Third Century Bancorp Releases Earnings for the Quarter and Year Ended December 31, 2023

FRANKLIN, Ind., February 22, 2024--(BUSINESS WIRE)--(OTCPINK: TDCB) - Third Century Bancorp ("Company"), the holding company for Mutual Savings Bank ("Bank"), announced it recorded unaudited net income of $252,000 for the quarter ended December 31, 2023, or $0.22 per basic and diluted share, compared to net income of $536,000 for the quarter ended December 31, 2022, or $0.46 per basic diluted share. In addition, the Company recorded net income of $1,018,000 for the year ended December 31, 2023, or $0.88 per basic and diluted share, compared to net income of $2,116,000 for the year ended December 31, 2022, or $1.83 per basic and $1.82 per diluted share.

"Two primary factors impacted our earnings for the year. First, higher funding costs. Due to the movement in the Fed Funds rate and market competitive deposit rates, the costs of funding our quality loan growth was significant. Second, due to higher residential mortgage loan interest rates, our non-interest income continued to run below our desired levels. Higher rates led to low levels of residential loan originations causing residential loan sales on the secondary market to be non-existent. Our loan quality remains strong as we had no non-performing loans at December 31, 2023 ," stated David A. Coffey, President and CEO. Coffey continued, "As we move into 2024, we are focusing on our strength of building quality broad relationships with our customers to help us shift our funding mix back to a retail funding mix. In addition, we will continue to focus on finding ways to be a more efficient financial institution." Coffey concluded, "We have a talented team and are focused on providing quality banking products and services to our customers. In 2024, we will strive to find ways to make our stockholders, customers, and community proud of our performance."

For the quarter ended December 31, 2023, net income decreased $284,000, or 52.99%, to $252,000 as compared to $536,000 for the same period in the prior year. The decrease in net income for the three-month period ended December 31, 2023 was driven primarily as a result of the $280,000, or 12.52% decline in net interest income. Net interest income decreased due to an increase in total interest expense of $1,027,000, or 151.03%, to $1,707,000 for the three-month period ended December 31, 2023 as compared to $680,000 for the same period for the prior year. The increase in total interest expense was due to the increase in funding costs of both retail deposits and wholesale funding. Offsetting the increase in total interest expense was an increase in total interest income of $747,000, or 25.62% to $3,663,000 for the three-month period ended December 31, 2023 compared to $2,916,000 for the same period for the prior year. The increase in total interest income was the result of higher average yields on interest earning assets and higher average loan balances. Non-interest expense increased by $107,000, or 6.0%, to $1,889,000 for the quarter ended December 31, 2023 as compared to $1,782,000 for the same period in the prior year. Non-interest income increased by $26,000, or 15.95%, to $189,000 for the quarter ended December 31, 2023 as compared to $163,000 for the same period in the prior year. The increase in non-interest expense occurred due to a combination of higher fraud expenses and increased fees for deposit insurance.

For the year ended December 31, 2023, net income decreased $1,098,000, or 51.89%, to $1,018,000 as compared to $2,116,000 for the year ended December 31, 2022. The decrease in net income for the year ended December 31, 2023, was driven primarily by the decline in net interest income as a result of an increase in non-interest expense. Net interest income decreased by $461,000, or 5.47%, to $7,970,000 for the year ended December 31, 2023, as compared to $8,431,000 for the prior year. Net interest income decreased due to an increase in total interest expense of $4,079,000, or 262.82%, to $5,631,000 for the year ended December 31, 2023, as compared to $1,552,000 for the prior year. The increase in total interest expense was largely due to the increased costs of retaining retail deposits and higher balances of wholesale funding. Offsetting the increase in total interest expense was an increase in total interest income of $3,618,000, or 36.24%, to $13,601,000 for the year ended December 31, 2023 as compared to $9,983,000 for the prior year. The increase in the total interest income was due to the increased levels of average loans with higher average loan yields in 2023 as compared to 2022. Non-interest income decreased by $145,000, or 11.27%, to $1,142,000 for the year ended December 31, 2023 as compared to $1,287,000 for the prior year. The decrease was largely due to decreases in 1-4 family loan sales on the secondary market. Non-interest expense increased by $612,000, or 8.32%, to $7,965,000 for the year ended December 31, 2023 as compared to $7,353,000 for the prior year. The increase in non-interest expenses was primarily driven by increases in personnel and data processing expenses, which increased by $147,000 or 3.46% and $119,000 or 18.62% respectively, compared to the prior year.

The allowance for credit losses increased by $1,081,000, or 55.68%, to $3.0 million from December 31, 2022. The increase was due to the transition from the incurred loss methodology model to the current expected credit loss (CECL) model. The allowance for credit losses totaled 1.51% of total loans as of December 31, 2023, compared to 1.13% of total loans as of December 31, 2022. Nonperforming loans totaled $0 as of December 31, 2023 as compared to $52,000 or 0.03% of total loans as of the end of December 31, 2022.

