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Third Century Bancorp Releases Earnings for the Fourth Quarter 2022 and for the Year Ended December 31, 2022

(OTCPINK: TDCB) - Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”), announced it recorded net income of $536,000 for the quarter ended December 31, 2022, or $0.46 per basic and diluted share, compared to net income of $634,000 for the quarter ended December 31, 2021, or $0.54 per basic and diluted share. For the year ended December 31, 2022, net income decreased $226,000, or 9.65%, to $2.1 million, or $1.83 per basic share and $1.82 per diluted share, as compared to $2.3 million, or $2.00 per basic share and $1.99 per diluted share, for the year ended December 31, 2021.

“I am pleased with the results we are sharing with our shareholders as we close out 2022. This has been a very challenging year for many reasons. The interest rate increases alone created a banking environment not previously experienced by many working in today’s industry,” commented President and CEO David A. Coffey. “ 2022 was a year of taking advantage of opportunities as they presented themselves. We did just that by issuing $10 million in subordinated debt at Third Century Bancorp in early 2022. In addition, we added quality loan balances on the Mutual Savings Bank balance sheet and purchased an incredibly attractive new location for our Greenwood Branch.” Coffey also added, “Looking ahead, 2023 offers similar economic challenges, but we are looking forward to another year to tell our story which will lead to another successful year for our shareholders.”

Coffey also commented, “Recent banking news may have created concerns about banking in general. I feel it is important that we remind our stakeholders that our bank has operated continuously since 1890. We remain well capitalized and well positioned to continue to serve our customers and community.” Coffey concluded, “While our customers deposits are covered by the FDIC Insurance, up to applicable limits, we remain Johnson County’s only locally based financial institution due to our financial strength, stability, liquidity and ability to navigate turbulent times.”

For the quarter ended December 31, 2022, net income decreased $98,000, or 15.46%, to $536,000 as compared to $634,000 for the same period in the prior year. The decrease in net income for the three-month period ended December 31, 2022 was driven primarily as a result of the $713,000, or 81.39%, decrease in non-interest income as compared to the same period in the prior year. The decrease in non-interest income was due to a decrease of $307,000, or 100.00%, in net gains on investment sales for the quarter ended December 31, 2022 as compared to the same period in the prior year. The decrease in non-interest income was also the result of a decrease of $177,000, or 69.45%, in gains on the sale of one-to-four-family residential mortgage loans sold to Freddie Mac for the quarter ended December 31, 2022 as compared to the same period in the prior year as a result of the rising interest rate environment. The decrease in net income was partially offset by an increase of $434,000, or 24.08%, in net interest income for the quarter ended December 31, 2022 as compared to the same period in the prior year. The increase in net interest income was supported by a $971,000, or 49.92% increase in interest income, which was offset by an increase of $537,000, or 375.52%, in interest expense for the quarter ended December 31, 2022 as compared to the same period in the prior year. The decrease in net income was also partially offset by a $48,000, or 48.48%, decrease in income tax expense as compared to the same period in the prior year as a result of the decrease in income before income tax expense.

There was no change in the provision for loan losses compared to the same period in 2021. The Company had $2,000 in net recoveries during the quarter ended December 31, 2022 compared to $3,000 in net charge-offs for the same period in 2021.

For the year ended December 31, 2022, net income decreased $226,000, or 9.65%, to $2.1 million, as compared to $2.3 million, for the year ended December 31, 2021. The decrease in net income for the year ended December 31, 2022 was driven primarily as the result of a decrease in non-interest income of $1.1 million, or 46.62% as compared to the prior year. This decrease was the result of a $577,000 or 100.00%, decrease in gains on the sale of investment securities, available-for-sale, as compared to the prior year, as well as a $677,000, or 54.73% decrease in the gain on sale of one-to-four family residential mortgage loans sold to Freddie Mac. As a result of the rising interest rate environment. The decrease in non-interest income was offset by the $1.0 million, or 14.07%, increase in net interest income. The increase in interest income was a result of higher market rates, as well as increases in average assets largely due to an increase in the average balance of loans held for investment and investment securities. Increases in interest expense were the result of higher average balances on interest-bearing deposits, FHLB Advances, and Subordinated Notes, along with increases in average rates paid on interest-bearing liabilities primarily as a result of significant increases in market rates following the historically low interest rate environment. In addition, the provision for loan losses decreased $30,000, or 33.33%, for the year ended December 31, 2022 as compared to the prior year.

The decrease in net income for the year ended December 31, 2022 was offset by a $179,000 or 48.64% decrease in income tax expense as compared to the prior year. The decrease in income tax expense was due to a decrease in pre-tax income for the year ended December 31, 2022 as compared to the prior year. The decrease in income tax expense was supported by a decrease in the effective income tax rate to 8.20% for the year ended December 31, 2022 from 13.51% for the prior year.

