Third Century Bancorp Releases Earnings for the Fourth Quarter 2022 and for the Year Ended December 31, 2022

Rhea-AI Summary

Third Century Bancorp (TDCB) reported a net income of $536,000 for Q4 2022, reflecting a 15.46% decline compared to $634,000 in Q4 2021. For the full year, net income decreased by 9.65% to $2.1 million, primarily due to a significant reduction in non-interest income, down 46.62% year-over-year. Despite challenges from rising interest rates, net interest income rose by 14.07%. Total assets increased by 16.12% to $280.5 million, driven by a 19.24% rise in loans. However, stockholders' equity dropped to $8.0 million from $21.5 million, impacted by unrealized losses in securities. TDCB remains well-capitalized to navigate economic challenges.

Positive

• Net interest income increased by 14.07% year-over-year.
• Total assets grew by 16.12% to $280.5 million.
• Loans held-for-investment rose by 19.24%.

Negative

• Net income decreased by 9.65% year-over-year.
• Non-interest income fell by 46.62%, primarily due to reduced gains on investment sales.
• Stockholders' equity decreased significantly from $21.5 million to $8.0 million.

FRANKLIN, Ind.--(BUSINESS WIRE)-- (OTCPINK: TDCB) - Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”), announced it recorded net income of $536,000 for the quarter ended December 31, 2022, or $0.46 per basic and diluted share, compared to net income of $634,000 for the quarter ended December 31, 2021, or $0.54 per basic and diluted share. For the year ended December 31, 2022, net income decreased $226,000, or 9.65%, to $2.1 million, or $1.83 per basic share and $1.82 per diluted share, as compared to $2.3 million, or $2.00 per basic share and $1.99 per diluted share, for the year ended December 31, 2021.

“I am pleased with the results we are sharing with our shareholders as we close out 2022. This has been a very challenging year for many reasons. The interest rate increases alone created a banking environment not previously experienced by many working in today’s industry,” commented President and CEO David A. Coffey. “ 2022 was a year of taking advantage of opportunities as they presented themselves. We did just that by issuing $10 million in subordinated debt at Third Century Bancorp in early 2022. In addition, we added quality loan balances on the Mutual Savings Bank balance sheet and purchased an incredibly attractive new location for our Greenwood Branch.” Coffey also added, “Looking ahead, 2023 offers similar economic challenges, but we are looking forward to another year to tell our story which will lead to another successful year for our shareholders.”

Coffey also commented, “Recent banking news may have created concerns about banking in general. I feel it is important that we remind our stakeholders that our bank has operated continuously since 1890. We remain well capitalized and well positioned to continue to serve our customers and community.” Coffey concluded, “While our customers deposits are covered by the FDIC Insurance, up to applicable limits, we remain Johnson County’s only locally based financial institution due to our financial strength, stability, liquidity and ability to navigate turbulent times.”

For the quarter ended December 31, 2022, net income decreased $98,000, or 15.46%, to $536,000 as compared to $634,000 for the same period in the prior year. The decrease in net income for the three-month period ended December 31, 2022 was driven primarily as a result of the $713,000, or 81.39%, decrease in non-interest income as compared to the same period in the prior year. The decrease in non-interest income was due to a decrease of $307,000, or 100.00%, in net gains on investment sales for the quarter ended December 31, 2022 as compared to the same period in the prior year. The decrease in non-interest income was also the result of a decrease of $177,000, or 69.45%, in gains on the sale of one-to-four-family residential mortgage loans sold to Freddie Mac for the quarter ended December 31, 2022 as compared to the same period in the prior year as a result of the rising interest rate environment. The decrease in net income was partially offset by an increase of $434,000, or 24.08%, in net interest income for the quarter ended December 31, 2022 as compared to the same period in the prior year. The increase in net interest income was supported by a $971,000, or 49.92% increase in interest income, which was offset by an increase of $537,000, or 375.52%, in interest expense for the quarter ended December 31, 2022 as compared to the same period in the prior year. The decrease in net income was also partially offset by a $48,000, or 48.48%, decrease in income tax expense as compared to the same period in the prior year as a result of the decrease in income before income tax expense.

