Third Century Bancorp Reports Strong Second-Quarter 2026 Earnings as Net Income Nearly Doubles
Third Century Bancorp, the holding company for Mutual Savings Bank, reported a significant improvement in financial performance for the quarter ended June 30, 2026, as stronger net interest income, improved credit quality, higher non-interest revenue, and continued balance sheet growth contributed to a substantial increase in profitability.
The company announced unaudited net income of $719,000 for the second quarter of 2026, equivalent to $0.62 per basic and diluted share. The result represents a 92.33% increase from net income of $374,000, or $0.32 per basic and diluted share, reported for the quarter ended June 30, 2025.
The quarterly results reflect continued momentum for Third Century Bancorp and Mutual Savings Bank, with the company benefiting from growth in its core banking activities and an improved net interest margin. Management also highlighted progress in credit quality, deposit growth, loan expansion, and the reduction of higher-cost borrowings.
“We delivered a strong second quarter with solid growth and improved performance across the board,” said David A. Coffey, President and Chief Executive Officer of Third Century Bancorp.
Coffey noted that the company’s core business continued to strengthen during the quarter, supported by higher net interest income and an improved net interest margin of 3.12%. The improvement reflected better pricing conditions and continued growth in the balance sheet.
Credit quality also improved during the quarter, with a reduction in problem loans and a modest reversal of the provision for credit losses. At the same time, the bank continued to expand its loan and deposit base while reducing its dependence on higher-cost borrowings.
The company also increased its quarterly dividend by $0.01 per share, representing a 25% increase. Management said the dividend increase reinforces its commitment to returning capital to shareholders while maintaining the financial strength necessary to support continued growth.
“Importantly, we increased our dividend by one cent per share, a 25% increase, reinforcing our commitment to returning capital to shareholders,” Coffey said. “Overall, returns improved significantly from a year ago and reflect continued momentum following a strong first quarter.”
Net Interest Income Drives Second-Quarter Earnings Growth
For the three months ended June 30, 2026, net income increased by $345,000, or 92.33%, compared with the same period a year earlier. The primary driver of the improvement was a $429,000 increase in net interest income.
Net interest income rose to $2.60 million during the second quarter of 2026. The increase was supported by stronger total interest income, which climbed $446,000, or 9.82%, to $4.47 million from $4.03 million in the second quarter of 2025.
The growth in total interest income was primarily attributable to higher average loan balances and higher average cash balances. The increase demonstrates the benefit of continued balance sheet expansion and the bank’s ability to generate additional income from its interest-earning assets.
The increase in interest income was partially offset by a modest rise in total interest expense. Total interest expense increased by $17,000, or 0.93%, to $1.88 million during the second quarter of 2026, compared with the same period in the prior year.
The higher interest expense was primarily associated with increased average retail deposit balances. Despite the increase in funding costs, the growth in interest income was significantly greater, allowing the bank to achieve a meaningful improvement in net interest income and overall profitability.
Credit Quality Remains Strong
Third Century Bancorp also reported continued strength in credit quality during the second quarter.
The company recorded a $27,000 reversal of the provision for credit losses during the current quarter, compared with a $30,000 provision expense during the same quarter of 2025. The change was attributed to the continued strength of credit quality and the absence of net charge-offs during the current reporting period.
The provision reversal contributed positively to earnings and reflected management’s assessment of the company’s credit portfolio and expected credit loss requirements.
Improved credit performance is an important factor in the company’s second-quarter results because it reduced the expense burden associated with potential loan losses. The combination of fewer problem loans, no net charge-offs, and a provision reversal helped support the bank’s improved bottom-line performance.
Non-Interest Income Increases
Non-interest income also contributed to the company’s improved quarterly results.
For the quarter ended June 30, 2026, non-interest income increased by $81,000, or 22.49%, to $441,000 from $360,000 in the same period of 2025.
The increase was driven by higher Trust revenue, increased loan fees, and stronger service charge income. The growth in these revenue sources helped diversify the bank’s earnings beyond traditional net interest income.
Trust-related revenue and service charges can provide banks with additional sources of income that are less directly dependent on movements in interest rates. The increase in these areas therefore supported the company’s broader revenue performance during the quarter.
At the same time, non-interest expense increased by $166,000, or 8.00%, to $2.24 million from $2.07 million a year earlier.
The increase in operating expenses was primarily due to higher advertising and personnel expenses. Although costs rose, the increase in revenue and net interest income more than offset the higher expenses, contributing to the significant improvement in quarterly net income.
Strong First-Half Performance
Third Century Bancorp also reported substantial earnings growth for the first six months of 2026.
Net income for the six months ended June 30, 2026, increased by $501,000, or 60.89%, to $1.33 million from $823,000 during the same period in 2025.
Net interest income rose to $5.03 million during the first half of 2026. Total interest income increased by $834,000, or 10.46%, to $8.80 million from $7.97 million during the first six months of the prior year.