Total assets increased $38.9 million to $280.5 million at December 31, 2022 from $241.6 million at December 31, 2021, an increase of 16.12%. The increase was primarily due to a $27.7 million, or 19.24%, increase in loans held-for-investment to $171.6 million at December 31, 2022, primarily funded by a $25.5 million, or 11.88%, increase in total deposits. Total deposits were $240.1 million at December 31, 2022, up from $214.7 million as of December 31, 2021. Federal Home Loan Bank advances were $21.8 million at December 31, 2022 as compared to $5.0 million at December 31, 2021. At December 31, 2022, the weighted average rate of all Federal Home Loan Bank advances was 4.29% compared to 1.45% at December 31, 2021, and the weighted average maturity was 0.1 years at December 31, 2022 compared to 4.3 years at December 31, 2021. Investment securities, available-for-sale increased slightly to $85.6 million at December 31, 2022 from $84.6 million at December 31, 2021, an increase of 1.07%. Investment securities, held-to-maturity increased to $3.0 million at December 31, 2022 from $0 at December 31, 2021.

The allowance for loan losses increased by $60,000, or 3.19%, to $1.9 million at December 31, 2022 from the previous year end. The increase was primarily due to the provision for loan losses of $60,000 during the year ended December 31, 2022. The allowance for loan losses totaled 1.13% of total loans as of December 31, 2022 as compared to 1.30% of total loans as of December 31, 2021. Nonperforming loans totaled $52,000 or 0.03%, of total loans as of December 31, 2022 as compared to $237,000 or 0.16%, of total loans as of December 31, 2021.

Stockholders’ equity was $8.0 million at December 31, 2022, down from $21.5 million at December 31, 2021. Stockholders’ equity decreased by $13.5 million during the year ended December 31, 2022 as a result of an increase in net unrealized loss of $14.9 million on available-for-sale securities due to the significant increase in market interest rates, partially offset by net income of $2.1 million. The decrease in stockholders’ equity was also impacted by repurchased stock of $216,000, dividends of $448,000 and stock awards of $28,000. Equity as a percentage of assets decreased to 2.86% at December 31, 2022 compared to 8.91% at December 31, 2021.

During the year ended December 31, 2022, the Company repurchased 12,200 shares of common stock at an average cost of $15.52 per share pursuant to the Company’s stock repurchase program. At December 31, 2022, 25,578 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 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,

2022

 

2022

 

2021

 

2022

 

2021

 

2020

Selected Consolidated Earnings Data:
Total Interest Income

$

2,916

$

2,581

$

1,945

$

9,983

$

8,130

$

8,002

Total Interest Expense

 

680

 

382

 

143

 

1,552

 

739

 

1,051

Net Interest Income

 

2,236

 

2,199

 

1,802

 

8,431

 

7,391

 

6,951

Provision for Losses on Loans

 

30

 

30

 

-

 

60

 

90

 

335

Net Interest Income after Provision for Losses on Loans

 

2,206

 

2,169

 

1,802

 

8,371

 

7,301

 

6,616

Non-Interest Income

$

163

 

350

 

876

 

1,287

 

2,411

 

2,503

Non-Interest Expense

$

1,782

 

1,808

 

1,945

 

7,353

 

7,002

 

6,990

Income Tax Expense

 

51

 

72

 

99

 

189

 

368

 

357

Net Income

$

536

$

639

$

634

$

2,116

$

2,342

$

1,772

 
Earnings Per Share - basic

$

0.46

$

0.55

$

0.54

$

1.83

$

2.00

$

1.49

Earnings Per Share - diluted

$

0.46

$

0.55

$

0.54

$

1.82

$

1.99

$

1.49

 
 
Condensed Consolidated Balance Sheet
(Unaudited)
In thousands, except per share data
 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

2022

 

2022

 

2021

 

2022

 

2021

 

2020

Selected Consolidated Balance Sheet Data:
Assets
Cash and Due from Banks

$

3,747

$

5,620

$

4,857

$

3,747

$

4,857

$

4,888

Investment Securities, Available-for-Sale, at Fair Value

 

85,571

 

85,043

 

84,661

 

85,571

 

84,661

 

59,292

Investment Securities, Held-to-Maturity

 

3,000

 

-

 

-

 

3,000

 

-

 

-

Loans Held-for-Sale

 

-

 

232

 

738

 

-

 

738

 

434

Loans Held-for-Investment

 

171,619

 

165,201

 

143,927

 

171,619

 

143,927

 

138,834

Allowance for Loan Losses

 

1,941

 

1,909

 

1,881

 

1,941

 

1,881

 

1,791

Net Loans

 

169,678

 

163,524

 

142,784

 

169,678

 

142,784

 

137,477

Accrued Interest Receivable

 

1,370

 

1,066

 

760

 

1,370

 

760

 

686

Other Assets

 

17,130

 

16,819

 

8,499

 

17,130

 

8,499

 

7,283

Total Assets

$

280,496

$

272,072

$

241,561

$

280,496

$

241,561

$

209,626

 
Liabilities
Noninterest-Bearing Deposits

$

44,631

$

45,313

$

40,988

$

44,631

$

40,988

$

32,049

Interest-Bearing Deposits

 

195,518

 

200,304

 

173,666

 

195,518

 

173,666

 

