First Bancorp OF Indiana Inc - Quarterly Report of Financial Condition (10QSB)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to _________________

Commission File Number 0-29814

FIRST BANCORP OF INDIANA, INC.

(Exact name of small business issuer as specified in its charter)

Indiana		35-2061832
(State or other jurisdiction of incorporation		(I.R.S. Employer
or organization)		Identification No.)

5001 Davis Lant Drive, Evansville, Indiana		47715
(Address of principal executive offices)		(Zip Code)

(812) 492-8100

(Issuer's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changes since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 1,804,828 shares of common stock, par value $0.01 per share, were outstanding as of May 2, 2008.

Transitional Small Business Disclosure Format (Check one): Yes o No x

FIRST BANCORP OF INDIANA, INC. AND SUBSIDIARY

FORM 10-QSB

FOR THE QUARTER ENDED MARCH 31, 2008

INDEX

	Page
Part I Financial Information
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis or Plan of Operation	10
Item 3. Controls and Procedures	16

Part II Other Information
Item 1. Legal Proceedings	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Submission of Matters to a Vote of Security Holders	17
Item 5. Other Information	17
Item 6. Exhibits	17

Signatures	18

FIRST BANCORP OF INDIANA, INC.

AND S UBSIDIARY

Condensed Consolidated Balance Sheets

	March 31, 2008			June 30, 2007
	(Unaudited)
Assets
Cash and due from banks	$	5,590,796		$	7,455,076
Interest-bearing demand deposits		2,948,175			7,395,910
Federal funds sold		1,179,365			0
Total cash and cash equivalents		9,718,336			14,850,986
Interest-bearing deposits		494,347			1,616,000
Investment securities
Available for sale		82,340,018			65,120,545
Held to maturity		14,026,444			14,976,789
Total investment securities		96,366,462			80,097,334
Loans		232,296,997			234,301,694
Allowance for loan losses		(1,037,657	)		(1,064,713	)
Net loans		231,259,340			233,236,981
Premises and equipment		9,108,170			9,322,801
Goodwill		6,229,152			6,229,152
Core deposit intangibles		800,850			894,431
Federal Home Loan Bank stock		4,564,700			4,564,700
Other assets		12,126,194			12,179,690

Total assets	$	370,667,551		$	362,992,075

Liabilities
Deposits
Non-interest bearing	$	9,633,505		$	11,503,688
Interest bearing		218,501,400			239,730,019
Total deposits		228,134,905			251,233,707
Borrowings		101,498,539			72,495,874
Advances by borrowers for taxes and insurance		935,049			695,051
Other liabilities		5,923,820			4,349,605
Total liabilities		336,492,313			328,774,237

Commitments and Contingent Liabilities		-			-

Stockholders' Equity
Preferred stock, $.01 par value
Authorized and unissued - 1,000,000 shares
Common stock, $.01 par value Authorized - 9,000,000 shares Issued - 2,566,346 shares		25,663			25,663
Additional paid-in capital		27,956,557			27,959,954
Retained earnings		18,492,235			18,801,944
Accumulated other comprehensive loss		(282,317	)		(683,548	)
		46,192,138			46,104,013
Less:
Unreleased employee stock ownership plan shares - 41,656 and 53,020 shares		(425,236	)		(541,241	)
Treasury stock - 742,518 and 725,445 shares		(11,591,664	)		(11,344,934	)

Total stockholders' equity		34,175,238			34,217,838

Total liabilities and stockholders' equity	$	370,667,551		$	362,992,075

See notes to unaudited condensed consolidated financial statements

FIRST BANCORP OF INDIANA, INC.

AND S UBSIDIARY

Condensed Consolidated Statements of Income

	For the				For the
	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2008		2007		2008		2007
	(Unaudited)				(Unaudited)

Interest Income
Loans receivable	$	3,927,379	$	3,882,760	$	12,019,213	$	10,920,208
Investment securities		1,210,520		1,025,141		3,281,979		2,822,948
Deposits with financial institutions		78,453		119,110		315,857		281,401
Federal funds sold		1,019		0		1,019		12,311
Other interest and dividend income		58,698		58,375		161,034		157,713
Total interest income		5,276,069		5,085,386		15,779,102		14,194,581

Interest Expense
Deposits		2,095,920		2,365,032		6,848,969		6,200,739
Borrowings		1,130,935		850,704		3,102,349		2,507,863
Total interest expense		3,226,855		3,215,736		9,951,318		8,708,602

