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Third Century Bancorp Releases Earnings for the Quarter Ended September 30, 2023

(OTCPINK: TDCB) – Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”), announced it recorded net income of $271,000 for the quarter ended September 30, 2023, or $0.23 per basic and diluted share, compared to net income of $639,000 for the quarter ended September 30, 2022, or $0.55 per basic and $0.54 per diluted share.

“Community banking is seeing some of the most challenging times in years. Regulatory and competitive pressures, particularly for deposits, have characterized the banking landscape. The impact of these challenging times is reflected in our current earnings report,” stated David A. Coffey, President and CEO. Coffey continued, “A primary issue all community banks continue to face is the rising interest rate environment. This created challenges early in the year and they remain today as our cost of funds has continued to squeeze our net interest margin.” Coffey noted, “Due to the decline of 1-4 family residential mortgage loan sales and its related impact on our non-interest income, we are continuing to focus on providing our services in more efficient ways. Our new Stones Crossing branch is an example of such thinking. Efficient staffing levels and technology that helps us offer leading edge banking to our customers.” Coffey concluded, “As we move into the final quarter of 2023, we will continue to find ways to become a more efficient bank without sacrificing our service levels our customers have come to expect.”

For the quarter ended September 30, 2023, net income decreased $368,000, or 57.59%, to $271,000 as compared to $639,000 for the same period in the prior year. The decrease in net income for the three-month period ended September 30, 2023 was driven primarily as a result of the $202,000, or 11.17% increase in non-interest expense and the $161,000, or 7.58% decline in net interest income. Net interest income decreased due to an increase in total interest expense of $1,147,000, or 300.26%, to $1,529,000 for the three-month period ended September 30, 2023 as compared to $382,000 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 decline in net interest income was an increase in total interest income of 39.35% to $3,492,000 for the three-month period ended September 30, 2023 compared to $2,506,000 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 $202,000, or 11.17%, to $2,010,000 for the quarter ended September 30, 2023 as compared to $1,808,000 for the same period in the prior year. Non-interest income decreased by $79,000, or 18.59%, to $346,000 for the quarter ended September 30, 2023 as compared to $425,000 for the same period in the prior year. The increase in non-interest expense occurred due to a combination of higher personnel expenses and increased fees for services from vendors. Non-interest income reductions, over the prior year period, were due to lower levels of 1-4 family loan origination service fees from sales to the secondary market.

For the nine-months ended September 30, 2023, net income decreased $814,000, or 51.52%, to $766,000 as compared to $1,580,000 for the nine-months ended September 30, 2022. The decrease in net income for the nine-month period ended September 30, 2023 was driven primarily as a result of an increase in non-interest expense and the decline in net interest income. Net interest income decreased by $280,000, or 4.80%, to $5,553,000 for the nine months ended September 30, 2023, as compared to $5,833,000 for the same period in the prior year. Net interest income decreased due to an increase in total interest expense of $3,052,000, or 350.00%, to $3,924,000 for the nine-months ended September 30, 2023, as compared to $872,000 for the same period in 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 decline in net interest income was an increase in total interest income of $2,772,000, or 41.34%, to $9,477,000 for the nine-months ended September 30, 2023 as compared to $6,705,000 for the same period of 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 than 2022. Non-interest income decreased by $72,000, or 4.85%, to $1,414,000 for the nine-months ended September 30, 2023 as compared to $1,486,000 for the same period of 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 $505,000, or 9.06%, to $6,076,000 for the nine-months ended September 30, 2023 as compared to $5,571,000 for the same period of the prior year. The increase in non-interest expenses was primarily driven by increases in personnel expense. Personnel-related expenses increased by $277,000, or 8.25%, compared to the same period the prior year.

The allowance for credit losses increased by $1,006,000, or 51.83%, 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 1.54% of total loans as of September 30, 2023, compared to 1.13% of total loans as of December 31, 2022. Nonperforming loans totaled $0 as of September 30, 2023 as compared to $52,000 or 0.03% of total loans as of the end of December 31, 2022.

Total assets increased $18.8 million to $299.3 million at September 30, 2023 from $280.5 million at December 31, 2022, an increase of 6.7%. The increase was primarily due to a $20.3 million, or 11.9%, increase in loans held-for-investment to $192.0 million at September 30, 2023, primarily funded by a $29.7 million, or 135.8%, increase in FHLB Advances. Total deposits were $230.5 million at September 30, 2023, down from $240.1 million as of December 31, 2022. At September 30, 2023, the weighted average rate of all FHLB advances was 3.76% compared to 4.29% at December 31, 2022, and the weighted average maturity was 3.5 years at September 30, 2023 compared to 0.1 years at December 31, 2022.