145,069

Total Deposits

 

240,149

 

245,617

 

214,654

 

240,149

 

214,654

 

177,118

FHLB Advances

 

21,845

 

9,000

 

5,000

 

21,845

 

5,000

 

11,705

Subordinated Notes, Net of Issuances Costs

 

9,731

 

9,724

 

-

 

9,731

 

-

Accrued Interest Payable

 

231

 

78

 

32

 

231

 

32

 

54

Accrued Expenses and Other Liabilities

 

517

 

509

 

342

 

517

 

342

 

274

Total Liabilities

 

272,473

 

264,928

 

220,028

 

272,473

 

220,028

 

189,151

Stockholders' Equity
Common Stock

 

11,440

 

11,432

 

11,412

 

11,440

 

11,412

 

11,381

Retained Earnings

 

10,519

 

10,214

 

9,066

 

10,519

 

9,066

 

7,323

Accumulated Other Comprehensive Income/(Loss)

 

(13,936)

 

(14,502)

 

1,055

 

(13,936)

 

1,055

 

1,771

Total Stockholders' Equity

 

8,023

 

7,144

 

21,533

 

8,023

 

21,533

 

20,475

Total Liabilities and Stockholders' Equity

$

280,496

$

272,072

$

241,561

$

280,496

$

241,561

$

209,626

 
 

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,

2022

 

2022

 

2021

 

2022

 

2021

 

2020

Selected Financial Ratios and Other Data (Unaudited):
Interest Rate Spread During Period

 

3.17%

 

3.23%

 

2.94%

 

3.14%

 

3.15%

 

3.44%

Net Yield on Interest-Earning Assets

 

4.42%

 

3.94%

 

3.26%

 

3.89%

 

3.58%

 

4.17%

Non-Interest Expense, Annualized, to Average Assets

 

2.70%

 

2.68%

 

3.23%

 

2.80%

 

3.03%

 

3.45%

Return on Average Assets, Annualized

 

0.81%

 

0.95%

 

1.05%

 

0.81%

 

1.01%

 

0.87%

Return on Average Equity, Annualized

 

24.38%

 

20.82%

 

12.29%

 

17.01%

 

11.35%

 

9.23%

Average Equity to Assets

 

3.33%

 

4.55%

 

8.58%

 

4.74%

 

8.94%

 

9.47%

 
Average Loans

$

166,435

$

167,005

$

143,448

$

158,721

$

142,385

$

138,415

Average Securities

 

87,234

 

86,080

 

83,268

 

88,765

 

73,674

 

43,450

Average Other Interest-Earning Assets

 

10,351

 

9,065

 

11,615

 

9,057

 

11,025

 

10,143

Total Average Interest-Earning Assets

 

264,020

 

262,150

 

238,330

 

256,543

 

227,083

 

192,008

Average Total Assets

 

264,016

 

269,872

 

240,513

 

262,381

 

230,955

 

202,749

 
Average Noninterest-Bearing Deposits

$

43,578

$

45,329

$

40,335

$

43,459

$

37,829

$

30,831

Average Interest-Bearing Deposits

 

195,028

 

197,642

 

170,457

 

191,318

 

163,399

 

132,941

Average Total Deposits

 

238,606

 

242,971

 

210,792

 

234,777

 

201,228

 

163,772

Average Wholesale Funding

 

22,658

 

17,937

 

5,000

 

16,499

 

6,854

 

12,107

Average Interest-Bearing Liabilities

 

217,686

 

215,579

 

175,457

 

207,817

 

170,253

 

145,048

 
Average Interest-Earnings Assets to Average Interest-Bearings Liabilities

 

121.28%

 

121.60%

 

135.83%

 

123.45%

 

133.38%

 

132.38%

Non-Performing Loans to Total Loans

 

0.03%

 

0.03%

 

0.16%

 

0.03%

 

0.16%

 

0.08%

Allowance for Loan Losses to Total Loans Outstanding

 

1.13%

 

1.15%

 

1.30%

 

1.13%

 

1.30%

 

1.29%

Allowance for Loan Losses to Non-Performing Loans

 

3732.69%

 

3671.15%

 

793.67%

 

3732.69%

 

793.67%

 

1613.51%

Net Loan Chargeoffs/(Recoveries) to Average Total Loans Outstanding

 

0.00%

 

0.00%

 

0.00%

 

0.00%

 

0.00%

 

0.01%

Effective Income Tax Rate

 

8.68%

 

10.13%

 

13.51%

 

8.20%

 

13.51%

 

16.77%

Tangible Book Value Per Share

$

6.88

$

6.12

$

18.28

$

6.88

$

18.28

$

17.13

Market Closing Price at the End of Quarter

$

9.70

$

10.21

$

17.50

$

9.70

$

17.50

$

15.00

Price-to-Tangible Book Value

 

140.89%

 

166.95%

 

95.73%

 

140.89%

 

95.75%

 

87.54%

 

Contacts

David A. Coffey, President and CEO

Ryan W. Cook, Senior Vice President and CFO

Tel. 317-736-7151 Fax 317-736-1726

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