Net Interest Income		2,049,214		1,869,650		5,827,784		5,485,979

Provision for loan losses		135,000		105,000		330,000		300,000
Net Interest Income after Provision		1,914,214		1,764,650		5,497,784		5,185,979
Noninterest Income
Increase in cash surrender values of life insurance		50,250		53,372		150,363		152,372
Net gains on loan sales		54,156		22,588		129,466		114,428
ATM transaction & POS interchange fees		83,355		62,437		238,913		189,214
Service charges on deposit accounts		193,530		106,261		595,411		319,039
Other income		145,320		246,946		508,633		676,117
Total noninterest income		526,611		491,604		1,622,786		1,451,170

Noninterest Expense
Salaries and employee benefits		1,055,808		1,091,242		3,135,293		3,077,196
Net occupancy expense		180,004		177,160		542,596		493,480
Equipment expense		117,606		105,714		359,586		319,727
Amortization of intangible assets		23,554		37,305		93,581		97,130
Professional fees		44,347		52,169		151,459		161,423
Advertising		52,585		60,954		178,203		182,612
Data processing fees		127,909		118,203		386,122		328,450
Other expense		371,052		374,884		1,265,703		1,217,009
Total noninterest expense		1,972,865		2,017,631		6,112,543		5,877,027

Income Before Income Tax		467,960		238,623		1,008,027		760,122
Income tax expense		113,081		48,633		216,726		168,908
Net Income	$	354,879	$	189,990	$	791,301	$	591,214

Basic earnings per share	$	0.20	$	0.11	$	0.44	$	0.35
Diluted earnings per share	$	0.20	$	0.10	$	0.44	$	0.34
Dividends declared per share	$	0.30	$	0.30	$	0.60	$	0.60

See notes to unaudited condensed consolidated financial statements

FIRST BANCORP OF INDIANA, INC.

AND SUBSIDIARY

Condensed Consolidated Statement of Changes in Stockholders' Equity

												Accumulated
						Additional						Other			Unallocated
	Comprehensive			Common		Paid-in			Retained			Comprehensive			ESOP			Treasury
	Income			Stock		Capital			Earnings			Income / (Loss)			Shares			Shares			Total

Balances, June 30, 2007				$	25,663	$	27,959,954		$	18,801,944		$	(683,548	)	$	(541,241	)	$	(11,344,934	)	$	34,217,838

Net income / (loss)	$	188,610								188,610												188,610
Other comprehensive income, net of tax—Unrealized gains (losses) on securities (unaudited)		299,296											299,296									299,296

Cash dividends paid ($0.30 per share)										(553,116	)											(553,116	)
Employee Stock Ownership Plan shares allocated							19,733									38,648						58,381
Treasury shares purchased																			(199,558	)		(199,558	)
Options exercised							(28,350	)											68,061			39,711
Comprehensive income (unaudited)	$	487,906

Balances, September 30, 2007				$	25,663	$	27,951,337		$	18,437,438		$	(384,252	)	$	(502,593	)	$	(11,476,431	)	$	34,051,162

Net income / (loss)	$	247,813							$	247,813											$	247,813
Other comprehensive income, net of tax—Unrealized gains (losses) on securities (unaudited)		155,795										$	155,795									155,795

Employee Stock Ownership Plan shares allocated						$	14,912								$	38,709						53,621
Treasury shares purchased																		$	(123,748	)		(123,748	)
Options exercised							(16,272	)											39,085			22,813
Comprehensive income (unaudited)	$	403,608

Balances, December 31, 2007				$	25,663	$	27,949,977		$	18,685,251		$	(228,457	)	$	(463,884	)	$	(11,561,094	)	$	34,407,456

Net income / (loss)	$	354,879							$	354,879											$	354,879
Other comprehensive income, net of tax—Unrealized gains (losses) on securities (unaudited)		(53,860	)									$	(53,860	)								(53,860	)

Cash dividends paid ($0.30 per share)										(547,895	)											(547,895	)
Employee Stock Ownership Plan shares allocated						$	6,580								$	38,648						45,228
Treasury shares purchased																		$	(30,570	)		(30,570	)
Comprehensive income (unaudited)	$	301,019

Balances, March 31, 2008				$	25,663	$	27,956,557		$	18,492,235		$	(282,317	)	$	(425,236	)	$	(11,591,664	)	$	34,175,238

See notes to unaudited condensed consolidated financial statements.

