million, and standby letters of credit totaled $2.9 million and $2.3 million. At March 31, 2001, $50.0 million (84%) of the commitments were at variable rates.

      Since commitments to make loans may expire without being used, this amount does not necessarily represent future cash commitments. Collateral obtained upon exercise of the commitment is determined using management’s credit evaluation of the borrower and may include accounts receivable, inventory, property, land and other items.

5

Table of Contents

Note 6 — Earnings per Share

      A reconciliation of the numerators and denominators of the basic earnings per common share and diluted earnings per common share computations is presented below:

      Stock options for 13,475 common shares for the three months ended March 31, 2001, were considered in computing diluted earnings per common share because they were dilutive. Stock options for 25,570 common shares for the three months ended March 31, 2000, were not considered in computing diluted earnings per common share because they were anti-dilutive.

6

Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Summary

      NorthWest Indiana Bancorp (the Bancorp) is a bank holding company registered with the Board of Governors of the Federal Reserve System. Peoples Bank SB (the Bank), an Indiana savings bank, is a wholly owned subsidiary of the Bancorp. The Bancorp has no other business activity other than being the holding company for Peoples Bank SB.

      At March 31, 2001, the Bancorp had total assets of $402.6 million and total deposits of $335.3 million. Stockholders’ equity totaled $34.2 million or 8.5% of total assets, with book value per share at $12.55. Net income for the three months ended March 31, 2001, was $1.1 million, or $.39 per common share for basic and diluted calculations. The annualized return on average assets (ROA) was 1.09%, while the annualized return on average stockholders’ equity (ROE) was 12.47%, for the three months ended March 31, 2001.

Financial Condition

      During the three months ended March 31, 2001, total assets increased by $10.3 million (2.6%), with interest-earning assets increasing by $12.3 million (3.3%). At March 31, 2001, interest-earning assets totaled $380.5 million and represented 94.5% of total assets.

      Loans receivable totaled $323.7 million at March 31, 2001, compared to $326.2 million at December 31, 2000. At March 31, 2001, loans receivable represented 85.1% of interest-earning assets, 80.4% of total assets and 96.5% of total deposits. The loan portfolio, which is the Bancorp’s largest asset, is a significant source of both interest and fee income. The Bancorp’s lending strategy stresses quality growth, product diversification and, competitive and profitable pricing. The loan portfolio includes $16.5 million (5.1%) in construction and development loans, $172.1 million (53.1%) in residential mortgage loans, $9.7 million (3.0%) in multifamily loans, $81.3 million (25.1%) in commercial real estate loans, $10.5 million (3.3%) in consumer loans, and $33.6 million (10.4%) in commercial business and other loans. Adjustable rate loans comprised 55% of total loans at March 31, 2001. During the three months ended March 31, 2001, loans decreased by $2.5 million (0.8%). The decrease during the current three months was a result of expected pay-offs in the commercial loan portfolio and an increase in refinance activity due to declining interest rates. Management believes that despite concerns about the pace of economic activity, loan growth will improve during the remaining months of 2001 because of a lower interest rate environment and an aggressive marketing and call program effort. Management expects to fund loan growth with a mix of deposits and borrowed funds.

      The Bancorp is primarily a portfolio lender. Mortgage banking activities are limited to the sale of fixed rate mortgage loans with contractual maturities of twenty-five years or longer. These loans are sold, on a case-by-case basis, in the secondary market as part of the Bancorp’s efforts to manage interest rate risk. The Bancorp retains the servicing on all loans sold in the secondary market. During the three months ended March 31, 2001, the Bancorp sold $613 thousand in fixed rate mortgages. No loans were sold during the three months ended March 31, 2000. Net gains realized from the sales totaled $15 thousand. At March 31, 2001, the Bancorp had $767 thousand classified as loans held for sale.

7

Table of Contents

      The primary objective of the Bancorp’s investment portfolio is to provide for the liquidity needs of the Bancorp and to contribute to profitability by providing a stable flow of dependable earnings. Funds are generally invested in federal funds, interest bearing balances in financial institutions, U.S. government securities and federal agency obligations. Interest-bearing balances in financial institutions include overnight deposits at the Federal Home Loan Bank of Indianapolis (FHLB). Investments are generally for terms ranging from one day to five years. At March 31, 2001, the investment portfolio totaled $32.1 million and was invested as follows: 89.4% in U.S. government agency debt securities, 7.9% in U.S. government debt securities, and 2.7% in U.S. government agency mortgage-backed securities. At March 31, 2001, securities available-for-sale totaled $25.3 million or 78.7% of total securities. The available-for-sale portfolio permits the active management of the Bancorp’s liquidity position. In addition, at March 31, 2001, the Bancorp had $20.3 million in interest bearing balances in financial institutions, $1.6 million in federal funds sold, and $2.1 million in FHLB stock. During the three months ended March 31, 2001, investment securities decreased by $4.0 million (11.1%) as declining interest rates led, as expected, to securities being called.