Stockholders’ equity was $6.0 million at September 30, 2023, down from $8.6 million at June 30, 2023, and down from $8.0 million at December 31, 2022. Stockholders’ equity decreased largely due to an increase in net unrealized loss of $1,600,000 during the nine-months ended September 30, 2023 as a result of the decrease in the fair value of our available-for-sale- securities due to the increase in market interest rates. 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 $736,000 adjustment to retained earnings for the CECL adjustment, dividends of $116,000, stock repurchases of $20,000 and the net settlement of stock awards of $10,000. Average equity as a percentage of assets decreased to 2.73% at September 30, 2023 compared to 2.86% 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

 

Nine Months Ended

Sept 30,

 

June 30,

 

Sept 30,

 

Sept 30,

 

Sept 30,

2023

 

2023

 

2022

 

2023

 

2022

Selected Consolidated Earnings Data:
Total Interest Income 

 $

                         3,492

 

 $

                         3,380

 

 $

                         2,506

 $

                     9,477

 

 $

                     6,705

Total Interest Expense 

 

                            1,529

 

 

                            1,365

 

 

                                382

 

                        3,924

 

 

                            872

Net Interest Income 

 

                            1,963

 

 

                            2,015

 

 

                            2,124

 

                        5,553

 

 

                        5,833

Provision for Losses on Loans 

 

                                  35

 

 

                                146

 

 

                                  30

 

                            211

 

 

                              30

Net Interest Income after Provision for Losses on Loans

 

                            1,928

 

 

                            1,869

 

 

                            2,094

 

                        5,342

 

 

                        5,803

Non-Interest Income 

 

                                346

 

 

                                315

 

 

                                425

 

                        1,414

 

 

                        1,486

Non-Interest Expense 

 

                            2,010

 

 

                            2,069

 

 

                            1,808

 

                        6,076

 

 

                        5,571

Income Tax Expense 

 

                                  (7

)

 

                                (60

)

 

                                  72

 

                            (86

)

 

                            138

Net Income 

 $

                            271

 

 $

                            175

 

 $

                            639

 $

                         766

 

 $

                     1,580

 
Earnings Per Share - basic

 $

                           0.23

 

 $

                           0.15

 

 $

                           0.55

 $

                       0.66

 

 $

                       1.34

Earnings Per Share - diluted

 $

                           0.23

 

 $

                           0.15

 

 $

                           0.54

 $

                       0.65

 

 $

                       1.34

 
 
 
 

Condensed Consolidated Balance Sheet

(Unaudited) 

In thousands, except per share data

 

September 30,

 

December 31,

 

September 30,

 

2023

 

 

 

2022

 

 

 

2022

 

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

 $

                         8,068

 

 $

                         3,747

 

$

                         5,620

 

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

 

                          76,842

 

 

                          85,571

 

 

85,043

 

Investment Securities, Held-to-Maturity

 

                            2,950

 

 

                            3,000

 

 

-

 

Loans Held-for-Sale

 

                                     -

 

 

                                     -

 

 

232

 

Loans Held-for-Investment

 

                       191,968

 

 

                       171,619

 

 

165,201

 

Allowance for Credit Losses

 

                            2,947

 

 

                            1,941

 

 

1,909

 

Net Loans

 

                       189,021

 

 

                       169,678

 

 

163,524

 

Accrued Interest Receivable

 

                            1,298

 

 

                            1,370

 

 

1,066

 

Other Assets

 

                          21,083

 

 

                          17,130

 

 

16,819

 

Total Assets

 $

                    299,262

 

 $

                    280,496

 

$

                    272,072

 

Liabilities
Noninterest-Bearing Deposits

 $

                      43,003

 

 $

                      44,631

 

$

                      45,313

 

Interest-Bearing Deposits

 

                       187,492

 

 

                       195,518

 

 

200,304

 

Total Deposits

 

                       230,495

 

 

                       240,149

 

 

245,617

 

FHLB Advances

 

                          51,500

 

 

                          21,845

 

 

9,000

 

Subordinated Notes, Net of Issuances Costs

 

                            9,751

 

 

                            9,731

 

 

9,724

 

Accrued Interest Payable

 

                                364

 

 

                                231

 

 

78

 

Accrued Expenses and Other Liabilities

 

