Third Century Bancorp Releases Earnings for the Year Ended December 31, 2019 and Releases Record Earnings for the Quarter Ended December 31, 2019

FRANKLIN, Ind.--()--(OTCPINK:TDCB)--Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”) announced it had a record level of net income of $321,000 for the quarter ended December 31, 2019, or $0.27 per basic and diluted share, compared to net income of $297,000 for the quarter ended December 31, 2018, or $0.25 per basic and diluted share. The increase in net income for the fourth quarter 2019 compared to the same period in 2018 was primarily driven by a $110,000 increase in non-interest income. For the year ended December 31, 2019, the Company recorded net income of $993,000, or $0.84 per basic and diluted share, compared to net income of $1,019,000 for the year ended December 31, 2018, or $0.86 per basic and diluted share. The decrease in net income for 2019 as compared to 2018 was primarily due to the $751,000 increase in noninterest expense.

“We are proud to report record level of earnings for the fourth quarter of 2019 for the Company. Those earnings helped us finish the year at nearly the same level of earnings from the prior year,” indicated David A. Coffey, President and CEO. Coffey added, “This strong level of earnings is rewarding as we encountered a decreasing rate environment and upgraded our core banking system. Our dedicated staff worked tirelessly to help make contributions that led to another strong year for the Company.”

For the quarter ended December 31, 2019, net income increased $24,000, or 8.08%, to $321,000 as compared to $297,000 for the same period in the prior year. The increase in net income for the three-month period ended December 31, 2019 was driven primarily as result of the $110,000, or 37.41%, increase in non-interest income. This increase was also supported by a $62,000, or 4.45%, increase in net interest income, which was from achieved through an increase in interest income of $151,000, or 9.05%, partially offset by an $89,000, or 32.48%, increase in interest expense in the quarter ended December 31, 2019 as compared to the same quarter in the prior year. The increase in interest income was due to an increase in the average yield on interest-earning assets, along with higher average loan balances. The increase in interest expense was primarily due to higher average balances of interest bearing liabilities and a higher average rate paid on interest bearing liabilities.

The increase in net interest income for the quarter ended December 31, 2019 was partially the result of a $61,000 decrease in provision for loan losses compared to the same period in 2018 due to improving credit quality factors and declining loan balances.

The increase in net income for the three month period ended December 31, 2019 was also impacted by a $110,000 increase in noninterest income, a $212,000 increase in noninterest expense and a $3,000 decrease in income tax expense. The increase in noninterest income was due to increases in gains on sales of loans, trust income, and deposit fee and service charge income for the three month period ended December 31, 2019 as compared to the prior year period. The increase in noninterest expense for the quarter ended December 31, 2019 compared to the same period in the prior year was primarily due to increases in wages and benefits. Income tax expense also decreased due to a decrease in the effective income tax rate to 20.93% for the quarter ended December 31, 2019 from 22.86% for the same quarter in the prior year.

For the year ended December 31, 2019, net income decreased $26,000, or 2.55%, to $993,000 from $1,019,000 for the year ended December 31, 2018. The decrease in net income for the year ended December 31, 2019 was primarily due to an increase in noninterest expense of $751,000, or 15.14%, to $5.7 million for the year ended December 31, 2019 from $5.0 million for the year ended December 31, 2018. The increase in noninterest expense for the year ended December 31, 2019 as compared to 2018 was due to a $514,000, or 18.51%, increase in salaries and employee benefits. This increase was partially offset by a $412,000, or 7.28%, increase in net interest income for the year ended December 31, 2019. The increase in net interest income for the year ended December 31, 2019 was due to a $793,000, or 12.07%, increase in interest income partially offset by a $381,000, or 41.80%, increase in interest expense as compared to the prior year. The increase in interest income was due to an increase in the average yield on interest-earning assets, along with steady average loan balances. The increase in interest expense was primarily due to higher average balances of interest bearing liabilities and a higher average rate paid on interest bearing liabilities.

The increase in net interest income for the year ended December 31, 2019 was partially the result of a $123,000 decrease in the provision for loan losses in 2019 as compared to 2018. The decrease in provision for loan losses was primarily driven by steady average loan balances and credit quality factors, including net loan recoveries of $16,000 during the year ended December 31, 2019 compared to net loan charge-offs of $7,000 for 2018.