      Management believes that the credit risk profile of the earning asset portfolio is relatively low. This is accomplished through quality loan underwriting and a proactive approach to loan monitoring. At March 31, 2001, non-performing loans, which include those loans that are 90 days or more past due and those loans that have been placed on non-accrual status, totaled $2.0 million, an increase of $189 thousand from December 31, 2000. The March 31, 2001 balance includes $1.6 million in loans accounted for on a non-accrual basis and $370 thousand in accruing loans which were contractually past due 90 days or more. The ratio of non-performing loans to total loans, which increased from 0.55% at December 31, 2000 to 0.62% at March 31, 2001, remains below industry norm. At March 31, 2001, $2.6 million of the Bancorp’s loans were internally classified as substandard compared to $2.9 million at December 31, 2000, a decrease of $281 thousand. There were no loans classified as doubtful or loss. Classified loans include non-performing loans and potential problem loans, where information about possible credit problems causes management to question the ability of such borrowers to comply with loan repayment terms. Potential problem loans are not included with non-performing loans as they continue to perform. Management does not anticipate that any of the non-performing loans or classified loans will materially impact future operations, liquidity or capital resources. At March 31, 2000, except as described above, there were no material credits that would cause management to have serious doubts as to the ability of such borrowers to comply with loan repayment terms.

      At March 31, 2001, the Bancorp had impaired loans totaling $496 thousand, representing three loans to two borrowers. Impaired loans, which are included in non-performing loans, are loans where full payment under the loan terms is not expected. No other loans were considered to be impaired loans as of, or for the three months ended March 31, 2001. At March 31, 2001, the ALL allocated to the impaired loan balances totaled $306 thousand.

      Because some loans may not be repaid in accordance with contractual agreements an allowance for loan losses (ALL) has been maintained. While management may periodically allocate portions of the allowance for specific problem loans, the entire allowance is available to absorb all probable incurred credit losses that arise from the loan portfolio and is not segregated for, or allocated to, any particular loan or group of loans. During the three months ended March 31, 2001, additions to the ALL account totaled $45 thousand compared to $39 thousand for the three months ended March 31, 2000. The provision is based on management’s current judgments about the credit quality of the loan portfolio, loan portfolio growth, changes in the portfolio mix and local economic conditions. The appropriateness of the current quarter provision and the overall adequacy of the ALL were determined through a disciplined and consistently applied quarterly process that combines a review of current activity with a risk assessment worksheet. While the quality of the loan portfolio remains sound, provisions during the three months

8

Table of Contents

ended March 31, 2001 were warranted because of increased average daily loan balances, the inherent risk associated with growth in commercial real estate and commercial business loans, an increase in the level of charge-offs, and increases in non-performing loans. Charge-offs, net of recoveries, totaled $288 thousand during the current three months, while no charge-offs were reported during the three months ended March 31, 2000. Included in the charge-offs were impaired loan balances of $233 thousand that had specific ALL reserves at December 31, 2000. At March 31, 2001, the ALL to total loans was .95%, while the ALL to nonperforming loans (coverage ratio) was 154.0%. At March 31, 2001, the balance in the ALL account totaled $3.1 million, which is considered adequate by management after evaluation of the loan portfolio, past experience and current economic and market conditions. Management does not anticipate that any of the non-performing loans or classified loans will materially impact future operations, liquidity or capital resources.

      The allocation of the ALL reflects performance and growth trends within the various loan categories, as well as, consideration of the facts and circumstances that affect the repayment of individual loans, as well as, loans which have been evaluated on a pooled basis. During the three months ended March 31, 2001, additions to the ALL were allocated to commercial business loans due to the growth in this portfolio and the additional risk related to this product.

      Deposits are a fundamental and cost-effective source of funds for lending and other investment purposes. The Bancorp offers a variety of products designed to attract and retain customers, with the primary focus on building and expanding relationships. At March 31, 2001, deposits totaled $335.3 million. During the three months ended March 31, 2001, deposit growth totaled $11.0 million (3.4%). Checking accounts decreased $2.9 million (4.3%), money market deposit accounts (MMDA’s) decreased $579 thousand (1.3%), savings accounts increased $1.5 million (3.3%), and certificates of deposit increased $13.0 million (7.8%). At March 31, 2001, the deposit base was comprised of 19.3% checking accounts, 13.3% MMDA’s, 14.0% savings accounts and 53.4% certificates of deposit. Borrowings are primarily used to fund asset growth not supported by deposit generation. At March 31, 2001, borrowed funds totaled $29.3 million compared to $30.6 million at December 31, 2000, a decrease of $1.3 million (3.9%). Repurchase agreements totaled $13.6 million, FHLB borrowings totaled $14.0 million, and other short-term borrowings totaled $1.7 million.