Total assets increased $32.4 million to $312.9 million at December 31, 2023 from $280.5 million at December 31, 2022, an increase of 11.6%. The increase was primarily due to a $25.1 million, or 14.6%, increase in loans held-for-investment to $196.7 million at December 31, 2023, primarily funded by a $24.6 million, or 112.8%, increase in FHLB advances. Total deposits were $246.1 million at December 31, 2023, up from $240.1 million as of December 31, 2022. At December 31, 2023, the weighted average rate of all FHLB advances was 3.73% compared to 4.29% at December 31, 2022, and the weighted average maturity was 3.6 years at December 31, 2023 compared to 0.1 years at December 31, 2022.

Stockholders’ equity was $9.5 million at December 31, 2023, up from $6.0 million at September 30, 2023 and $8.0 million at December 31, 2022. Stockholders’ equity increased largely due to a decrease in net unrealized loss of $1,626,000 during the year ended December 31, 2023 as a result of the increase in the fair value of our available- for-sale-securities due to the temporary improvement in the forward rate curve compared to our portfolio at year end. The available-for-sale securities are investments in government sponsored mortgage-backed securities as well as investments in municipal bonds, which provided cash flow for business purposes. Stockholders’ equity was also affected by the $808,000 adjustment to retained earnings for the CECL adjustment, net income of $1,018,000, dividends of $416,000, stock repurchases of $20,000 and the net settlement of stock awards of $10,000. Average equity as a percentage of assets decreased to 2.74% at December 31, 2023 compared to 3.33% at December 31, 2022.

Founded in 1890, Mutual Savings Bank is a full-service financial institution based in Johnson County, Indiana. In addition to its main office at 80 East Jefferson Street, Franklin, Indiana, the Bank operates branches in Franklin at 1124 North Main Street, Trafalgar and Greenwood, Indiana.

This press release contains certain forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of the Company. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Certain factors that could cause actual results to differ materially from expected results include inflation, changes in the interest rate environment, changes in general economic conditions, the COVID-19 pandemic, legislative and regulatory changes that adversely affect the business of the Company and the Bank, and changes in the securities markets. Except as required by law, the Company does not undertake any obligation to update any forward-looking statements to reflect changes in belief, expectations, or events.

Condensed Consolidated Statements of Income
(Unaudited)
In thousands, except per share data
	Three Months Ended											Twelve Months Ended
	December 31,				September 30,				December 31,			December 31,				December 31,			December 31,
	2023				2023				2022			2023				2022			2021
Selected Consolidated Earnings Data:
Total Interest Income	$	3,663			$	3,492			$	2,916		$	13,601			$	9,983		$	8,130
Total Interest Expense		1,707				1,529				680			5,631				1,552			739
Net Interest Income		1,956				1,963				2,236			7,970				8,431			7,391
Provision for Losses on Loans		27				35				30			238				60			90
Net Interest Income after Provision for Losses on Loans		1,929				1,928				2,206			7,732				8,371			7,301
Non-Interest Income		189				346				163			1,142				1,287			2,411
Non-Interest Expense		1,889				2,010				1,782			7,965				7,353			7,002
Income Tax Expense		(23	)			(7	)			51			(109	)			189			368
Net Income	$	252			$	271			$	536		$	1,018			$	2,116		$	2,342
Earnings Per Share - basic	$	0.22			$	0.23			$	0.46		$	0.88			$	1.83		$	2.00
Earnings Per Share - diluted	$	0.22			$	0.23			$	0.46		$	0.88			$	1.82		$	1.99

