(OTCPINK: TDCB) - Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”), announced it recorded net income of $639,000 for the quarter ended September 30, 2022, or $0.55 per basic and diluted share, compared to net income of $784,000 for the quarter ended September 30, 2021, or $0.66 per basic and diluted share.

David A. Coffey, President and CEO, commented, “In these challenging economic times, we are pleased to report another solid quarter of performance for our Company. We have benefited from the changing interest rate environment and had a quarter of good loan growth.” Coffey concluded, “The key factor of our solid earnings is our people. Our talented team drives the success that translates to the numbers we report. I am proud of our team and all they do for our Bank. As we look forward, we will continue to take advantage of the market opportunities that will provide a fair return for our loyal stockholders.”

For the quarter ended September 30, 2022, net income decreased $145,000, or 18.49%, to $639,000 as compared to $784,000 for the same period in the prior year. The decrease in net income for the three-month period ended September 30, 2022 was driven primarily as a result of the $514,000, or 54.74%, decrease in non-interest income as compared to the same period in the prior year. The decrease in non-interest income was due primarily to a $271,000, or 100.00%, decrease in gains on the sale of investment securities, available-for-sale, as compared to the same period in the prior year. The decrease in non-interest income was partially offset by a $404,000, or 23.49%, increase in net interest income as compared to the same period in the prior year. The increase in net interest income was driven primarily by a $617,000, or 32.66%, increase in interest income as compared to the same period in the prior year due to the increase in interest rates and the growth of our loan portfolio. This was partially offset by a $213,000, or 126.04% increase in interest expense as compared to the same period in the prior year due to the increase in deposit expense as a result of rising interest rates.

The decrease in net income for the quarter ended September 30, 2022 was also the result of the $30,000 increase in the provision for loan losses compared to the same period in 2021. The increase in provision expense was due to the increase in loan balances during the nine-months ended September 30, 2022. The Company had no net charge-offs during the quarter ended September 30, 2022, and a net charge-off during the quarter ended September 30, 2021 of $2,000.

For the nine-months ended September 30, 2022, net income decreased $126,000, or 7.39%, to $1.6 million as compared to $1.7 million for the nine-months ended September 30, 2021. The decrease in net income for the nine-month period ended September 30, 2022 was driven primarily as a result of the $807,000, or 35.19%, decrease in non-interest income as compared to the same nine-month period in the prior year. The decrease in non-interest income was driven primarily by a $500,000, or 50.91%, decrease in the gain on sale of one-to-four family mortgages sold to Freddie Mac, as compared to the same nine-month period in the prior year. The decrease in non-interest income was also driven by a $271,000, or 100.00%, decrease in gains on the sale of investment securities, available-for-sale, as compared to the same period in the prior year. The decrease in non-interest income for the nine-month period ended September 30, 2022 was offset by a $874,000, or 17.62%, increase in net interest income as compared to the same nine-month period ended in the prior year. The increase in net interest income was primarily due to a $1.1 million, or 20.70%, increase in interest income, as compared to the same nine-month period in the prior year due to the increase in interest rates and the growth of our loan portfolio. The increase in interest income was partially offset by a $276,000, or 46.31%, increase in interest expense, as compared to the same nine-month period in the prior year due to the increase in deposit expense as a result of rising interest rates. Net income was also impacted by a $384,000, or 7.40%, increase in non-interest expense as compared to the same nine-month period in the prior year. In addition, the provision for loan losses decreased $60,000, or 66.67%, for the nine-month period ended September 30, 2022 as compared to the same nine-month period in the prior year as the Bank reached a level of adequate provision.

The increase in net income for the nine-months ended September 30, 2022 was also partially supported by a $131,000, or 48.70%, 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 8.03% for the nine-months ended September 30, 2022 from 13.62% for the same period in the prior year.

Total assets increased $30.5 million to $272.1 million at September 30, 2022 from $241.6 million at December 31, 2021, an increase of 12.63%. The increase was primarily due to a $21.2 million, or 14.78%, increase in loans held-for-investment to $165.2 million at September 30, 2022. This increase was primarily funded by a $30.9 million, or 14.42%, increase in total deposits, and the addition of $10.0 million in subordinated debt notes issued during the year. Total deposits were $245.6 million at September 30, 2022, up from $214.7 million as of December 31, 2021. Federal Home Loan Bank advances were $9.0 million at September 30, 2022 as compared to $5.0 million at December 31, 2021. At September 30, 2022, the weighted average rate of all Federal Home Loan Bank advances was 2.87% compared to 1.45% at December 31, 2021, and the weighted average maturity was 0.1 years at September 30, 2022 compared to 4.3 years at December 31, 2021.

The allowance for loan losses remained the same at $1.9 million at September 30, 2022 and at December 31, 2021. The allowance for loan losses totaled 1.15% of total loans as of September 30, 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 September 30, 2022 as compared to $237,000, or 0.16%, of total loans as of December 31, 2021.

Stockholders’ equity was $7.1 million at September 30, 2022, down from $21.5 million at December 31, 2021. Stockholders’ equity decreased by $14.4 million during the nine-months ended September 30, 2022 as a result of an increase in net unrealized loss of $15.5 million on available-for-sale securities due to the significant increase in market interest rates, partially offset by net income of $1.6 million. The decrease in stockholders’ equity was also impacted by repurchased stock of $176,000, dividends of $326,000 and stock awards of $20,000. Equity as a percentage of assets decreased to 2.63% at September 30, 2022 compared to 8.91% at December 31, 2021.

During the quarter ended September 30, 2022, the Company did not repurchase any shares of common stock. At September 30, 2022, 24,422 shares of common stock have been repurchased by the Company through the stock repurchase program since its inception in January 2021.

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, inflation, 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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