Quantitative and Qualitative Disclosures About Market Risk

      The Bancorp’s primary market risk exposure is interest rate risk. Interest rate risk is the risk that the Bancorp’s earnings and capital will be adversely affected by changes in interest rates. The primary approach to interest rate risk management is one that focuses on adjustments to the Bancorp’s asset/liability mix in order to limit the magnitude of interest rate risk. The Board of Directors has delegated the responsibility for measuring, monitoring and controlling interest rate risk to the Bancorp’s asset/liability management committee (ALCO). The ALCO is responsible for developing and implementing interest rate risk management strategies, establishing and maintaining a system of limits and controls, and establishing and utilizing an interest rate risk measurement system. The ALCO, which is made up of members of senior management, generally meets monthly with board presentations occurring quarterly.

      Performance from an interest rate risk perspective can be measured in many ways. Methodologies used by the Bancorp focus on net interest income and the net economic value of equity. Net interest income is defined as interest income less interest expense. Variability in net interest income arises because its components — interest income and interest expense — do not change equally as rates vary. This mismatch occurs because individual assets and liabilities reprice differently as rates change. Factors which affect net interest income include changes in the level of interest rates, changes in the relationship between Bancorp yield rates and interest costs, changes in the volume of assets and

9

Table of Contents

liabilities outstanding, and changes in the composition or mix of assets and liabilities. Management uses rate shock (i.e., instantaneous and sustained parallel shifts in the yield curve in 1% increments up and down 2%) for stress testing the net interest income under several rate change levels. In order to simulate activity, maturing balances are replaced with new balances at the new rate level and repricing balances are adjusted to the new rate shock level. The results are compared to limits set by the Board of Directors and are monitored to identify unfavorable trends. Net economic value of equity is the net present value of the Bancorp’s portfolio of assets and liabilities. By marking-to-market the components of the balance sheet, management can compute the net economic value of equity. As rates change over time, the market values of Bancorp assets and liabilities will change, with longer-term products fluctuating more than short-term products. In most cases, rate-sensitive assets and liabilities will not have the same maturity characteristics. Therefore, as rates vary, the market value of the rate-sensitive assets will not change equally with the market value of rate-sensitive liabilities. This will cause the net economic value of equity to vary. The focus of the net economic value of equity is to determine the percentage decline in the net economic value of equity caused by a 2% increase or decrease in interest rates, whichever produces the larger decline. A large value indicates a large percentage decline in the net economic value of equity due to changes in interest rates and, thus, high interest rate sensitivity. A low value indicates a small percentage decline in the net economic value of equity due to changes in interest rates and, thus, low interest rate sensitivity. As with net interest income, the results are compared to limits set by the Board of Directors and are monitored to identify unfavorable trends.

      Presented in the following tables is forward-looking information about the Bancorp’s sensitivity to changes in interest rates as of March 31, 2001 and December 31, 2000. The tables incorporate the Bancorp’s internal system generated data as related to the maturity, repricing and repayment/withdrawal of interest-earning assets and interest-bearing liabilities. Prepayment assumptions are based on published data. Present value calculations use current published market interest rates. For core deposits that have no contractual maturity, the table presents principal cash flows and, as applicable, related weighted-average interest rates based on the Bancorp’s historical experience, management’s judgment, and statistical analysis, as applicable, concerning their most likely withdrawal behaviors.

10

Table of Contents

      The tables show that the Bancorp has managed interest rate risk within the policy limits set by the Board of Directors. At March 31, 2001, an increase in interest rates of 2% would have resulted in a 3.6% decrease in net interest income and a 10.2% decrease in the net economic value of equity compared to decreases of 6.5% and 11.9% at December 31, 2000. The reduction in interest rate risk during the three months ended March 31, 2001 was due to an increase in interest bearing balances in financial institutions and the reduction in short-term borrowings.

