FRANKLIN, Ind., February 22, 2024--(BUSINESS WIRE)--(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. O?setting 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 a?ected 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 ?nancial institution based in Johnson County, Indiana. In addition to its main o?ce at 80 East Je?erson 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 di?er materially from expected results include in?ation, changes in the interest rate environment, changes in general economic conditions, the COVID-19 pandemic, legislative and regulatory changes that adversely a?ect 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 re?ect 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