Third Century Bancorp Releases Record Earnings for the Quarter and Nine-Months Ended September 30, 2021

(OTCPINK: TDCB) -- Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”), announced it recorded net income of $784,000 for the quarter ended September 30, 2021, or $0.66 per basic and diluted share, compared to net income of $532,000 for the quarter ended September 30, 2020, or $0.45 per basic and diluted share.

David A. Coffey, President and CEO stated, “Our earnings and related metrics reflect the success of another quarter. The financial information reflects how we continued business as usual, in unprecedented times, and found additional ways to positively impact earnings.” Coffey further stated, “Regardless of what the numbers reflect, it isn’t lost on me that none of it is possible without a terrific team. It is the people who do the work and tell our story. We are blessed to have a team of dedicated professionals that strive to live our mission statement: Make dreams come true. Surpass expectations. Be the first choice for all financial needs.” Coffey concluded, “Our team is looking forward to concluding our year in a positive manner for our stakeholders.”

For the quarter ended September 30, 2021, net income increased $252,000, or 47.37%, to $784,000 as compared to $532,000 for the same period in the prior year. The increase in net income for the three-month period ended September 30, 2021 was driven primarily as a result of the $165,000, or 10.61%, increase in net interest income and a $165,000, or 8.90%, decrease in non-interest expense as compared to the same period in the prior year. The increase in net interest income was due to a combination of an increase in interest income and a decrease in interest expense due to increases in average assets largely due to an increase in the average balance of investment securities and decreases in average rates paid on liabilities primarily as a result of a decrease in average rates paid on deposits in the current low interest rate environment. Non-interest expense decreased as a result of a $170,000, or 14.25% decrease in personnel expenses. In addition, the increase in net income was supported by a decrease of $91,000, or 100.00%, in provision for loan losses as compared to the same period in the prior year. The increase in net income was partially offset by a $112,000, or 10.66%, decrease in non-interest income as compared to the same period in the prior year. The decrease in non-interest income was driven primarily by a $325,000 or 51.19%, decrease in gains on the sale of one-to-four family residential mortgage loans sold to Freddie Mac as compared to the same period in the prior year. This decrease was partially offset by a $271,000 or 100.00%, increase in gains on the sale of investment securities, available-for-sale, as compared to the same period in the prior year.

The $91,000 decrease in the provision for loan losses compared to the same period in 2020 was due to the improving economic conditions resulting from the current COVID-19 pandemic. The Company had no net charge-offs during the quarter ended September 30, 2021 compared to net loan recoveries of $2,000 for the same period in 2020. The Company expects that the current COVID-19 pandemic could impact the future provision for loan losses.

For the nine-months ended September 30, 2021, net income increased $245,000, or 16.77%, to $1.7 million as compared to $1.5 million for the nine-months ended September 30, 2020. The increase in net income for the nine-month period ended September 30, 2021 was driven primarily as a result of the $409,000, or 8.99%, increase in net interest income. The increase in net interest income was due to a combination of an increase in interest income and a decrease in interest expense due to increases in average assets largely due to an increase in the average balance of investment securities and decreases in average rates paid on liabilities primarily as a result of a decrease in average rates paid on deposits in the current low interest rate environment. The increase in net interest income for the nine-month period ended September 30, 2021 was partially offset by a decrease in non-interest income of $290,000, or 11.23% as compared to the same nine-month period ended in the prior year. This decrease was partially offset by a $192,000 or 245.15%, increase in gains on the sale of investment securities, available-for-sale, as compared to the same nine-month period in the prior year. In addition, the provision for loan losses decreased $186,000, or 67.39%, for the nine-month period ended September 30, 2021 as compared to the same prior year period.

The increase in net income for the nine-months ended September 30, 2021 was also supported by a $46,000 decrease in income tax expense as compared to the same period in the prior year. The decrease in income tax expense was due to a decrease in the effective income tax rate to 13.62% for the nine-months ended September 30, 2021 from 17.73% for the same period in the prior year.

Total assets increased $29.7 million to $239.3 million at September 30, 2021 from $209.6 million at December 31, 2020, an increase of 14.16%. The increase was primarily due to a $21.7 million, or 36.62%, increase in investment securities, available-for-sale to $81.0 million at September 30, 2021, primarily funded by a $34.3 million, or 19.36%, increase in total deposits. Total deposits were $211.4 million at September 30, 2021, up from $177.1 million as of December 31, 2020. Federal Home Loan Bank advances were $5.0 million at September 30, 2021 as compared to $11.7 million at December 31, 2020. At September 30, 2021, the weighted average rate of all Federal Home Loan Bank advances was 1.45% compared to 1.21% at December 31, 2020, and the weighted average maturity was 4.5 years at September 30, 2021 compared to 3.5 years at December 31, 2020. Total loans held-for-investment grew to $139.3 million at September 30, 2021 from $138.8 million at December 31, 2020, an increase of 0.37%.

The increase in total loan balances was partially the result of loans originated through the Small Business Administration’s Paycheck Protection Program (“PPP”) in which the Company participated. The Company originated $8.6 million of PPP loans in the program in 2020, of which $342,000 remained on the Company’s balance sheet as of September 30, 2021. The Company originated $4.6 million of PPP loans in the program in 2021, of which $1.3 million remained on the Company’s balance sheet as of September 30, 2021. As of September 30, 2021, a total of $1.6 million of PPP loans remained on the Company’s balance sheet with the remaining forgiven by the Small Business Administration.

The allowance for loan losses increased by $94,000, or 5.23%, to $1.9 million at September 30, 2021 from $1.8 million at December 31, 2020. The increase was primarily due to the provision for loan losses of $90,000 during the nine-months ended September 30, 2021 due to the economic conditions resulting from the COVID-19 pandemic. The allowance for loan losses totaled 1.34% of total loans as of September 30, 2021 as compared to 1.29% of total loans as of December 31, 2020. Nonperforming loans totaled $102,000 or 0.07%, of total loans as of September 30, 2021 as compared to $111,000 or 0.08%, of total loans as of December 31, 2020.

Stockholders’ equity was $21.6 million at September 30, 2021, up from $20.5 million at December 31, 2020. Stockholders’ equity increased by $1.1 million during the nine-months ended September 30, 2021 as a result of net income of $1.7 million, offset by a decrease in net unrealized gain of $270,000 of available-for-sale securities due to the sale of investment securities, available-for-sale, as well as an increase in market interest rates. The increase in stockholders’ equity was also offset by dividends of $201,000, repurchased stock of $167,000 and stock awards of $50,000. Equity as a percentage of assets decreased to 9.03% at September 30, 2021 compared to 9.76% at December 31, 2020.

During the nine-months ended September 30, 2021, the Company repurchased 10,800 shares of common stock at an average cost of $15.40 per share pursuant to the Company’s stock repurchase program. At September 30, 2021, 39,200 shares of common stock remain available for future repurchase by the Company through the stock repurchase program.

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 the COVID-19 pandemic, changes in the interest rate environment, changes in general economic conditions, 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.

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