Liquidity and Capital Resources

      For the Bancorp, liquidity management refers to the ability to generate sufficient cash to fund current loan demand, meet savings deposit withdrawals, and pay dividends and operating expenses. The Bancorp’s primary goal for liquidity management is to ensure that at all times it can meet the cash demands of its depositors and its loan customers. A secondary purpose of liquidity management is profit management. Because profit and liquidity are often conflicting objectives, management attempts to maximize the Bancorp’s net interest margin by making adequate, but not excessive, liquidity provisions. Finally, because the Bancorp is subject to legal reserve requirements under Federal Reserve Regulation D, liquidity is managed to ensure that the Bancorp maintains an adequate level of legal reserves.

      Changes in the liquidity position result from operating, investing and financing activities. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income. The primary investing activities include loan originations, loan repayments, investments in interest bearing balances in financial institutions, and the purchase and maturity of investment securities. Financing activities focus almost entirely on the generation of customer deposits. In addition, the Bancorp utilizes borrowings (i.e., repurchase agreements and advances from the FHLB) as a source of funds.

      During the three months ended March 31, 2001, cash and cash equivalents increased $16.6 million compared to an $809 thousand increase for the three months ended March 31, 2000. The primary sources of cash were deposit growth, proceeds from maturities of securities and cash provided by operating activities. The primary uses of cash were the purchase of securities, the repayment of borrowings and the payment of common stock dividends. During the current three months cash provided by operating activities totaled $1.3 million compared to $1.2 million for the three months ended March 31, 2000. Cash inflows from investing activities totaled $6.0 million compared to cash outflows of $9.0 million for the three months ended March 31, 2000. The current period reflects expected loan pay-offs of commercial loans and proceeds from securities that matured or were called because of declining interest rates. Cash flows from financing activities totaled $9.3 million during the current period compared to $8.6 million for the three months ended March 31, 2000. The increase reflects deposit growth during the current period. The funds were used for repayment of borrowings. The Bancorp paid dividends on common stock of $649 thousand during the current three months compared to $653 thousand for the three months ended March 31, 2000.

      At March 31, 2001, outstanding commitments to fund loans totaled $59.0 million. Approximately 84% of the commitments were at variable rates. Management believes that the Bancorp has sufficient cash flow and borrowing capacity to fund all outstanding commitments and to maintain proper levels of liquidity.

      Management strongly believes that maintaining a high level of capital enhances safety and soundness. During the three months ended March 31, 2001, stockholders’ equity increased by $627 thousand (1.9%). The increase resulted primarily from earnings of $1.1 million during the period. In addition, $155 thousand represents proceeds from the exercise of 16,080 stock options. The Bancorp declared $707 thousand in cash

11

Table of Contents

dividends. The net unrealized gain on available-for-sale securities, net of tax was $121 thousand for the period. At March 31, 2001, book value per share was $12.55 compared to $12.39 at December 31, 2000.

      The Bancorp is subject to risk-based capital guidelines adopted by the Board of Governors of the Federal Reserve System (the FRB), and the Bank is subject to risk-based capital guidelines adopted by the FDIC. As applied to the Bancorp and the Bank, the FRB and FDIC capital requirements are substantially identical. The Bancorp and the Bank are required to maintain a total risk-based capital ratio of 8%, of which 4% must be Tier I capital. In addition, the FRB and FDIC regulations provide for a minimum Tier I leverage ratio (Tier I capital to adjusted average assets) of 3% for financial institutions that meet certain specified criteria, including that they have the highest regulatory rating and are not experiencing or anticipating significant growth. All other financial institutions are required to maintain a Tier I leverage ratio of 3% plus an additional cushion of at least one to two percent.

      The following table shows that, at March 31, 2001, and December 31, 2000, the Bancorp’s capital exceeded all regulatory capital requirements. The Bancorp’s and the Bank’s regulatory capital ratios were substantially the same at both dates. The dollar amounts are in millions.

12

Table of Contents

Results of Operations — Comparison of the Quarter Ended March 31, 2001 to the Quarter Ended March 31, 2000

      Net income for the three months ended March 31, 2001 was $1.06 million compared to $1.04 million for the quarter ended March 31, 2000, an increase of $22 thousand (2.1%). The earnings represent a ROA of 1.09% for the quarter ended March 31, 2001 compared to 1.14% for the quarter ended March 31, 2000. The ROE was 12.47% for the current quarter compared to 12.74% for the quarter ended March 31, 2000.