There was no change in the provision for loan losses compared to the same period in 2021. The Company had $2,000 in net recoveries during the quarter ended December 31, 2022 compared to $3,000 in net charge-offs for the same period in 2021.

For the year ended December 31, 2022, net income decreased $226,000, or 9.65%, to $2.1 million, as compared to $2.3 million, for the year ended December 31, 2021. The decrease in net income for the year ended December 31, 2022 was driven primarily as the result of a decrease in non-interest income of $1.1 million, or 46.62% as compared to the prior year. This decrease was the result of a $577,000 or 100.00%, decrease in gains on the sale of investment securities, available-for-sale, as compared to the prior year, as well as a $677,000, or 54.73% decrease in the gain on sale of one-to-four family residential mortgage loans sold to Freddie Mac. As a result of the rising interest rate environment. The decrease in non-interest income was offset by the $1.0 million, or 14.07%, increase in net interest income. The increase in interest income was a result of higher market rates, as well as increases in average assets largely due to an increase in the average balance of loans held for investment and investment securities. Increases in interest expense were the result of higher average balances on interest-bearing deposits, FHLB Advances, and Subordinated Notes, along with increases in average rates paid on interest-bearing liabilities primarily as a result of significant increases in market rates following the historically low interest rate environment. In addition, the provision for loan losses decreased $30,000, or 33.33%, for the year ended December 31, 2022 as compared to the prior year.

The decrease in net income for the year ended December 31, 2022 was offset by a $179,000 or 48.64% decrease in income tax expense as compared to the prior year. The decrease in income tax expense was due to a decrease in pre-tax income for the year ended December 31, 2022 as compared to the prior year. The decrease in income tax expense was supported by a decrease in the effective income tax rate to 8.20% for the year ended December 31, 2022 from 13.51% for the prior year.

Total assets increased $38.9 million to $280.5 million at December 31, 2022 from $241.6 million at December 31, 2021, an increase of 16.12%. The increase was primarily due to a $27.7 million, or 19.24%, increase in loans held-for-investment to $171.6 million at December 31, 2022, primarily funded by a $25.5 million, or 11.88%, increase in total deposits. Total deposits were $240.1 million at December 31, 2022, up from $214.7 million as of December 31, 2021. Federal Home Loan Bank advances were $21.8 million at December 31, 2022 as compared to $5.0 million at December 31, 2021. At December 31, 2022, the weighted average rate of all Federal Home Loan Bank advances was 4.29% compared to 1.45% at December 31, 2021, and the weighted average maturity was 0.1 years at December 31, 2022 compared to 4.3 years at December 31, 2021. Investment securities, available-for-sale increased slightly to $85.6 million at December 31, 2022 from $84.6 million at December 31, 2021, an increase of 1.07%. Investment securities, held-to-maturity increased to $3.0 million at December 31, 2022 from $0 at December 31, 2021.

The allowance for loan losses increased by $60,000, or 3.19%, to $1.9 million at December 31, 2022 from the previous year end. The increase was primarily due to the provision for loan losses of $60,000 during the year ended December 31, 2022. The allowance for loan losses totaled 1.13% of total loans as of December 31, 2022 as compared to 1.30% of total loans as of December 31, 2021. Nonperforming loans totaled $52,000 or 0.03%, of total loans as of December 31, 2022 as compared to $237,000 or 0.16%, of total loans as of December 31, 2021.

