OTCPINK “TDCB” -- Third Century Bancorp (“Company”), the holding company for Mutual Savings Bank (“Bank”) announced it had net income of $229,000 for the quarter ended September 30, 2019, or $0.19 per basic and diluted share, compared to net income of $272,000 for the quarter ended September 30, 2018, or $0.23 per basic and diluted share. For the nine-months ended September 30, 2019, the Company recorded net income of $672,000, or $0.57 per basic and diluted share, compared to net income of $721,000 for the nine-months ended September 30, 2018, or $0.61 per basic and diluted share.
For the quarter ended September 30, 2019, net income decreased $43,000, or 15.81%, to $229,000 as compared to $272,000 for the same period in the prior year. The decrease in net income for the three-month period ended September 30, 2019 was primarily a result of the $263,000 increase in non-interest expense and a $4,000 decrease in non-interest income. Partially offsetting this decrease was a $138,000, or 10.00%, increase in net interest income, which was achieved through an increase in interest income of $231,000, or 14.25%, partially offset by a $93,000, or 38.75%, increase in interest expense in the quarter ended September 30, 2019 as compared to the same quarter in the prior year. The increase in interest income was due to an increase in overall average asset size, with higher levels of cash and investments and slightly lower average balances in loans over the period. The increase in interest expense was primarily due to higher average balances of interest-bearing liabilities, primarily deposits, and a higher average rate paid on interest-bearing liabilities.
Further offsetting the decrease in net income for the quarter ended September 30, 2019 was a $61,000 decrease in provision for loan losses compared to the same period in 2018 as a result of lower loan balances as compared to the same period last year.
The decrease in noninterest income was due to decreases in gains on sales of loans, trust income, and deposit fee and service charge income for the three-month period ended September 30, 2019 as compared to the prior year period. The increase in noninterest expense for the quarter ended September 30, 2019 compared to the same period in the prior year was primarily due to increases in overhead expenses. The decrease in net income for the three month period ended September 30, 2019 was also impacted by a $24,000 decrease in income tax expense.
For the nine-month period ended September 30, 2019, net income decreased $49,000, or 6.79%, to $672,000 from $721,000 for the nine-month period ended September 30, 2018. The decrease in net income for the nine-month period ended September 30, 2019 was primarily due to an increase in non-interest expense of $446,000, or 11.74%, to $4.2 million for the nine-month period ended September 30, 2019 from $3.8 million for the nine-month period ended September 30, 2018. This decrease was partially offset by an increase in net interest income of $424,000, or 10.69% to $4.4 million for the nine-month period ended September 30, 2019 from $4.0 million for the nine-month period ended September 30, 2018.
The increase in net interest income for the nine-month period ended September 30, 2019 was due to a $713,000, or 15.48%, increase in interest income partially offset by a $289,000, or 45.23%, increase in interest expense as compared to the prior year. The increase in interest income was due to an increase in overall average asset size, with higher levels of cash and investments and slightly lower average balances in loans over the period. The increase in interest expense was primarily due to higher average balances of interest-bearing liabilities, primarily deposits, and a higher average rate paid on interest-bearing liabilities.
The decrease in provision for loan losses for the nine-months ended September 30, 2019 to $121,000 from $183,000 for the same period in the prior year was primarily driven by decreases in outstanding loan balances and improving credit quality factors, including net loan recoveries of $21,000 during the nine-months ended September 30, 2019 compared to net loan recoveries of $19,000 for the same period in 2018.
The decrease in net income for the nine-months ended September 30, 2019 was also impacted by a $116,000 decrease in noninterest income, a $446,000 increase in noninterest expense, and a $27,000 decrease in income tax expense. The decrease in noninterest income was due to decreases in gains on sales of loans, trust income, and deposit fee and service charge income for the nine-months ended September 30, 2019 as compared to the same period in the prior year. The increase in noninterest expense of $446,000 for the nine-months ended September 30, 2019 compared to the same period in the prior year was primarily due to increases in wages and benefits, as well as other increases in operating overhead. The decrease in income tax expense was due to a reduced level of pre-tax income.
Total assets increased $14.0 million to $173.1 million at September 30, 2019 from $159.1 million at December 31, 2018, an increase of 8.80%. The increase was primarily due to a $18.0 million, or 83.30%, increase in cash and investments, primarily funded by a $22.6 million, or 18.14%, increase in total deposits. Federal Home Loan Bank advances were $7.5 million at September 30, 2019 as compared to $17.5 million at December 31, 2018. At September 30, 2019, the weighted average rate of all Federal Home Loan Bank advances was 1.67% compared to 1.51% at December 31, 2018, and the weighted average maturity was 3.3 years at September 30, 2019 as compared to 4.2 years at December 31, 2018.
The allowance for loan losses increased by $142,000, or 10.61%, to $1.5 million at September 30, 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 $21,000 during the nine-months ended September 30, 2019. The allowance for loan losses totaled 1.18% of total loans as of September 30, 2019. Nonperforming loans totaled $90,000 or 0.01% of total loans as of September 30, 2019.