FIRST BANCORP OF INDIANA, INC.

AND S UBSIDIARY

Condensed Consolidated Statements of Cash Flows

	Year to Date
	March 31,
	2008			2007
	(Unaudited)
Net Cash Provided by Operating Activities	$	2,790,747		$	1,562,727

Investing Activities
Net change in interest-bearing deposits		1,121,653			3,162,783
Proceeds from maturities of securities available for sale		30,858,340			6,066,513
Proceeds from maturities of securities held to maturity		932,148			1,102,385
Purchases of securities available for sale		(47,331,041	)		(9,036,951	)
Net change in loans		1,887,494			(4,757,364	)
Purchases of premises and equipment		(160,967	)		(580,031	)
Proceeds from sales of premises and equipment		20,530			1,676
Redemption of FHLB stock		0			61,600
Acquisition of bank, net of cash received		0			(2,024,394	)

Net cash used by investing activities		(12,671,843	)		(6,003,783	)

Financing Activities
Net change in
Non-interest bearing, interest-bearing demand and savings deposits		4,754,617			1,717,810
Certificates of deposit		(27,853,419	)		13,383,729
Proceeds from issuance of long-term borrowings		38,155,000			8,000,000
Repayments of long-term borrowings		(11,000,000	)		(15,000,000	)
Net issuance of short-term borrowings		1,844,613			0
Advances by borrowers for taxes and insurance		239,998			345,298
Dividends paid		(1,101,011	)		(1,022,258	)
Purchase of treasury shares		(353,876	)		(584,478	)
Options exercised		62,524			187,313

Net cash provided by financing activities		4,748,446			7,027,414

Net Change in Cash and Cash Equivalents		(5,132,650	)		2,586,358

Cash and Cash Equivalents, Beginning of Period		14,850,986			9,737,702

Cash and Cash Equivalents, End of Period	$	9,718,336		$	12,324,060

Additional Cash Flow Information
Interest paid	$	9,134,888		$	7,782,614
Income tax paid		30,000			175,000

See notes to unaudited condensed consolidated financial statements

FIRST BANCORP OF INDIANA, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of First Bancorp of Indiana, Inc. (the "Company") have been prepared in accordance with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary to fairly present the financial position, results of operations, and cash flow of the Company. The condensed consolidated balance sheet of the Company as of June 30, 2007, has been derived from the audited consolidated balance sheet of the Company as of that date. The results of operations for the three and nine months ended March 31, 2008, are not necessarily indicative of the results to be expected for the year ending June 30, 2008. The condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended June 30, 2007, contained in the Company's Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on September 27, 2007.

NOTE 2 – BORROWINGS

The following summarizes the Company's borrowings at March 31, 2008, and June 30, 2007. Each putable advance is convertible from a fixed-rate to a variable-rate instrument at the discretion of the Federal Home Loan Bank of Indianapolis contingent upon meeting prescribed strike rates and/or initial lockout periods. Similarly, the counterparties to reverse repurchase agreements may terminate the agreements upon the expiration of the initial lockout periods.

	March 31, 2008			June 30, 2007
	(unaudited)
Federal Home Loan Bank putable advances
Fixed rate of 5.360%, due in March 2008				$	2,500,000
Fixed rate of 4.980%, due in December 2010	$	2,000,000			2,000,000
Fixed rate of 5.370%, due in February 2011		10,000,000			10,000,000
Fixed rate of 4.830%, due in July 2011		10,000,000			10,000,000
Fixed rate of 4.350%, due in September 2015		10,000,000			10,000,000
Fixed rate of 3.700%, due in September 2015		10,000,000			10,000,000
Fixed rate of 4.610%, due in June 2017		15,000,000			15,000,000
Fixed rate of 4.140%, due in August 2017		5,000,000
Fixed rate of 3.910%, due in September 2017		5,000,000
Fixed rate of 3.320%, due in December 2017		5,000,000
Fixed rate of 3.490%, due in December 2017		5,000,000
Fixed rate of 3.430%, due in December 2017		5,000,000

Federal Home Loan Bank bullet advances
Fixed rate of 3.290%, due in August 2007					500,000
Fixed rate of 5.310%, due in June 2008		4,000,000			4,000,000
Fixed rate of 4.300%, due in June 2010		500,000			500,000

Overnight line of credit advance		1,844,613

Total Federal Home Loan Bank advances		88,344,613			64,500,000

Reverse repurchase agreements
Fixed rate of 4.2850%, due in January 2017					8,000,000
Fixed rate of 4.460%, due in July 2017		8,000,000

