Third Century Bancorp Releases Earnings for Quarter Ended and Year Ended December 31, 2016: Announces Dividend; Announces Retirement of President Robert D. Heuchan Effective 12-31-17; Appointment of David A. Coffey as Successor

Third Century Bancorp (“Company”), (OTCBB: TDCB) the holding company for Mutual Savings Bank (“Bank”) announced it had net income of $226,000 for the quarter ended December 31, 2016, or $0.19 per basic and diluted share, compared to net income of $165,000 for the quarter ended December 31, 2015, or $0.13 per basic and diluted share. For the twelve months ended December 31, 2016, the Company recorded net income of $691,000, or $0.55 per basic and diluted share, compared to net income of $547,000 for the twelve months ended December 31, 2015, or $0.43 per basic and diluted share.

For the three months ended December 31, 2016, net income increased $61,000, or 36.63%, to $226,000 as compared to $165,000 for the same period in the prior year. The increase in net income for the three month period ended December 31, 2016 was primarily a result of a $73,000 increase in net interest income, which was achieved through an increase in interest income of $93,000 partially offset by a $20,000 increase in interest expense. The increase in interest income was due to an increase in the average yield on interest-earning assets, along with higher average loan balances. The increase in interest expense was due to higher average balances of interest-bearing liabilities and a higher average rate paid on interest-bearing liabilities.

The increase in net income for the three month period ended December 31, 2016 was also impacted by a $74,000 increase in noninterest income, a $4,000 increase in provision for loan losses, a $31,000 increase in noninterest expenses and a $51,000 increase in income tax expense. The increase in noninterest income was due to increases in gains on sales of loans, trust income, and deposit fee and service charge income for the three month period ended December 31, 2016 as compared to the prior year period. During the three month period ended December 31, 2016, the Company recorded $4,000 in provision for loan losses compared to $0 for the same period in the prior year. The increase in noninterest expenses for the quarter ended December 31, 2016 compared to the same period in the prior year was primarily due to increases in wages and benefits, advertising expenses, and data processing expenses. Income tax expense increased during the three month period ended December 31, 2016 as compared to the prior year period due to the increase in pre-tax income.

For the twelve month period ended December 31, 2016, net income increased $144,000, or 26.4% to $691,000 as compared to $547,000 for the twelve month period ended December 31, 2015. The increase in net income for the twelve month period ended December 31, 2016 was primarily a result of an increase of $289,000 in net interest income, which was achieved through a $322,000 increase in interest income partially offset by a $33,000 increase in interest expense. The increase in interest income was due to an increase in the average yield on interest-earning assets, along with higher average loan balances. The increase in interest expense was due to higher average balances of interest-bearing liabilities and a higher average rate paid on interest-bearing liabilities.

The change in net income for the twelve month period ended December 31, 2016 was also impacted by a $406,000 increase in the provision for loan losses. The Company recorded a $6,000 provision during the twelve months ended December 31, 2016 compared to a $400,000 credit for loan losses recorded in the same period for the prior year. The Company recorded net loan recoveries of $3,000 during the twelve months ended December 31, 2016 compared to net loan recoveries of $98,000 during the twelve months ended December 31, 2015. Nonperforming loans totaled $455,000, or 0.41%, of total loans at December 31, 2016 compared to $155,000, or 0.16%, of total loans at December 31, 2015.

Also contributing to the increase in net income for the twelve months ended December 31, 2016 was a $445,000 increase in noninterest income compared to the prior year, which was driven by increases in gains on sale of loans, trust income, and an increase in cash surrender value of life insurance compared to the prior year. Partially offsetting the increases in net interest income and noninterest income was an increase of $139,000 in noninterest expenses and a $45,000 increase in income tax expense. The increase in noninterest expenses for the twelve months ended December 31, 2016 compared to the prior year was primarily due to increases in wages and benefits, advertising expenses, and data processing expenses. Income tax expense increased during the twelve month period ended December 31, 2016 as compared to the prior year due to the increase in pre-tax income.

Total assets increased $8.9 million to $135.9 million at December 31, 2016 from $127.0 million at December 31, 2015, an increase of 7.0%. The increase was primarily due to an $11.3 million increase in net loans, primarily funded by a $3.5 million increase in total deposits and a $5.5 million increase in FHLB advances.

Deposits increased $3.5 million, or 3.73%, to $98.3 million at December 31, 2016 from $94.8 million at December 31, 2015. Federal Home Loan Bank advances and other borrowings increased $5.5 million, or 34.38%, to $21.5 million at December 31, 2016 from $16.0 million at December 31, 2015. At December 31, 2016, the weighted average rate of all Federal Home Loan Bank advances was 1.23% compared to 1.33% at December 31, 2015, and the weighted average maturity was 3.5 years at December 31, 2016 compared to 1.9 years at December 31, 2015.

Stockholders’ equity was $15.8 million at December 31, 2016 compared to $16.1 million at December 31, 2015. Stockholders’ equity decreased due to the repurchase of 75,174 shares of common stock at a total cost of $755,000 and cash dividends paid of $211,000, partially offset by net income of $691,000 during the twelve months ended December 31, 2016. Equity as a percentage of assets decreased to 11.61% at December 31, 2016 compared to 12.64% at December 31, 2015.

Third Century Bancorp also announced that on February 23, 2017 the Board of Directors declared a cash dividend of $0.05 per share for shareholders of records on March 15, 2017. The dividend payable date is April 3, 2017.

The Board of Directors further announced that Robert D. Heuchan has provided to the Board of Directors formal notice of his intention to retire as President and CEO of Third Century Bancorp and Mutual Savings Bank effective December 31, 2017. Heuchan, whose current term as a director expires in May, 2019, plans to remain on the Board of Directors.

The Board of Directors also announced that David A. Coffey, current Executive Vice President, Chief Operating Officer and Chief Financial Officer for Third Century Bancorp and Mutual Savings Bank, will become President and CEO of Third Century Bancorp and Mutual Savings Bank following the retirement of Robert D. Heuchan at the end of 2017. Third Century Bancorp and Mutual Savings Bank will begin a search to hire a new CFO by the end of 2017.

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.

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