Stockholders’ equity was $17.5 million at September 30, 2019, up from $16.5 million at December 31, 2018. Stockholders’ equity increased by $999,000 during the nine-months ended September 30, 2019 as a result of net income of $672,000, and the increase in net unrealized gain of $492,000 of available-for-sale securities due in part to the decrease in market interest rates and partially offset by cash dividends paid of $165,000. Equity as a percentage of assets decreased to 10.10% at September 30, 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 September 30, | At December 31, | ||||||
2019 | 2018 | ||||||
Selected Consolidated Financial Condition Data: | (Dollars in thousands, except per share data) | ||||||
Total Assets | $ | 173,131 | $ | 159,077 | |||
Loans receivable-net of allowance for loan losses of $1,480 and $1,338 | 124,344 | 128,311 | |||||
Loans held for sale | 848 | 838 | |||||
Cash and cash equivalents | 1,946 | 3,055 | |||||
Interest-earning time deposits in other banks | 0 | 496 | |||||
Investment securities | 37,711 | 18,084 | |||||
Deposits | 147,371 | 124,740 | |||||
FHLB advances and other borrowings | 7,500 | 17,500 | |||||
Interest payable and other liabilities | 781 | 356 | |||||
Stockholders’ equity-net | 17,479 | 16,480 | |||||
Equity to assets ratio at period end | 10.10% | 10.36% | |||||
Non-performing loans to total loans | 0.01 | 0.00 | |||||
Allowance for loan losses to total loans outstanding | 1.18 | 1.03 | |||||
Allowance for loan losses to non-performing loans | 1,644.44% | N/A | |||||
Number of full service offices | 6 | 5 | |||||
Tangible book value per share | $ | 14.81 | $ | 13.96 | |||
Market closing price at end of quarter | $ | 11.90 | $ | 10.75 | |||
Price-to-tangible book value | 80.35% | 77.01% | |||||
For the Three Months Ended September 30, | ||||||
2019 | 2018 | |||||
(Dollars In Thousands, Except Share Data) | ||||||
Selected Consolidated Earnings Data: | ||||||
Total interest income | $ | 1,851 | $ | 1,620 | ||
Total interest expense | 333 | 240 | ||||
Net interest income | 1,518 | 1,380 | ||||
Provision for losses on loans | 0 | 61 | ||||
Net interest income after provision for losses on loans | 1,518 | 1,318 | ||||
Noninterest income | 321 | 325 | ||||
Noninterest expense | 1,553 | 1,290 | ||||
Income tax expense | 57 | 81 | ||||
Net income | $ | 229 | $ | 272 | ||
Earnings per basic and diluted share | $ | 0.19 | $ | 0.23 | ||
Selected Financial Ratios and Other Data: | ||||||
Interest rate spread during period | 3.63% | 3.54% | ||||
Net yield on interest-earning assets | 4.35 | 4.27 | ||||
Noninterest expense, annualized, to average assets | 3.44 | 3.28 | ||||
Return on average assets | 0.56 | 0.70 | ||||
Return on average equity | 5.45 | 6.69 | ||||
Average equity to assets | 10.22 | 10.45 | ||||
Average interest-earning assets to average interest-bearing liabilities | 105.51 | 105.36 | ||||
Net loan chargeoffs/(recoveries) to average total loans outstanding | (0.01) | (0.01) | ||||
Effective income tax rate | 19.93 | 22.88 | ||||
For the Nine Months Ended September 30, | ||||||
2019 | 2018 | |||||
(Dollars in thousands, except per share data) | ||||||
Selected Consolidated Earnings Data: | ||||||
Total interest and dividend income | $ | 5,317 | $ | 4,604 | ||
Total interest expense | 928 | 639 | ||||
Net interest income | 4,389 | 3,965 | ||||
Provision for losses on loans | 121 | 183 | ||||
Net interest income after provision for losses on loans | 4,268 | 3,783 | ||||
Noninterest income | 827 | 943 | ||||
Noninterest expense | 4,245 | 3,799 | ||||
Income tax expense | 178 | 205 | ||||
Net income | 672 | 721 | ||||
Earnings per basic and diluted share | $ | 0.57 | $ | 0.61 | ||
Selected Financial Ratios and Other Data: | ||||||
Interest rate spread during period | 3.67% | 3.72% | ||||
Net yield on interest-earning assets | 4.29 | 4.31 | ||||
Noninterest expense to average assets | 3.44 | 3.22 | ||||
Return on average assets | 0.58 | 0.64 | ||||
Return on average equity | 5.50 | 5.98 | ||||
Average equity to average assets | 10.13 | 10.57 | ||||
Average interest-earning assets to average interest-bearing liabilities | 105.41 | 109.38 | ||||
Net charge-offs/(recoveries) to average total loans outstanding | (0.01) | 0.01 | ||||
Effective income tax rate | 20.94 | 22.14 | ||||
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Contacts:
Ryan Cook, Senior Vice President and CFO
317-736-7151
mymsb.bank