The increase in net income for the year ended December 31, 2019 was also impacted by a $159,000 increase in noninterest income, a $751,000 increase in noninterest expense and a $30,000 decrease in income tax expense. The increase in noninterest income was due to increases in gains on sales of loans, trust income, and deposit fee and service charge income for the year ended December 31, 2019 as compared to the prior year. The increase in noninterest expense for the year ended December 31, 2019 compared to the prior year was primarily due to increases in wages and benefits. The decrease in income tax expense was due to a decrease in the effective income tax rate to 20.93% for the year ended December 31, 2019 from 22.31% for the prior year.

Total assets increased $17.0 million to $176.1 million at December 31, 2019 from $159.1 million at December 31, 2018, an increase of 10.68%. The increase was primarily due to a $18.6 million, or 102.76%, increase in investment securities, primarily funded by a $21.1 million, or 16.92%, increase in total deposits. Total Loans decreased at December 31, 2019 by $1.7 million or 9.64% as compared to the prior year. Federal Home Loan Bank advances were $12.2 million at December 31, 2019 as compared to $17.5 million at December 31, 2018. At December 31, 2019, the weighted average rate of all Federal Home Loan Bank advances was 1.74% compared to 1.55% at December 31, 2018, and the weighted average maturity was 1.9 years at December 31, 2019 compared to 4.2 years at December 31, 2018.

The allowance for loan losses increased by $137,000, or 10.24%, to $1.4 million at December 31, 2019 compared to $1.3 million at December 31, 2018. The increase was due to the provision for loan losses of $121,000, and was supported by net loan recoveries of $16,000 during the year ended December 31, 2019. The allowance for loan losses totaled 1.15% of total loans as of December 31, 2019. Nonperforming loans totaled $10,000 or 0.01% of total loans as of December 31, 2019.

Stockholders’ equity was $17.6 million at December 31, 2019, up from $16.5 million at December 31, 2018. Stockholders’ equity increased by $1,091,000 during the year ended December 31, 2019 as a result of net income of $993,000, and an increase in net unrealized gain of $428,000 of our available-for-sale securities due to the decrease in market interest rates and partially offset by cash dividends paid of $330,000. Equity as a percentage of assets decreased to 9.98% at December 31, 2019 compared to 10.36% at December 31, 2018.

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 Otterbein Franklin Senior Life Community, as well as branches in Nineveh, 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 changes in the interest rate environment, changes in general economic conditions, 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.

Selected Consolidated Financial Data

(unaudited)

 

 

At December 31,

 

At December 31,

 

 

2019

 

2018

Selected Consolidated Financial Condition Data:

 

(Dollars in thousands, except per share data)

Total Assets

 

$

176,068

 

 

$

159,077

 

Loans receivable-net of allowance for loan losses of $1,475 and $1,338

 

 

126,544

 

 

 

128,311

 

Loans held for sale

 

 

713

 

 

 

838

 

Cash and cash equivalents

 

 

3,839

 

 

 

3,055

 

Interest-earning time deposits in other banks

 

 

0

 

 

 

496

 

Investment securities

 

 

36,724

 

 

 

18,084

 

Deposits

 

 

145,806

 

 

 

124,740

 

FHLB advances and other borrowings

 

 

12,250

 

 

 

17,500

 

Interest payable and other liabilities

 

 

441

 

 

 

356

 

Stockholders’ equity-net

 

 

17,572

 

 

 

16,480

 

 

 

 

 

 

Equity to assets ratio at year end

 

 

9.98

%

 

 

10.36

%

Non-performing loans to total loans

 

 

0.01

 

 

 

0.00

 

Allowance for loan losses to total loans outstanding

 

 

1.15

 

 

 

1.03

 

Allowance for loan losses to non-performing loans

 

 

1,475.00

%

 

 

N/A

 

Number of full service offices

 

 

6

 

 

 

5

 

Tangible book value per share

 

$

14.89

 

 

$

13.96

 

Market closing price at end of quarter

 

$

11.95

 

 

$

10.75

 

Price-to-tangible book value

 

 

80.25

%

 

 

77.01

%

 

 

 

 

 

 

For the Three Months Ended December 31,

 

2019

 

2018

 

 

(Dollars In Thousands, Except Share Data)

Selected Consolidated Earnings Data:

 

 

 

Total interest income

 

$

1,819

 

 

$

1,668

 

Total interest expense

 

 

363

 

 

 

274

 

Net interest income

 

 

1,456

 

 

 

1,394

 

Provision for losses on loans

 

 

0

 

 

 

61

 

Net interest income after provision for losses on loans

 

 

1,456

 

 

 

1,333

 

Noninterest income

 

 

404

 

 

 

294

 

Noninterest expense

 

 

1,454

 

 

 

1,242

 

Income tax expense

 

 