The increase in total interest income was primarily driven by higher average yields on interest-earning assets and higher average loan balances. The results indicate that the company benefited from both asset growth and improved earning-asset yields during the first half of the year.
Total interest expense increased by $81,000, or 2.19%, to $3.77 million from $3.69 million in the first half of 2025. The increase was primarily related to higher average retail deposit balances.
The increase in interest expense was more than offset by the growth in interest income, resulting in a significant improvement in net interest income.
The company also recorded a $50,000 provision reversal for credit losses during the first half of 2026, compared with a $13,000 provision reversal during the same period of 2025. Management attributed the stronger result to continued credit quality strength and nominal charge-offs during the current period.
Non-interest income increased by $88,000, or 12.10%, to $815,000 for the six months ended June 30, 2026, compared with $727,000 for the same period a year earlier. The improvement was primarily attributable to higher service fee income and increased income from other assets.
Non-interest expense increased by $309,000, or 7.56%, to $4.40 million from $4.09 million. The increase was primarily related to higher occupancy costs, outside consultant fees, and advertising expenses.
Despite the increase in operating costs, the company’s stronger revenue performance resulted in significant year-to-date earnings growth.
Balance Sheet Continues to Expand
Third Century Bancorp also reported continued growth in its balance sheet during the first half of 2026.
Total assets increased by $4.02 million to $353.21 million as of June 30, 2026, compared with $349.19 million at December 31, 2025.
The increase in assets was primarily driven by higher loan and securities balances. Loans increased by $2.30 million, or 1.04%, while securities increased by $2.79 million, or 3.72%, from year-end 2025.
Gross loans held for investment increased to $223.78 million at June 30, 2026, from $221.49 million at December 31, 2025. The continued expansion of the loan portfolio supports the company’s interest income growth and reflects ongoing demand for lending products.
Deposits also increased during the first six months of the year. Total deposits stood at $284.37 million at June 30, 2026, compared with $280.09 million at the end of 2025.
The increase in deposits provides the bank with additional funding to support lending and other balance sheet activities.
At the same time, Federal Home Loan Bank advances declined by $3.0 million, or 6.67%, to $42.0 million at June 30, 2026, from $45.0 million at December 31, 2025.
The reduction in FHLB advances reflects the company’s efforts to reduce reliance on higher-cost borrowings. The weighted average rate of all FHLB advances was 3.71% as of June 30, 2026, compared with 3.75% at the end of 2025.
The weighted average maturity of the advances was 3.47 years at June 30, 2026, compared with 3.97 years at December 31, 2025.
Stockholders’ Equity Improves
Stockholders’ equity also increased significantly during the first half of 2026.
Equity stood at $15.62 million at June 30, 2026, compared with $13.17 million at December 31, 2025.
The increase was primarily attributable to retained net income generated during the year and a $1.25 million decrease in the company’s net unrealized loss during the six-month period.
The improvement in the unrealized loss position resulted from an increase in the fair value of the company’s available-for-sale securities, driven by changes in the forward rate curve compared with the portfolio position at the end of the prior year.
The available-for-sale securities portfolio consists primarily of government-sponsored mortgage-backed securities and municipal bonds. These investments provide cash flow and liquidity to support the company’s business operations.
Quarterly average equity as a percentage of average assets increased to 4.11% at June 30, 2026, compared with 3.69% at December 31, 2025.
The improvement in equity levels strengthens the company’s capital position and provides additional support for future balance sheet growth.
Mutual Savings Bank Continues Longstanding Community Banking Tradition
Founded in 1890, Mutual Savings Bank is a full-service financial institution headquartered in Johnson County, Indiana.
The bank’s main office is located at 80 East Jefferson Street in Franklin, Indiana. Mutual Savings Bank also operates branches in Franklin at 1124 North Main Street, as well as locations in Trafalgar and Greenwood, Indiana.
Through its community banking model, the institution provides a range of financial services to individuals, families, businesses, and other customers throughout the communities it serves.
The latest quarterly results demonstrate the company’s continued focus on strengthening its core banking operations, expanding loans and deposits, maintaining credit quality, and managing funding costs.
The company cautioned that the press release contains forward-looking statements based on assumptions regarding future plans, strategies, and expectations.
These statements do not relate strictly to historical or current facts and may include terms such as “believe,” “expect,” “anticipate,” “estimate,” and “intend,” as well as future or conditional words including “will,” “would,” “should,” “could,” and “may.”
Actual results could differ materially from expectations due to a variety of factors. These risks include inflation, tariffs, changes in interest rates, shifts in general economic conditions, geopolitical conflicts, public health issues, legislative and regulatory changes affecting the company or the bank, and volatility or changes in the securities markets.
Third Century Bancorp stated that, except where required by law, it does not undertake an obligation to update forward-looking statements to reflect changes in its beliefs, expectations, or future events.
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