Junior subordinated debentures, 6.905% rate, due September 2037		5,155,000

Discount on purchased borrowings		(1,074	)		(4,126	)

Total borrowings	$	101,498,539		$	72,495,874

Weighted average rate		4.314	%		4.611	%

The junior subordinated debentures represent obligations of the Company to First Bancorp of Indiana Statutory Trust I (Trust), a wholly-owned subsidiary, in connection with the issuance of $5,000,000 of trust preferred securities by the Trust on August 1, 2007. The debentures mature in September 2037 and bear a fixed interest rate of 6.905% for the first five years and 141 basis points over the three month LIBOR rate for the remaining term. The Company has fully and unconditionally guaranteed all of the Trust’s obligations under the trust preferred securities.

NOTE 3 – EARNINGS PER SHARE

Earnings per share for the quarters ended March 31, 2008, and March 31, 2007, were computed as follows:

	Quarter Ended March 31, 2008
	Income		Weighted- Average Shares		Per Share Amount

Net income	$	354,879

Basic earnings per share
Income available to common stockholders	$	354,879		1,781,050	$	0.20

Effect of dilutive securities
Stock options		—		7,652

Diluted earnings per share
Income available to common stockholders and assumed conversions	$	354,879		1,788,702	$	0.20

	Quarter Ended March 31, 2007
	Income		Weighted- Average Shares		Per Share Amount

Net income	$	189,990

Basic earnings per share
Income available to common stockholders	$	189,990	$	1,784,571	$	0.11

Effect of dilutive securities
Stock options		—		26,089

Diluted earnings per share
Income available to common stockholders and assumed conversions	$	189,990	$	1,810,660	$	0.10

Year-to-date earnings per share were computed as follows:

	Nine months Ended March 31, 2008
	Income		Weighted- Average Shares		Per Share Amount

Net income	$	791,301

Basic earnings per share
Income available to common stockholders	$	791,301		1,782,706	$	0.44

Effect of dilutive securities
Stock options		—		12,325

Diluted earnings per share
Income available to common stockholders and assumed conversions	$	791,301		1,795,031	$	0.44

	Nine months Ended March 31, 2007
	Income		Weighted- Average Shares		Per Share Amount

Net income	$	591,214

Basic earnings per share
Income available to common stockholders	$	591,214	$	1,683,198	$	0.35

Effect of dilutive securities
Stock options		—		32,087

Diluted earnings per share
Income available to common stockholders and assumed conversions	$	591,214	$	1,715,285	$	0.34

Options to purchase 22,724 shares of common stock at $19.33 per share were outstanding at March 31, 2008 and 2007, but were not included in the calculation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares. Similarly, 11,362 options exercisable at $14.58 per share and another 13,000 exercisable at $13.38 were greater than the average market price of common shares for the quarter ended March 31, 2008.

NOTE 4 – RECLASSIFICATIONS

Certain reclassifications have been made to the condensed consolidated income statement for the three- and nine-month periods ended March 31, 2007, to conform to the presentation of the condensed consolidated income statement for the three- and nine-month periods ended March 31, 2008. These reclassifications had no effect on earnings.

NOTE 5 – CHANGE IN ACCOUNTING PRINCIPLES

On July 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes . FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement No. 109. FIN 48 presents a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the implementation of FIN 48, the Company did not identify any material uncertain tax positions that it believes should be recognized in the financial statements.

Effective July 1, 2007, the Company adopted Statement of Financial Accounting Standards No. 156 (SFAS 156), Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140. SFAS 156 requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. The adoption of SFAS 156 did not impact the results of operations or financial condition.

NOTE 6 – RECENT DEVELOPMENTS

On May 7, 2008, the Company completed its previously announced 1-for-300 reverse stock split. The reverse stock split, which was effected at the record shareholder level, was immediately followed by a 300-for-1 forward stock split so that shareholders holding 300 or more shares continued to hold at least one whole share of the Company’s common stock. Shareholders of record owning fewer than 300 shares of the Company’s common stock received, in lieu of fractional shares, $14.00 in cash for each pre-reverse stock split share held at the effective time of the reverse stock split. The transaction resulted in a 39,305 reduction in pre-reverse stock split shares at a total cost of approximately $550,270 which, together with an estimated $87,000 of associated fees and expenses, will be deducted from stockholders’ equity.