Condensed Consolidated Balance Sheet
(Unaudited)
In thousands, except per share data
	December 31,				September 30,				December 31,				December 31,				December 31,				December 31,
		2023				2023				2022				2023				2022				2021
Selected Consolidated Balance Sheet Data:
Assets
Cash and Due from Banks	$	13,470			$	8,068			$	3,747			$	13,470			$	3,747			$	4,857
Investment Securities, Available-for-Sale, at Fair Value		80,367				76,842				85,571				80,367				85,571				84,661
Investment Securities, Held-to-Maturity		2,950				2,950				3,000				2,950				3,000				-
Loans Held-for-Sale		552				-				-				552				-				738
Loans Held-for-Investment		196,722				191,968				171,619				196,722				171,619				143,927
Allowance for Credit Losses		2,972				2,947				1,941				2,972				1,941				1,881
Net Loans		194,302				189,021				169,678				194,302				169,678				142,784
Accrued Interest Receivable		1,547				1,298				1,370				1,547				1,370				760
Other Assets		20,269				21,083				17,130				20,269				17,130				8,499
Total Assets	$	312,905			$	299,262			$	280,496			$	312,905			$	280,496			$	241,561
Liabilities
Noninterest-Bearing Deposits	$	43,692			$	43,003			$	44,631			$	43,692			$	44,631			$	40,988
Interest-Bearing Deposits		202,426				187,492				195,518				202,426				195,518				173,666
Total Deposits		246,118				230,495				240,149				246,118				240,149				214,654
FHLB Advances		46,500				51,500				21,845				46,500				21,845				5,000
Subordinated Notes, Net of Issuances Costs		9,758				9,751				9,731				9,758				9,731				-
Accrued Interest Payable		485				364				231				485				231				32
Accrued Expenses and Other Liabilities		536				1,105				517				536				517				342
Total Liabilities		303,397				293,215				272,473				303,397				272,473				220,028
Stockholders' Equity
Common Stock		11,480				11,467				11,440				11,480				11,440				11,412
Retained Earnings		10,338				10,143				10,519				10,338				10,519				9,066
Accumulated Other Comprehensive Income/(Loss)		(12,310	)			(15,563	)			(13,936	)			(12,310	)			(13,936	)			1,055
Total Stockholders' Equity		9,508				6,047				8,023				9,508				8,023				21,533
Total Liabilities and Stockholders' Equity	$	312,905			$	299,262			$	280,496			$	312,905			$	280,496			$	241,561

	Three Months Ended									Twelve Months Ended
	dollar figures are in thousands, except per share data									dollar figures are in thousands, except per share data
	December 31,			September 30,			December 31,			December 31,			December 31,			December 31,
	2023			2023			2022			2023			2022			2021
Selected Financial Ratios and Other Data (Unaudited):
Interest Rate Spread During Period		2.26%			2.34%			3.17%			2.40%			3.14%			3.15%
Net Yield on Interest-Earning Assets		5.04%			4.78%			4.42%			4.80%			3.89%			3.58%
Non-Interest Expense, Annualized, to Average Assets		2.51%			2.66%			2.70%			2.73%			2.80%			3.03%
Return on Average Assets, Annualized		0.34%			0.36%			0.81%			0.35%			0.81%			1.01%
Return on Average Equity, Annualized		12.23%			13.15%			24.36%			12.35%			17.01%			11.35%
Average Equity to Assets		2.74%			2.73%			3.33%			2.83%			4.74%			8.94%
Average Net Loans	$	193,190		$	189,897		$	166,435		$	184,972		$	158,721		$	142,385
Average Net Securities		81,084			82,795			87,234			85,966			88,765			73,674
Average Other Interest-Earning Assets		16,583			19,314			10,351			12,203			9,057			11,025
Total Average Interest-Earning Assets		290,858			292,006			264,020			283,141			256,543			227,083
Average Total Assets		300,494			302,142			264,016			291,309			262,381			230,955
Average Noninterest-Bearing Deposits	$	43,147		$	42,464		$	43,578		$	43,471		$	43,459		$	37,829
Average Interest-Bearing Deposits		196,655			190,553			195,028			194,411			191,318			163,399
Average Total Deposits		239,802			233,017			238,606			237,882			234,777			201,228
Average Wholesale Funding		49,279			59,670			22,658			39,396			16,499			6,854
Average Interest-Bearing Liabilities		245,934			250,223			217,686			233,807			207,817			170,253
Avg. Interest-Earnings Assets to Avg. Interest-Bearings Liabilities		118.27%			116.70%			121.28%			121.10%			123.45%			133.38%
Non-Performing Loans to Total Loans		0.00%			0.00%			0.03%			0.00%			0.03%			0.16%
Allowance for Credit Losses to Total Loans Outstanding		1.51%			1.54%			1.13%			1.51%			1.13%			1.30%
Allowance for Credit Losses to Non-Performing Loans		-			-			3732.69%			-			3732.69%			793.67%
Net Loan Chargeoffs/(Recoveries) to Avg. Total Loans Outstanding		0.00%			0.00%			0.00%			0.00%			0.00%			0.00%
Effective Income Tax Rate		-10.04%			-2.65%			8.69%			-11.99%			8.20%			13.51%
Tangible Book Value Per Share	$	8.18		$	5.11		$	6.88		$	8.18		$	6.88		$	18.28
Market Closing Price at the End of Quarter	$	7.05		$	7.75		$	9.70		$	7.05		$	9.70		$	17.50
Price-to-Tangible Book Value		86.23%			151.71%			140.89%			86.23%			140.89%			95.75%

View source version on businesswire.com: https://www.businesswire.com/news/home/20240222364119/en/

Contacts

David A. Coffey, President and CEO
S. Paul Arab, SVP and CFO
Tel. 317-736-7151
Fax 317-736-1726