(OTCPINK: TDCB) - Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”), announced it recorded net income of $508,000 for the quarter ended June 30, 2021, or $0.43 per basic and diluted share, compared to net income of $475,000 for the quarter ended June 30, 2020, or $0.40 per basic and diluted share.

“As we anticipated, this is another quarter of very solid performance. Our earnings and asset growth reflect the result of our team’s efforts as they maintain existing and build new relationships,” indicated David A. Coffey, President and CEO. Coffey also added, “Our strong earnings helped us positively impact shareholder value as the book value of our stock improved to $17.83 per share.”

For the quarter ended June 30, 2021, net income increased $33,000, or 6.94%, to $508,000 as compared to $475,000 for the same period in the prior year. The increase in net income for the three-month period ended June 30, 2021 was driven primarily as a result of the $205,000, or 14.13%, increase in net interest income. The increase in net interest income was due to a combination of an increase in interest income and a decrease in interest expense due to increases in average assets and decreases in average rates paid on liabilities. In addition the increase in net income was supported by a decrease of $135,000, or 75.00%, in provision for loan losses as compared to the same period in the prior year. The increase in net interest income and decreases in provision for loan losses were partially offset by a $321,000, or 32.30%, decrease in non-interest income and a $42,000, or 2.51%. increase in non-interest expense as compared to the same period in the prior year. The decrease in non-interest income was driven primarily by a $252,000 or 46.50%, decrease in gains on the sale of one-to-four family residential mortgage loans sold to Freddie Mac as compared to the same period in the prior year. The increase in non-interest expense was driven primarily by a $61,000, or 5.62%, increase in personnel expenses as compared to the same period in the prior year.

The $135,000 decrease in the provision for loan losses compared to the same period in 2020 was due to the improving economic conditions resulting from the current COVID-19 pandemic. The Company had net loan recoveries of $2,000 during the quarter ended June 30, 2021 compared to net loan recoveries of $4,000 for the same period in 2020. The Company expects that the current COVID-19 pandemic could impact the future provision for loan losses.

For the six-months ended June 30, 2021, net income decreased $6,000, or 0.69%, to $922,000 as compared to $928,000 for the six-months ended June 30, 2020. The decrease in net income for the six-month period ended June 30, 2021 was driven primarily as a result of the $271,000, or 8.41%, increase in non-interest expense. The increase in non-interest expense was driven primarily by a $82,000, or 4.08% increase in personnel expenses as compared to the same six-month period in the prior year. The decrease in non-interest income was driven primarily by a $169,000, or 20.14%, decrease in gains on the sale of one-to-four family residential mortgage loans sold to Freddie Mac as compared to the same six-month period in the prior year. The increase in non-interest expense and decrease in non-interest income for the six-month period ended June 30, 2021 was mostly offset by an increase in net interest income of $235,000, or 7.84% as compared to the same six-month period ended in the prior year. The increase in net interest income was due to a combination of an increase in interest income and a decrease in interest expense for the six-months ended June 30, 2021. In addition, the provision for loan losses decreased $95,000, or 51.35%, for the six-month period ended June 30, 2021. The increase in net interest income and decreases in provision for loan losses were partially offset by a $168,000, or 10.98% decrease in non-interest income as compared to the six-month period in the prior year.

The decrease in net income for the six-months ended June 30, 2021 was also partially offset by a $103,000 decrease in income tax expense as compared to the same period in the prior year. The decrease in income tax expense was due to a decrease in the effective income tax rate to 8.14% for the six-months ended June 30, 2021 from 16.62% for the same period in the prior year.

Total assets increased $20.9 million to $230.6 million at June 30, 2021 from $209.6 million at December 31, 2020, an increase of 9.99%. The increase was primarily due to a $17.6 million, or 29.73%, increase in investment securities, available-for-sale, primarily funded by a $26.1 million, or 14.77%, increase in total deposits. Total deposits were $203.2 million at June 30, 2021, up from $177.1 million as of December 31, 2020. Federal Home Loan Bank advances were $5.0 million at June 30, 2021 as compared to $11.7 million at December 31, 2020. At June 30, 2021, the weighted average rate of all Federal Home Loan Bank advances was 1.45% compared to 1.21% at December 31, 2020, and the weighted average maturity was 4.8 years at June 30, 2021 compared to 3.5 years at December 31, 2020. Total loans held-for-investment grew to $141.8 million at June 30, 2021 from $138.8 million at December 31, 2020, an increase of 2.17%.

The increase in total loan balances was partially the result of loans originated through the Small Business Administration’s Paycheck Protection Program (“PPP”) in which the Company participated. The Company originated $8.6 million of PPP loans in the program in 2020, of which $394,000 remained on the Company’s balance sheet as of June 30, 2021. The Company originated $4.6 million of PPP loans in the program in 2021, of which $3.6 million remained on the Company’s balance sheet as of June 30, 2021. As of June 30, 2021, a total of $3.9 million of PPP loans remained on the Company’s balance sheet with the remaining forgiven by the Small Business Administration.

The allowance for loan losses increased by $94,000, or 5.23%, to $1.9 million at June 30, 2021 from $1.8 million at December 31, 2020. The increase was primarily due to the provision for loan losses of $90,000 due to the economic conditions resulting from the COVID-19 pandemic. The allowance for loan losses totaled 1.32% of total loans as of June 30, 2021 as compared to 1.29% of total loans as of December 31, 2020. Nonperforming loans totaled $105,000 or 0.07% of total loans as of June 30, 2021 as compared to $111,000 or 0.08%, of total loans as of December 31, 2020.

Stockholders’ equity was $21.1 million at June 30, 2021, up from $20.5 million at December 31, 2020. Stockholders’ equity increased by $643,000 during the six-months ended June 30, 2021 as a result of net income of $922,000, offset by a decrease in net unrealized gain of $119,000 of available-for-sale securities due to the increase in market interest rates. These changes in stockholders’ equity were also offset by dividends of $102,000, repurchased stock of $91,000 and stock awards of $33,000. Equity as a percentage of assets decreased to 9.21% at June 30, 2021 compared to 9.76% at December 31, 2020.

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 the COVID-19 pandemic, 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.

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