85

 

 

 

88

 

Net income

 

$

321

 

 

$

297

 

Earnings per basic and diluted share

 

$

0.27

 

 

$

0.25

 

 

 

 

 

 

Selected Financial Ratios and Other Data:

 

 

 

 

Interest rate spread during period

 

 

3.45

%

 

 

3.53

%

Net yield on interest-earning assets

 

 

4.38

 

 

 

4.33

 

Noninterest expense, annualized, to average assets

 

 

3.31

 

 

 

3.12

 

Return on average assets

 

 

0.73

 

 

 

0.75

 

Return on average equity

 

 

7.37

 

 

 

6.29

 

Average equity to assets

 

 

9.93

 

 

 

10.40

 

Average Loans

 

$

127,733

 

 

$

130,154

 

Average Securities

 

 

36,856

 

 

 

18,634

 

Average Other Interest-Earning Assets

 

 

3,135

 

 

 

1,586

 

Total Average Interest-Earning Assets

 

 

167,724

 

 

 

150,374

 

Average Noninterest-bearing deposits

 

$

24,229

 

 

$

21,914

 

Average Interest-bearing deposits

 

 

120,889

 

 

 

107,769

 

Average Total Deposits

 

 

145,118

 

 

 

129,683

 

Average FHLB Funding

 

 

12,060

 

 

 

18,717

 

Average Interest-Bearing Liabilities

 

 

132,949

 

 

 

126,486

 

Average Interest-Earnings Assets to Average Interest-Bearings Liabilities

 

 

126.15

%

 

 

118.88

%

Net loan chargeoffs/(recoveries) to average total loans outstanding

 

 

0.01

 

 

 

(0.01

)

Effective income tax rate

 

 

20.93

 

 

 

22.86

 

 

For the Years Ended December 31,

 

2019

 

2018

 

 

(Dollars in thousands, except per share data)

Selected Consolidated Earnings Data:

 

 

 

Total interest and dividend income

 

$

7,359

 

 

$

6,566

 

Total interest expense

 

 

1,291

 

 

 

910

 

Net interest income

 

 

6,068

 

 

 

5,656

 

Provision for losses on loans

 

 

121

 

 

 

243

 

Net interest income after provision for losses on loans

 

 

5,947

 

 

 

5,412

 

Noninterest income

 

 

1,018

 

 

 

859

 

Noninterest expense

 

 

5,710

 

 

 

4,960

 

Income tax expense

 

 

262

 

 

 

293

 

Net income

 

 

993

 

 

 

1,019

 

Earnings per share basic

 

$

0.84

 

 

$

0.86

 

Earnings per share diluted

 

$

0.84

 

 

$

0.86

 

 

 

 

 

 

Selected Financial Ratios and Other Data:

 

 

 

 

Interest rate spread during year

 

 

3.62

%

 

 

3.61

%

Net yield on interest-earning assets

 

 

4.48

 

 

 

4.27

 

Noninterest expense to average assets

 

 

3.25

 

 

 

3.17

 

Return on average assets

 

 

0.60

 

 

 

0.65

 

Return on average equity

 

 

5.82

 

 

 

7.21

 

Average equity to average assets

 

 

10.21

 

 

 

10.36

 

Average Loans

 

$

129,985

 

 

$

126,293

 

Average Securities

 

 

25,278

 

 

 

17,890

 

Average Other Interest-Earning Assets

 

 

3,335

 

 

 

2,013

 

Total Average Interest-Earning Assets

 

 

158,598

 

 

 

146,196

 

Average Noninterest-bearing deposits

 

 

22,603

 

 

 

22,901

 

Average Interest-bearing deposits

 

 

115,281

 

 

 

99,580

 

Average Total Deposits

 

 

137,884

 

 

 

122,481

 

Average FHLB Funding

 

 

14,291

 

 

 

19,371

 

Average Interest-Bearing Liabilities

 

 

129,572

 

 

 

118,951

 

Average Interest-Earnings Assets to Average Interest-Bearings Liabilities

 

 

122.40

%

 

 

125.42

%

Net charge-offs/(recoveries) to average total loans outstanding

 

 

(0.01

)

 

 

0.01

 

Effective income tax rate

 

 

20.91

 

 

 

22.31

 

 

Contacts

David A. Coffey, President and CEO
Ryan Cook, Senior Vice President and CFO
Tel. 317-736-7151 Fax 317-736-1726

Contacts

David A. Coffey, President and CEO
Ryan Cook, Senior Vice President and CFO
Tel. 317-736-7151 Fax 317-736-1726