Stockholders’ equity was $8.0 million at December 31, 2022, down from $21.5 million at December 31, 2021. Stockholders’ equity decreased by $13.5 million during the year ended December 31, 2022 as a result of an increase in net unrealized loss of $14.9 million on available-for-sale securities due to the significant increase in market interest rates, partially offset by net income of $2.1 million. The decrease in stockholders’ equity was also impacted by repurchased stock of $216,000, dividends of $448,000 and stock awards of $28,000. Equity as a percentage of assets decreased to 2.86% at December 31, 2022 compared to 8.91% at December 31, 2021.

During the year ended December 31, 2022, the Company repurchased 12,200 shares of common stock at an average cost of $15.52 per share pursuant to the Company’s stock repurchase program. At December 31, 2022, 25,578 shares of common stock remain available for future repurchase by the Company through the stock repurchase program.

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,
	2022			2022			2021			2022			2021			2020
Selected Consolidated Earnings Data:
Total Interest Income	$	2,916		$	2,581		$	1,945		$	9,983		$	8,130		$	8,002
Total Interest Expense		680			382			143			1,552			739			1,051
Net Interest Income		2,236			2,199			1,802			8,431			7,391			6,951
Provision for Losses on Loans		30			30			-			60			90			335
Net Interest Income after Provision for Losses on Loans		2,206			2,169			1,802			8,371			7,301			6,616
Non-Interest Income	$	163			350			876			1,287			2,411			2,503
Non-Interest Expense	$	1,782			1,808			1,945			7,353			7,002			6,990
Income Tax Expense		51			72			99			189			368			357
Net Income	$	536		$	639		$	634		$	2,116		$	2,342		$	1,772
Earnings Per Share - basic	$	0.46		$	0.55		$	0.54		$	1.83		$	2.00		$	1.49
Earnings Per Share - diluted	$	0.46		$	0.55		$	0.54		$	1.82		$	1.99		$	1.49
Condensed Consolidated Balance Sheet
(Unaudited)
In thousands, except per share data
	December 31,			September 30,			December 31,			December 31,			December 31,			December 31,
	2022			2022			2021			2022			2021			2020
Selected Consolidated Balance Sheet Data:
Assets
Cash and Due from Banks	$	3,747		$	5,620		$	4,857		$	3,747		$	4,857		$	4,888
Investment Securities, Available-for-Sale, at Fair Value		85,571			85,043			84,661			85,571			84,661			59,292
Investment Securities, Held-to-Maturity		3,000			-			-			3,000			-			-
Loans Held-for-Sale		-			232			738			-			738			434
Loans Held-for-Investment		171,619			165,201			143,927			171,619			143,927			138,834
Allowance for Loan Losses		1,941			1,909			1,881			1,941			1,881			1,791
Net Loans		169,678			163,524			142,784			169,678			142,784			137,477
Accrued Interest Receivable		1,370			1,066			760			1,370			760			686
Other Assets		17,130			16,819			8,499			17,130			8,499			7,283
Total Assets	$	280,496		$	272,072		$	241,561		$	280,496		$	241,561		$	209,626
Liabilities
Noninterest-Bearing Deposits	$	44,631		$	45,313		$	40,988		$	44,631		$	40,988		$	32,049
Interest-Bearing Deposits		195,518			200,304			173,666			195,518			173,666			145,069
Total Deposits		240,149			245,617			214,654			240,149			214,654			177,118
FHLB Advances		21,845			9,000			5,000			21,845			5,000			11,705
Subordinated Notes, Net of Issuances Costs		9,731			9,724			-			9,731			-
Accrued Interest Payable		231			78			32			231			32			54
Accrued Expenses and Other Liabilities		517			509			342			517			342			274
Total Liabilities		272,473			264,928			220,028			272,473			220,028			189,151
Stockholders' Equity
Common Stock		11,440			11,432			11,412			11,440			11,412			11,381