On May 7, 2008, the Company also filed a Form 25, Notification of Removal from Listing and/or Registration, with the Securities and Exchange Commission in order to suspend trading in its stock on the NASDAQ Global Market. The Company anticipates that its shares will trade on the OTC Bulletin Board following its delisting. On May 19, 2008, the expected effective date of the delisting, the Company intends to file a Form 15 with the SEC to voluntarily deregister its common stock under the Securities Exchange Act of 1934. Upon the filing of the Form 15, the Company’s obligation to file certain reports with the SEC, including Forms 10-K, 10-Q and 8-K, will immediately be suspended. The Company expects that the deregistration of its common stock will become effective 90 days after the date of filing of the Form 15 with the SEC.

ITEM 2.

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

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, rather they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends," and similar expressions. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause the Company's actual results, performance, and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission. Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this report or made elsewhere from time to time by the Company or on its behalf. The Company assumes no obligation to update any forward-looking statements.

GENERAL

Management's discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes thereto.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2008, AND JUNE 30, 2007

Total consolidated assets of the Company increased $7.7 million, or 2.1%, to $370.7 million at March 31, 2008, from $363.0 million at June 30, 2007. Investment activity generally was responsible for the growth.

Cash and cash equivalents, which consist mainly of funds on deposit at the Federal Home Loan Bank of Indianapolis (FHLB) or the Federal Reserve Bank, decreased $5.1 million to $9.7 million during the nine months ended March 31, 2008. Certificates of deposit (CDs) with other financial institutions, which are all fully insured by the FDIC, totaled $494,000 at March 31, 2008, compared to $1.6 million at June 30, 2007.

Investment securities increased 20.3% during the first nine months of fiscal 2008 to $96.4 million. Highly-rated mortgage-backed securities accounted for most of the increase. The portfolio is composed entirely of mortgage-related securities, federal agency notes, municipal bonds, and investment grade asset-backed paper. Recent economic conditions have not adversely affected the ratings of any securities in the portfolio.

Net loans totaled $231.3 million at March 31, 2008, a 0.8% decrease from the $233.2 million balance at June 30, 2007. Permanent mortgage loans secured by one- to four-family residences decreased 3.2% during the first nine months of fiscal 2008 with non-owner-occupied loans accounting for the majority of this reduction. Conversely, commercial business loans increased 17.6% and permanent loans secured by nonresidential or multi-family real estate grew 4.1% during the same period. The consumer loan portfolio, including loans secured by savings accounts, decreased 3.3% as indirect automobile loan production slowed to $24.1 million through the first nine months of fiscal 2008. Also, $7.3 million of newly originated permanent single family residential mortgage loans, or 48.2% of total production, have been sold this fiscal year. For the foreseeable future, management intends to continue building the mortgage loan servicing portfolio through the origination and sale of loans. Consumer loan retention is subject to First Federal's liquidity needs, as well as internal and regulatory asset diversification limitations to which First Federal is in full compliance.

The allowance for loan losses totaled $1.0 million at March 31, 2008, a $27,000 decrease from nine months earlier. The change was composed of $330,000 in provisions for losses and $357,000 in net charge-offs. Net charge-offs consisted of $78,000 of mortgage loans, $17,000 of commercial loans, and $262,000 of consumer loans. The Company’s allowance for loan losses represented 0.45% of total loans at March 31, 2008, virtually equivalent to the level at June 30, 2007. Despite the small reduction, the allowance for loan losses increased to 427.2% of nonperforming loans at March 31, 2008, from 326.7% at June 30, 2007.

The table below highlights changes in the Company’s nonperforming assets since the most recent fiscal year end.

	March 31, 2008			June 30, 2007

Loans accounted for on a nonaccrual basis	$	140,000		$	311,000
Accruing loans past due 90 days or more		103,000			14,000
Nonperforming loans		243,000			325,000
Real estate owned (net)		76,000			10,000
Other repossessed assets		54,000			33,000
Total nonperforming assets	$	373,000		$	368,000

Total loans delinquent 90 days or more to total loans		0.10	%		0.14	%
Total loans delinquent 90 days or more to total assets		0.07	%		0.09	%
Total nonperforming assets to total assets		0.10	%		0.10	%

Total deposits decreased $23.1 million to $228.1 million at March 31, 2008, from $251.2 million at June 30, 2007. The decrease was attributed primarily to a $42.3 million reduction in brokered funds. Borrowings, which consisted mainly of FHLB products, totaled $101.5 million at March 31, 2008, a $29.0 million increase that included $5.2 million of junior subordinated debt associated with trust preferred securities issued through a statutory trust on August 1, 2007. Advances from the Federal Home Loan Bank of Indianapolis accounted for the balance of the increase. First Federal believes that it has substantial resources to increase its borrowing capacity with the FHLB.

