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

(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%

 

Contacts

David A. Coffey, President and CEO

S. Paul Arab, SVP and CFO

Tel. 317-736-7151

Fax 317-736-1726

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