Retained Earnings		10,519			10,214			9,066			10,519			9,066			7,323
Accumulated Other Comprehensive Income/(Loss)		(13,936)			(14,502)			1,055			(13,936)			1,055			1,771
Total Stockholders' Equity		8,023			7,144			21,533			8,023			21,533			20,475
Total Liabilities and Stockholders' Equity	$	280,496		$	272,072		$	241,561		$	280,496		$	241,561		$	209,626
	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,
	2022			2022			2021			2022			2021			2020
Selected Financial Ratios and Other Data (Unaudited):
Interest Rate Spread During Period		3.17%			3.23%			2.94%			3.14%			3.15%			3.44%
Net Yield on Interest-Earning Assets		4.42%			3.94%			3.26%			3.89%			3.58%			4.17%
Non-Interest Expense, Annualized, to Average Assets		2.70%			2.68%			3.23%			2.80%			3.03%			3.45%
Return on Average Assets, Annualized		0.81%			0.95%			1.05%			0.81%			1.01%			0.87%
Return on Average Equity, Annualized		24.38%			20.82%			12.29%			17.01%			11.35%			9.23%
Average Equity to Assets		3.33%			4.55%			8.58%			4.74%			8.94%			9.47%
Average Loans	$	166,435		$	167,005		$	143,448		$	158,721		$	142,385		$	138,415
Average Securities		87,234			86,080			83,268			88,765			73,674			43,450
Average Other Interest-Earning Assets		10,351			9,065			11,615			9,057			11,025			10,143
Total Average Interest-Earning Assets		264,020			262,150			238,330			256,543			227,083			192,008
Average Total Assets		264,016			269,872			240,513			262,381			230,955			202,749
Average Noninterest-Bearing Deposits	$	43,578		$	45,329		$	40,335		$	43,459		$	37,829		$	30,831
Average Interest-Bearing Deposits		195,028			197,642			170,457			191,318			163,399			132,941
Average Total Deposits		238,606			242,971			210,792			234,777			201,228			163,772
Average Wholesale Funding		22,658			17,937			5,000			16,499			6,854			12,107
Average Interest-Bearing Liabilities		217,686			215,579			175,457			207,817			170,253			145,048
Average Interest-Earnings Assets to Average Interest-Bearings Liabilities		121.28%			121.60%			135.83%			123.45%			133.38%			132.38%
Non-Performing Loans to Total Loans		0.03%			0.03%			0.16%			0.03%			0.16%			0.08%
Allowance for Loan Losses to Total Loans Outstanding		1.13%			1.15%			1.30%			1.13%			1.30%			1.29%
Allowance for Loan Losses to Non-Performing Loans		3732.69%			3671.15%			793.67%			3732.69%			793.67%			1613.51%
Net Loan Chargeoffs/(Recoveries) to Average Total Loans Outstanding		0.00%			0.00%			0.00%			0.00%			0.00%			0.01%
Effective Income Tax Rate		8.68%			10.13%			13.51%			8.20%			13.51%			16.77%
Tangible Book Value Per Share	$	6.88		$	6.12		$	18.28		$	6.88		$	18.28		$	17.13
Market Closing Price at the End of Quarter	$	9.70		$	10.21		$	17.50		$	9.70		$	17.50		$	15.00
Price-to-Tangible Book Value		140.89%			166.95%			95.73%			140.89%			95.75%			87.54%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230313005771/en/

David A. Coffey, President and CEO

Ryan W. Cook, Senior Vice President and CFO

Tel. 317-736-7151 Fax 317-736-1726

Source: Third Century Bancorp

FAQ

What were the earnings per share for TDCB in Q4 2022?

Earnings per share for Q4 2022 were $0.46 for both basic and diluted shares.

How did TDCB's net income change year-over-year?

TDCB's net income decreased by 9.65% from $2.3 million in 2021 to $2.1 million in 2022.

What factors contributed to the decrease in TDCB's non-interest income?

The decrease was primarily due to a 100% drop in gains on investment sales and a 54.73% decline in gains on mortgage loans sold to Freddie Mac.

What is the future outlook for TDCB?

The company anticipates continued challenges in 2023 but remains optimistic about growth and shareholder value.