Third Century Bancorp Releases Earnings For Quarter Ended And Year To Date September 30, 2016

Third Century Bancorp ("Company") (OTCBB: TDCB), the holding company for Mutual Savings Bank ("Bank") announced it had net income of $172,000 for the quarter ended September 30, 2016, or $0.14 per common and diluted share, compared to net income of $142,000 or $0.11 per common and diluted share for the quarter ended September 30, 2015. The period over period increase was $30,000, or 21.13%. For the nine months ended September 30, 2016, the Company recorded net income of $465,000, or $0.37 per common and diluted share, compared to net income of $381,000 or $0.30 per common and diluted share for the nine months ended September 30, 2015. The period over period increase was $84,000, or 22.05%.

The increase in net income for the three month period ended September 30, 2016 as compared to the same period in 2015 was primarily a result of an increase of $77,000 in net interest income, a $331,000 increase in noninterest income and a $28,000 decrease in noninterest expense, partially offset by a $402,000 increase in provision for losses and a $4,000 increase in income tax expense. Net interest income increased due to a $90,000 increase in interest income, partially offset by a $13,000 increase in interest expense. Interest income increased due to an increase of $89,000 in interest income on loans. The increase in interest income on loans was due to higher average balances compared to the same time period in the prior year. The increase in interest expense for the three month period ended September 30, 2016 compared to the same quarter in the prior year was due to a $13,000 increase in interest expense on FHLB advances. The increase in interest expense on FHLB advances was due to higher average balances of FHLB advances outstanding.

Noninterest income increased by $331,000 to $229,000 for the quarter ended September 30, 2016 compared to $(102,000) for the quarter ended September 30, 2015 primarily due to a lower amount of charges taken to write down real estate owned compared to the same period in the prior year. During the quarter ended September 30, 2016, noninterest income included $29,000 of charges taken to write down one parcel of real estate owned to the then current fair market value compared to $303,000 of charges taken to write down two parcels of real estate owned to the then current fair market values during the quarter ended September 30, 2015. Noninterest expense declined by $28,000 to $1,112,000 for the quarter ended September 30, 2016 compared to $1,140,000 for the quarter ended September 30, 2015, due to a $65,000 decline in data processing expenses for the quarter, partially offset by increases in other noninterest expenses.

The increase in net income for the nine months ended September 30, 2016 compared to the same time period in 2015 was primarily due to an increase of $228,000 in net interest income, a $339,000 increase in noninterest income, and a $7,000 decrease in income tax expense, partially offset by a $401,000 increase in provision for loan losses and an $89,000 increase in noninterest expenses. The increase in net interest income was the result of a $240,000 increase in interest income and partially offset by a $12,000 increase in interest expense. Interest income increased due to a $213,000 increase in interest income on loans and a $33,000 increase in interest income on investment securities. The increase in interest income on loans was due to higher average balances of loans outstanding. The increase in interest income on investment securities was due to a higher average yield on investment securities. The increase in interest expense was due to a $23,000 increase in interest expense on FHLB advances, partially offset by an $11,000 decrease in interest expense on deposits. The increase in interest expense on FHLB advances was due to higher average balances of FHLB advances outstanding. The decrease in interest expense on deposits was due to lower average balances of deposits outstanding.

Noninterest income increased $339,000 to $539,000 for the nine months ended September 30, 2016 compared to $200,000 for the same period in 2015 primarily due to a lower amount of charges taken to write down real estate owned compared to the same period in the prior year along with a $46,000 increase in income from the increase in cash surrender value of life insurance. Noninterest income for the nine month period ended September 30, 2016 included $119,000 of charges taken to write down two parcels of real estate owned to the then current fair market values compared to $303,000 of charges taken to write down two parcels of real estate owned to the then current fair market values in the nine month period ended September 30, 2015. Noninterest expense increased $89,000 to $3,243,000 for the nine months ended September 30, 2016 compared to $3,154,000 for the same period in the prior year primarily due to a $72,000 increase in employee wages.

Total assets increased $6.9 million to $133.9 million at September 30, 2016 from $127.0 million at December 31, 2015, an increase of 5.43%. The increase was primarily due to an $8.2 million increase in loans net of allowance for loan losses and a $1.8 million increase in fed funds sold, partially offset by a $1.6 million decline in cash and cash equivalents, a $992,000 decrease in interest earning time deposits with other banks, and an $807,000 decrease in investment securities. The increase in assets was funded by a $3.2 million increase in deposits and a $3.5 million increase in Federal Home Loan Bank borrowings.