                            1,105

 

 

                                517

 

 

509

 

Total Liabilities

 

                       293,215

 

 

                       272,473

 

 

264,928

 

Stockholders' Equity
Common Stock

 

                          11,467

 

 

                          11,440

 

 

11,432

 

Retained Earnings

 

                          10,143

 

 

                          10,519

 

 

10,214

 

Accumulated Other Comprehensive Income/(Loss)

 

                       (15,563

)

 

                       (13,936

)

 

(14,502

)

Total Stockholders' Equity

 

                            6,047

 

 

                            8,023

 

 

7,144

 

Total Liabilities and Stockholders' Equity

 $

                    299,262

 

 $

                    280,496

 

$

                    272,072

 

 
 
 
 
 

Three Months Ended

 

Nine Months Ended

dollar figures are in thousands, except per share data

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

2023

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

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

 

2.34

%

 

2.46

%

 

3.11

%

 

3.30

%

 

2.94

%

Net Yield on Interest-Earning Assets 

 

4.78

%

 

4.72

%

 

3.82

%

 

6.58

%

 

3.50

%

Non-Interest Expense, Annualized, to Average Assets 

 

2.66

%

 

2.81

%

 

2.68

%

 

4.16

%

 

2.84

%

Return on Average Assets, Annualized

 

0.36

%

 

0.24

%

 

0.95

%

 

0.52

%

 

0.80

%

Return on Average Equity, Annualized

 

13.15

%

 

8.52

%

 

12.59

%

 

17.33

%

 

13.33

%

Average Equity to Assets 

 

2.73

%

 

2.79

%

 

7.52

%

 

3.03

%

 

6.03

%

 
Average Loans 

 $

                    189,897

 

 $

                    186,542

 

 $

                    167,005

 

 $

                185,054

 

 $

                158,198

 

Average Securities 

 

82,795

 

 

84,335

 

 

86,080

 

 

87,603

 

 

87,196

 

Average Other Interest-Earning Assets 

 

19,314

 

 

15,743

 

 

9,065

 

 

15,610

 

 

10,185

 

Total Average Interest-Earning Assets 

 

292,006

 

 

286,620

 

 

262,150

 

 

288,267

 

 

255,579

 

Average Total Assets

 

302,142

 

 

294,192

 

 

269,872

 

 

291,877

 

 

261,829

 

 
Average Noninterest-Bearing Deposits 

 $

                      42,464

 

 $

                      43,472

 

 $

                      45,329

 

 $

                   43,122

 

 $

                   43,419

 

Average Interest-Bearing Deposits 

 

190,553

 

 

191,787

 

 

197,642

 

 

193,659

 

 

190,068

 

Average Total Deposits 

 

233,017

 

 

235,259

 

 

242,971

 

 

236,781

 

 

233,487

 

Average Wholesale Funding 

 

59,670

 

 

49,693

 

 

17,937

 

 

45,804

 

 

17,424

 

Average Interest-Bearing Liabilities  

 

250,223

 

 

241,480

 

 

215,579

 

 

239,463

 

 

207,492

 

 
Average Interest-Earnings Assets to Average Interest-Bearings Liabilities 

 

116.70

%

 

118.69

%

 

121.60

%

 

120.38

%

 

123.18

%

Non-Performing Loans to Total Loans

 

0.00

%

 

0.00

%

 

0.03

%

 

0.00

%

 

0.03

%

Allowance for Credit Losses to Total Loans Outstanding

 

1.54

%

 

1.54

%

 

1.15

%

 

1.54

%

 

1.15

%

Allowance for Credit Losses to Non-Performing Loans

 

-

 

 

-

 

 

3671.15

%

 

-

 

 

3671.15

%

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

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Effective Income Tax Rate 

 

-2.65

%

 

-52.17

%

 

10.13

%

 

-12.65

%

 

8.03

%

Tangible Book Value Per Share

 $

                           5.11

 

 $

                           7.21

 

 $

                           6.12

 

 $

                       5.11

 

 $

                       6.12

 

Market Closing Price at the End of Quarter

 $

                           7.75

 

 $

                           7.55

 

 $

                         10.21

 

 $

                       7.75

 

 $

                     10.21

 

Price-to-Tangible Book Value

 

151.71

%

 

104.72

%

 

166.95

%

 

151.71

%

 

166.95

%

 
 

 

Contacts

David A. Coffey, President and CEO

Tel. 317-736-7151

Fax 317-736-1726

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