At $935,000, escrow balances at March 31, 2008, were 34.5% above the levels nine months earlier due mainly to seasonal variances. During the first nine months of fiscal 2008, other liabilities, which include accrued expenses and miscellaneous short-term payables, increased $1.6 million, or 36.2%. The change was attributed primarily to accrued interest on time deposits and accrued income taxes.

Total stockholders’ equity decreased $43,000 through the first three quarters of fiscal 2008 to $34.2 million. In addition to the $791,000 of net income, the most significant components of the change included 23,925 shares of First Bancorp common stock repurchased at a total cost of $354,000 and semiannual cash dividends totaling $1.1 million. Also affecting stockholders’ equity were $157,000 in allocations of ESOP shares, and $63,000 from the exercise of stock options. Finally, an unrealized gain, adjusted for deferred taxes, of $401,000 was recognized on the portfolio of available-for-sale securities.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2008, AND 2007

GENERAL. Net income for the quarter ended March 31, 2008, improved 86.8% to $355,000 from $190,000 for the quarter ended March 31, 2007, as lower funding costs contributed to a higher net interest margin. Greater noninterest revenues also contributed to the improved earnings. The annualized return on average assets increased to 0.38% for the quarter ended March 31, 2008, from 0.21% for the same quarter last year. The return on average equity also rose to 4.12% from 2.22% for the comparative quarters.

NET INTEREST INCOME. At $2.0 million, net interest income for the quarter ended March 31, 2008, was 9.6% greater than in the same quarter a year ago. Total interest income increased 3.8% between the comparative quarters as a result of a $7.1 million increase in average interest-earning assets and a ten basis point improvement in the average yield on those assets. In particular, an $8.5 million increase in the average balance of investment securities provided $185,000 of additional interest income. Total interest expenses increased just 0.4% between the same periods on a $6.6 million increase in average interest-bearing liabilities and a seven basis point drop in average cost. Consequently, the net interest margin improved to 2.42% for the third quarter of fiscal 2008 from 2.26% for the same period the preceding year.

PROVISION FOR LOAN LOSSES. The provision for loan losses is intended to establish an allowance adequate to cover losses inherent in the loan portfolio as of the balance sheet date based upon management's periodic analysis of information available at that time. At $135,000, the provision for loan losses for the quarter ended March 31, 2008, was $30,000 greater than the same quarter last fiscal year. While management believes the allowance for loan losses to be sufficient given current information, future events, conditions, or regulatory directives could necessitate additions to the allowance for loan losses that may adversely affect net income.

NONINTEREST INCOME. Noninterest income totaled $527,000 for the quarter ended March 31, 2008, compared to $492,000 for the same quarter last year. The introduction of a new overdraft protection program accounted for the 82.1% increase in service charges on deposit accounts. Net gains on loan sales increased 139.8% from the same quarter last year due to a similar increase in sales volume. These improvements were partly offset by lower loan fee income and a $21,000 write-down of a residual asset.

NONINTEREST EXPENSE. At $2.0 million for the quarter ended March 31, 2008, total noninterest expense was 2.2% below the same quarter in fiscal 2007. The reduction was distributed among numerous expense categories with salaries and employee benefits accounting for the largest change. At 2.12% of average assets, noninterest expenses were eight basis points below the year-ago quarter.

INCOME TAXES. Effective tax rates for the quarters ended March 31, 2008 and 2007 approximated 24.2% and 20.4%, respectively. The effective tax rates are below the statutory rates due in large part to the tax benefits generated by bank-qualified municipal securities relative to the levels of income before taxes.

COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED MARCH 31, 2008, AND 2007

GENERAL. Net income for the nine months ended March 31, 2008, improved 33.8% to $791,000 from $591,000 for the nine months ended March 31, 2007, despite a slight compression in the net interest margin. At 0.29%, the annualized return on average assets was six basis points above the 0.23% for the same period in fiscal 2007. Similarly, the 3.09% return on average equity for the most recent nine months compared favorably to the 2.45% realized in the same period last fiscal year. The increase in noninterest expenses between the comparative nine-month periods was largely due to the Company’s October 1, 2006, acquisition of Home Building Bancorp, Inc. Improved noninterest revenues partially offset the higher overhead expenses.

