Third Century Bancorp Releases Earnings for Quarter Ended September 30, 2012

FRANKLIN, Ind.--(BUSINESS WIRE)--Third Century Bancorp (“Company”) (OTCBB: TDCB), the holding company for Mutual Savings Bank (“Bank”) announced that it had net income of $22,000 for the quarter ended September 30, 2012, or $0.02 per share, compared to net income of $87,000 for the quarter ended September 30, 2011, or $0.07 per share. For the nine months ended September 30, 2012, the Company recorded net income of $206,000, or $0.16 per share, compared to net income of $205,000 for the nine months ended September 30, 2011, or $0.15 per share.

The provision for loan losses increased $167,000 to $170,000 for the three month period ended September 30, 2012 from $3,000 for the comparable period in 2011 and increased $165,000 to $268,000 from $103,000 for nine month period ended September 30, 2012 and 2011, respectively. While the overall asset quality for the Bank has improved during the past twelve months, an additional provision to the allowance for loan losses was needed in order to assist in the resolution of a classified commercial real estate loan. In evaluating the adequacy of the allowance for loan losses, management considers factors such as delinquency trends, portfolio composition, past loss experience and other factors such as general economic conditions. During the nine months ended September 30, 2012, Mutual Savings Bank charged-off loans, net of recoveries, of $485,000 compared to charged-off loans, net of recoveries, of $863,000 for the comparable period ended September 30, 2011. At September 30, 2012, non-performing assets totaled $6.3 million, or 5.16% of total assets, and included $5.5 million of non-performing loans. At September 30, 2011, non-performing assets totaled $9.0 million, or 7.71% of total assets, and included $8.0 million of non-performing loans. The decrease in non-performing loans was the result of increased collection efforts with delinquent borrowers prior to such loans becoming non-performing, payoff of loans due to various reasons, or from the writing off of the loan. Loans are considered non-performing when one or more of the following occur: (i) borrowers fail to make scheduled payments causing loans to become delinquent by 90 days or more; (ii) borrowers default on the original loan terms and the Bank restructures such loans; or, (iii) Management classifies loans as “doubtful” in regards to full repayment according to loan agreements.

Total assets increased $2.6 million to $121.5 million at September 30, 2012 from $118.9 million at December 31, 2011, an increase of 2.24%. The increase in assets was primarily the result of an increase of $2.5 million in loans receivable net of allowance to $97.9 million from $95.4 million. One-to-four family residential mortgage loans increased $6.4 million to $49.2 million at September 30, 2012 from $42.8 million at December 31, 2011, while commercial construction and land development loans decreased $4.2 million to $5.1 million at September 30, 2012 from $9.3 million at December 31, 2011.

Deposits decreased $489,000 to $88.4 million at September 30, 2012 from $88.9 million at December 31, 2011. Demand deposits increased $3.0 million, or 24.20%, to $15.5 million at September 30, 2012 from $12.5 million at December 31, 2011, while savings, NOW and money markets decreased $2.4 million to $44.9 million and time deposits decreased $1.1 million to $28.0 million at September 30, 2012.

Federal Home Loan Bank advances and other borrowings increased $3.0 million, or 20.69%, to $17.5 million at September 30, 2012 from $14.5 million at December 31, 2011. At September 30, 2012 the weighted average rate of all Federal Home Loan Bank advances was 2.49% and the weighted average maturity was 2.5 years compared with a weighted average rate of 2.98% and a weighted average maturity of 2.4 years at December 31, 2011.

Stockholders’ equity was $15.2 million at September 30, 2012 and December 31, 2011. Equity as a percentage of assets increased 0.40% to 12.50% at September 30, 2012 compared to 12.10% at December 31, 2011. In addition, the Company fully distributed and terminated its employee stock option plan for $1.1 million. The Company previously announced that the Board of Directors has suspended quarterly cash dividend payments until the Company achieves an acceptable and sustained level of earnings performance.

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 and the Franklin United Methodist Community, as well as in Edinburgh, Nineveh and Trafalgar, Indiana.

Selected Consolidated Financial Data
	At September 30,			At December 31,
	2012			2011
Selected Consolidated Financial Condition Data:	(In Thousands)
Assets	$	121,531		$	118,869
Loans receivable-net		97,952			95,411
Cash and cash equivalents		8,018			6,025
Interest-earning time deposits		1,737			2,985
Investment securities		6,452			6,495
Deposits		88,440			88,928
FHLB advances and other borrowings		17,500			14,500
Stockholders’ equity-net		15,195			15,185
	For the Three Months Ended September 30,
	2012			2011
	(Dollars In Thousands, Except Share Data)
Selected Consolidated Earnings Data:
Total interest income	$	1,301		$	1,339
Total interest expense		206			245
Net interest income		1,095			1,094
Provision of losses on loans		170			3
Net interest income after provision for losses on loans		925			1,091
Total other income		245			185
General, administrative and other expenses		1,135			1,125
Income tax expense		13			64
Net income		22		$	87
Earnings per share basic	$	0.02		$	0.07
Earnings per share diluted	$	0.02		$	0.07
Selected Financial Ratios and Other Data:
Interest rate spread during period		3.50	%		3.64	%
Net yield on interest-earning assets		3.72			3.89
Return on average assets		0.07			0.30
Return on average equity		0.57			2.31
Equity to assets		12.50			12.98
Average interest-earning assets to average interest-bearing liabilities		130.74			129.36
Non-performing assets to total assets		5.16			7.71
Allowance for loan losses to total loans outstanding		2.32			2.93
Allowance for loan losses to non-performing loans		42.16			34.03
Net charge-offs (recoveries) to average total loans outstanding		0.49			0.91
General, administrative and other expense to average assets		0.93			0.95
Effective income tax rate		37.14			42.38
Number of full service offices		6			6
Tangible book value per share	$	11.92		$	10.66
Market closing price at end of quarter	$	3.00		$	2.10
Price as a percentage of tangible book value		25	%		20	%

	For the Nine Months Ended September 30,
	2012			2011
	(Dollars In Thousands, Except Share Data)
Selected Consolidated Earnings Data:
Total interest income	$	3,943		$	4,137
Total interest expense		636			799
Net interest income		3,307			3,338
Provision of losses on loans		268			103
Net interest income after provision for losses on loans		3,039			3,235
Total other income		682			625
General, administrative and other expenses		3,382			3,499
Income tax expense		133			156
Net income	$	206		$	205
Earnings per share – basic	$	0.16		$	0.15
Earnings per share - diluted	$	0.16		$	0.15
Selected Financial Ratios and Other Data:
Interest rate spread during period		3.56	%		3.58	%
Net yield on interest-earning assets		3.78			3.86
Return on average assets		0.23			0.23
Return on average equity		1.79			1.82
Equity to assets		12.50			12.98
Average interest-earning assets to average interest-bearing liabilities		129.51			130.84
Non-performing assets to total assets		5.16			7.71
Allowance for loan losses to total loans outstanding		2.32			2.93
Allowance for loan losses to non-performing loans		42.16			34.03
Net charge-offs to average total loans outstanding		0.49			0.91
General, administrative and other expense to average assets		2.78			2.90
Effective income tax rate		39.23			43.21
Number of full service offices		6			6
Book value per share	$	11.92		$	10.66
Market closing price at end of quarter	$	3.00		$	2.10
Price-to-book value		25	%		20	%