      Net interest income for the three months ended March 31, 2001 and 2000 was $3.6 million. The weighted-average yield on interest-earning assets was 7.77% for the three months ended March 31, 2001 compared to 7.75% for the three months ended March 31, 2000. The weighted-average cost of funds for the quarter ended March 31, 2001, was 4.03% compared to 3.73% for the quarter ended March 31, 2000. The impact of the 7.77% return on interest-earning assets and the 4.03% cost of funds resulted in an interest rate spread of 3.74% for the current quarter compared to 4.02% for the quarter ended March 31, 2000. During the current quarter, total interest income increased by $487 thousand (7.3%) while total interest expense increased by $498 thousand (16.4%). The net interest margin was 3.73% for the three months ended March 31, 2001 compared to 4.01% for the quarter ended March 31, 2000, as the recent action of the Federal Reserve to reduce interest rates by 1.50% has resulted in the Bancorp’s interest-earning assets repricing downward faster than interest-bearing liabilities.

      During the three months ended March 31, 2001, interest income from loans increased by $508 thousand (8.4%) compared to the three months ended March 31, 2000. The increase was due to higher yields and higher average daily balances. The weighted-average yield on loans outstanding was 8.04% for the current quarter compared to 7.95% for the three months ended March 31, 2000. Loan balances averaged $325.1 million for the current quarter, up $22.3 million (7.4%) from $302.8 million for the three months ended March 31, 2000. During the three months ended March 31, 2001, interest income on investments and other deposits decreased by $21 thousand (3.2%) compared to the quarter ended March 31, 2000. The decrease was due to lower yields. The weighted-average yield on securities and other deposits was 5.79% for the current quarter compared to 6.23% for the three months ended March 31, 2000. Securities and other deposits averaged $43.3 million for the current quarter, up $1.6 million (3.9%) from $41.7 million for the three months ended March 31, 2000.

      Interest expense for deposits increased by $381 thousand (13.8%) during the current quarter compared to the three months ended March 31, 2000. The increase was due to a higher cost of funds and growth in average daily balances. The weighted-average rate paid on deposits for the three months ended March 31, 2001 was 3.92% compared to 3.63% for the quarter ended March 31, 2000. Total deposit balances averaged $321.2 million for the current quarter, up $26.1 million (8.6%) from $305.1 million for the quarter ended March 31, 2000. Interest expense on borrowed funds increased by $117 thousand (42.7%) during the current quarter due to higher rates and increases in average daily balances. The weighted-average cost of borrowed funds was 5.27% for the current quarter compared to 5.22% for the three months ended March 31, 2000. Borrowed funds averaged $29.7 million during the quarter ended March 31, 2001, up $8.7 million (41.4%) from $21.0 million for the quarter ended March 31, 2000.

      Noninterest income for the quarter ended March 31, 2001 was $548 thousand, up $100 thousand (22.3%) from $448 thousand for the three months ended March 31, 2000. During the period the Bancorp continued to implement initiatives focused on improving income from Bank operations. As a result, fees and service

13

Table of Contents

charges increased $53 thousand (14.8%) compared to the three months ended March 31, 2000. During the current quarter the Bancorp reported $15 thousand in gains on sale of loans compared to a loss of $4 thousand during the three months ended March 31, 2000. In addition, the Bancorp reported $30 thousand in gains on securities during the current quarter, while no gains were reported during the quarter ended March 31, 2000.

      Noninterest expense for the quarter ended March 31, 2001 was $2.4 million, up $59 thousand (2.5%) from $2.3 million for the three months ended March 31, 2000. The increase in compensation and benefits was due to annual salary increases and additional staffing for current operations resulting from the Hobart facility that opened during the fourth quarter of 2000. Other expense changes were due to standard increases in operations and the new Hobart facility. The Bancorp’s efficiency ratio was 57.8% for the quarter ended March 31, 2001 compared to 57.6% for the three months ended March 31, 2000. The ratio is determined by dividing total noninterest expense by the sum of net interest income and total noninterest income for the period.

      Income tax expenses for the three months ended March 31, 2001 totaled $655 thousand compared to $653 thousand for the three months ended March 31, 2000, an increase of $2 thousand (0.3%). The increase was due to an increase in pretax earnings during the current quarter. The combined effective federal and state tax rates for the Bancorp was 38.2% for the three months ended March 31, 2001 compared to 38.7% for the three months ended March 31, 2000. The reduction during the current period is a result of investments in low-income housing tax credits.

Forward-Looking Statements

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

      The 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 advise readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities and competitive and regulatory factors, could affect the Bancorp’s financial performance and could cause the Bancorp’s actual results for future periods to differ materially from those anticipated or projected.

14

Table of Contents

PART II — Other Information

Item 1. Legal Proceedings

The registrant is not party to any material legal proceedings. No significant changes in legal proceedings of the Bancorp occurred during the quarter.

Item 2. Changes in Securities

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits and Reports on Form 8-K

                            (a) Reports on Form 8-K. None.

15

Table of Contents

Signatures

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NorthWest Indiana Bancorp

16