NET INTEREST INCOME. At $5.8 million, net interest income for the nine months ended March 31, 2008, was 6.2% higher than in the same period in fiscal 2007. Total interest income increased 11.2% between the comparative nine-month periods as a result of a $25.1 million increase in average interest-earning assets, which was attributed mainly to the merger, and a 17 basis point improvement in the average yield on those assets. Along with merger assets, investment activity during the current fiscal year contributed greatly to a $7.6 million increase in the average investment securities portfolio and a $459,000 increase in investment income. The merger was also the primary contributor to the 14.3% increase in total interest expenses between the same periods. Consequently, the net interest margin declined slightly to 2.34% through the first three quarters of fiscal 2008 from 2.38% for the same time frame in fiscal 2007.

PROVISION FOR LOAN LOSSES. At $330,000, the provision for loan losses for the nine months ended March 31, 2008, was slightly higher than the same nine-month period in fiscal 2007. Net charge-offs, which typically are related to the automobile loan portfolio, totaled $357,000 for the most recent nine months versus $250,000 for the nine months ended March 31, 2007. Approximately $86,000 of the current fiscal year net charge-offs are attributed to loans delinquent 180 days or more to borrowers who have filed for Chapter 13 bankruptcy protection. Payments received from the bankruptcy trustees are treated as recoveries in subsequent periods.

NONINTEREST INCOME. Noninterest income totaled $1.6 million for the nine months ended March 31, 2008, compared to $1.5 for the same period last year. Last year’s total included a $42,000 gain from the sale of approximately $5.0 million of consumer loans. The introduction of a new overdraft protection program accounted for most of the 86.6% increase in service charges on deposit accounts. Reduced income from the servicing of sold consumer loans was responsible for the decrease in other noninterest income.

NONINTEREST EXPENSE. At $6.1 million for the nine months ended March 31, 2008, total noninterest expense increased 4.0% from the same period in fiscal 2007 due in large part to the personnel and facilities gained in the merger. Similarly, the 17.6% increase in data processing expenses was due mainly to accounts added in the merger. Despite these items, noninterest expenses relative to average assets declined nine basis points to an annualized 2.22% through the first three quarters of fiscal 2008.

INCOME TAXES. Effective tax rates for the nine-month periods ended March 31, 2008 and 2007 approximated 21.5% and 22.2%, respectively. The effective tax rates are below the statutory rates due in large part to the tax benefits generated by bank-qualified municipal securities relative to the levels of income before taxes.

LIQUIDITY AND CAPITAL RESOURCES

Federal regulations require First Federal to maintain liquidity commensurate with safe and sound operations. Such liquidity may include both existing assets and access to reliable funding sources. To this end, First Federal maintains an adequate level of liquidity to ensure the availability of sufficient funds to fund loan originations and deposit withdrawals, to satisfy other financial commitments, and to take advantage of investment opportunities. First Federal invests excess funds in overnight deposits and other short-term interest-bearing assets to provide liquidity to meet these needs. At March 31, 2008, bank-only cash and cash equivalents totaled $7.2 million, or 2.0% of total assets. First Federal also had marketable securities, excluding a small inventory of negotiable CDs, totaling $96.1 million, of which, 85.4% were classified “available for sale.” At the same time, First Federal had net commitments to fund loans, including loans in process, of $6.2 million.

Retail certificates of deposit scheduled to mature in one year or less totaled $82.2 million at March 31, 2008. Based upon historical experience, management believes the majority of maturing certificates of deposit will remain with First Federal. Management of First Federal believes it can adjust the offering rates of certificates of deposit to retain deposits in changing interest rate environments. If a significant portion of these deposits are not retained by First Federal, First Federal would be able to utilize FHLB advances and other wholesale sources to fund deposit withdrawals. This could result in an increase in interest expense to the extent that the average rate paid on wholesale funds generally exceeds the average rate paid on retail deposits of similar duration.

Management believes its ability to generate funds internally will satisfy its liquidity needs. However, should First Federal require funds beyond its ability to generate them internally, it has the ability to borrow funds from the Federal Home Loan Bank. Based on currently pledged collateral, First Federal had approximately $6.5 million of remaining availability to borrow under its credit arrangement with the FHLB as of March 31, 2008. In addition, First Federal had unpledged investment securities sufficient to add another $20.5 million of borrowing capacity with the FHLB.