Deposits increased $3.2 million, or 3.38%, to $97.9 million at September 30, 2016 from $94.8 million at December 31, 2015. Federal Home Loan Bank advances increased $3.5 million, or 21.88%, to $19.5 million at September 30, 2016 from $16.0 million at December 31, 2015. At September 30, 2016, the weighted average rate of all Federal Home Loan Bank advances outstanding was 1.23% compared to 1.33% at December 31, 2015 and the weighted average maturity of such advances was 2.1 years at September 30, 2016 compared with 2.25 years at December 31, 2015.

Stockholders' equity was $16.0 million at September 30, 2016 compared with $16.1 million at December 31, 2015. Stockholders' equity declined due to repurchases of 38,207 shares of the Company's common stock at an aggregate amount of $363,000 and $151,000 of cash dividends declared and paid on its common stock, partially offset by net income of $465,000 for the nine months ended September 30, 2016. Equity as a percentage of assets decreased to 11.96% at September 30, 2016 compared to 12.64% at December 31, 2015 due to the growth in total assets and the decrease in stockholders equity. Tangible book value per share was $12.86 at September 30, 2016 compared to $12.52 at December 31, 2015, an increase of $0.34 per share or 2.72%.

On November 10, 2015, Third Century Bancorp announced that its Board of Directors authorized the repurchase of up to 10% of its outstanding shares of common stock, or 127,270 shares, commencing on November 15, 2015. From November 15, 2015 through September 30, 2016, the Company repurchased 38,207 shares of its common stock at an aggregate total cost of $362,642, or $9.49 per share. The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to a trading plan. Repurchases are made at management's discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company's financial performance. Open market purchases are conducted in accordance with applicable legal requirements.

The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares.

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 Nineveh and Trafalgar, 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 September 30, At December 31,

2016

2015

Selected Consolidated Financial Condition Data:
(Dollars in thousands, except per share data)
Assets $ 133,886 $ 127,044
Loans receivable-net 106,637 98,412
Cash and cash equivalents 4,603 6,173
Federal funds sold 1,840 -
Interest-earning time deposits in other banks 3,720 4,712
Investment securities 9,251 10,058
Deposits 97,928 94,765
FHLB advances and other borrowings 19,500 16,000
Stockholders' equity-net 16,015 16,061
 
Non-performing assets to total assets 0.81 % 0.55 %

Allowance for loan losses to total loans outstanding
1.16 1.24

Allowance for loan losses to non-performing loans
115.01 176.60
Equity to assets 11.96 12.64
 
Number of full service offices 5 5
Tangible book value per share $ 12.86 $ 12.51
Market closing price at end of quarter $ 9.50 $ 8.25
Price-to-tangible book value 73.87 % 65.95 %
 
For the Three Months Ended September 30,

2016

2015
(Dollars In Thousands, Except Share Data)
Selected Consolidated Earnings Data:
Total interest income $ 1,248 $ 1,158
Total interest expense   115     102  
Net interest income 1,133 1,056
Provision (credit) for loan losses   1     (401 )

Net interest income after provision for loan losses
1,132 1,457
Noninterest income 229 (102 )
Noninterest expenses 1,112 1,140
Income tax expense   77     73  
Net income $ 172   $ 142  
Earnings per share basic $ 0.14 $ 0.11
Earnings per share diluted $ 0.14 $ 0.11
 
Selected Financial Ratios and Other Data:
Interest rate spread during period 3.45 % 3.41 %
Net yield on interest-earning assets 3.60 3.55
Return on average assets 0.52 0.46
Return on average equity 4.28 3.58

Average interest-earning assets to average interest-bearing liabilities
141.16 139.04
 
 
For the Nine Months Ended September 30,

2016

2015
(Dollars In Thousands, Except Share Data)
Selected Consolidated Earnings Data:
Total interest income $ 3,702 $ 3,462
Total interest expense   332     320  
Net interest income 3,370 3,142
Provision (credit) for loan losses   2     (399 )

Net interest income after provision for loans losses
3,368 3,541
Noninterest income 539 200
Noninterest expenses 3,243 3,154
Income tax expense   199     206  
Net income $ 465   $ 381  
Earnings per share - basic $ 0.37 $ 0.30
Earnings per share - diluted $ 0.37 $ 0.30
 
Selected Financial Ratios and Other Data:
Interest rate spread during period 3.48 % 3.28 %
Net yield on interest-earning assets 3.62 3.42
Return on average assets 0.47 0.41
Return on average equity 3.85 3.22

Average interest-earning assets to average interest-bearing liabilities
138.51 138.81
 

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