Office of Thrift Supervision regulations require First Federal to maintain specific amounts of capital. As of March 31, 2008, First Federal exceeded its minimum capital requirements as the following table illustrates.

						Regulatory Minimum					Well Capitalized per
	Actual					Required Capital					12 CFR Part 565
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
As of March 31, 2008 (unaudited)
Total capital (to risk weighted assets)	$	27,951		11.84	%	$	18,883		8.00	%	$	23,603		10.00	%
Tier I capital (to risk weighted assets)		27,876		11.48			9,441		4.00			14,162		6.00
Tier I capital (to adjusted total assets)		27,876		7.75			14,395		4.00			17,994		5.00

As of June 30, 2007
Total capital (to risk weighted assets)	$	25,680		10.81	%	$	19,010		8.00	%	$	23,763		10.00	%
Tier I capital (to risk weighted assets)		25,675		10.40			9,505		4.00			14,258		6.00
Tier I capital (to adjusted total assets)		25,675		7.23			14,200		4.00			17,750		5.00

The Company’s fourth stock repurchase program was announced on August 24, 2006, to acquire up to 77,000 shares, or 5%, of the outstanding shares. This repurchase program, as with the previous programs, has been undertaken to enhance shareholder value and to provide liquidity for the otherwise thinly traded shares. The repurchase programs generally have been conducted through open market purchases, although unsolicited negotiated transactions or other types of repurchases have also taken place. As of March 31, 2008, 41,566 shares had been repurchased under the fourth stock repurchase program leaving 35,434 shares to be purchased.

The following chart summarizes stock repurchase activity during the most recent quarter.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2008 through January 31, 2008		0		N/A		0		37,921

February 1, 2008 through February 29, 2008		0		N/A		0		37,921

March 1, 2008 through March 31, 2008		2,487	$	12.25		2,487		35,434

Total		2,487	$	12.25		2,487

CRITICAL ACCOUNTING POLICIES

ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is established through a provision for loan losses charged to earnings at the time losses are estimated to have occurred. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogenous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.

MORTGAGE SERVICING RIGHTS. Mortgage servicing rights on originated loans that have been sold are initially recorded at fair value. Capitalized servicing rights are amortized in proportion to and over the period of estimated servicing revenues. Impairment of mortgage-servicing rights is assessed based on the fair value of those rights. Fair values are estimated using discounted cash flows based on a current market interest rate. For purposes of measuring impairment, the rights are stratified based on the predominant risk characteristics of the underlying loans. The predominant characteristic currently used for stratification is type of loan. The amount of impairment recognized is the amount by which the capitalized mortgage servicing rights for a stratum exceed their fair value.

GOODWILL. Goodwill is tested annually for impairment. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued Statement No. 157 (SFAS 157), Fair Value Measurements . This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Although this statement does not require any new fair value measurements, the application of this Statement may change current practices. The new standard will be effective for the Company beginning July 1, 2008. The Company has not completed its evaluation of the impact of the adoption of SFAS 157.

In February 2007, FASB issued Statement No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The new standard will be effective for the Company beginning July 1, 2008, although early adoption is allowed. The Company is currently evaluating the impact of the adoption of SFAS 159 and did not elect to early adopt.

ITEM 3.

CONTROLS AND PROCEDURES

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

Periodically, there have been various claims and lawsuits involving the Company and First Federal, such as claims to enforce liens, condemnation proceedings on properties in which First Federal holds security interests, claims involving the making and servicing of real property loans and other issues incident to First Federal's business. In the opinion of management, after consultation with the Company's and First Federal's legal counsel, no significant loss is expected from any of such pending claims or lawsuits. Neither the Company nor First Federal is a party to any material pending legal proceedings.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

See “Liquidity and Capital Resources” in Part I for information regarding stock repurchase activity during the quarter.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

31.1	Rule 13a-14(a)/15d-14(a) Chief Executive Officer Certification.

31.2	Rule 13a-14(a)/15d-14(a) Chief Financial Officer Certification.

32.0	Section 1350 Certifications.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FIRST BANCORP OF INDIANA, INC.

Dated: May 14, 2008	By: /s/ Michael H. Head
	Michael H. Head
	President and Chief Executive Officer
	(principal executive officer)

Dated: May 14, 2008	By: /s/ George J. Smith
	George J. Smith
	Treasurer and Chief Financial Officer
	(principal financial and accounting officer)

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