SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
Commission file number: 000-50828
THIRD CENTURY BANCORP
(Exact name of small business issuer as specified in its charter)
Indiana 20-0857725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
80 East Jefferson Street
Franklin, Indiana 46131
(Address of principal executive offices)
(317) 736-7151
(Issuer's telephone number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: April 30, 2005 - 1,653,125 common
shares
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
1
THIRD CENTURY BANCORP
FORM 10-QSB
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements of Income 4
Consolidated Condensed Statement of Stockholders' Equity 5
Consolidated Condensed Statements of Cash Flows 6
Notes to Unaudited Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits 13
SIGNATURES 14
EXHIBIT INDEX E-1
EXHIBITS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THIRD CENTURY BANCORP
Consolidated Condensed Balance Sheets
As of As of
March 31, 2005 December 31, 2004
(Unaudited)
-------------------- --------------------
Assets (in thousands)
Cash and due from banks $ 804 $ 734
Interest-bearing demand deposits 8,467 11,323
-------------------- --------------------
Cash and cash equivalents 9,271 12,057
Interest-bearing time deposits 400 200
Held to maturity securities 9,366 10,455
Loans, net of allowance for loan losses
of $1,002 and $1,012 100,070 98,822
Premises and equipment 2,111 2,136
Federal Home Loan Bank stock 1,030 1,019
Interest receivable 571 483
Other assets 709 991
-------------------- --------------------
Total assets $ 123,528 $ 126,163
==================== ====================
Liabilities
Deposits
Demand $ 10,198 $ 11,164
Savings, NOW and money market 39,136 39,672
Time 34,883 35,572
-------------------- --------------------
Total deposits 84,217 86,408
Federal Home Loan Bank Advances 16,000 16,500
Other liabilities 364 358
-------------------- --------------------
Total liabilities 100,581 103,266
Commitments and Contingencies
Equity Contributed by ESOP 100 64
-------------------- --------------------
Stockholders' Equity
Preferred stock, without par value, authorized and
unissued 2,000,000 shares - -
Common stock, without par value
Authorized - 20,000,000 shares
Issued and outstanding - 1,653,125 shares 14,290 14,290
Retained earnings 8,557 8,543
-------------------- --------------------
Total stockholders' equity 22,847 22,833
-------------------- --------------------
Total liabilities and stockholders' equity $ 123,528 $ 126,163
==================== ====================
See notes to consolidated condensed financial statements.
3
THIRD CENTURY BANCORP
Consolidated Condensed Statements of Income
(Unaudited)
Three Months Ended March 31,
--------------------------------------------------
2005 2004
--------------------- ---------------------
(in thousands, except share data)
Interest income
Loans receivable $ 1,519 $ 1,447
Investment securities 62 2
Federal Home Loan Bank stock 10 15
Interest-bearing deposits 50 10
--------------------- ---------------------
Total interest income 1,641 1,474
--------------------- ---------------------
Interest expense
Deposits 310 286
Federal Home Loan Bank advances 162 180
--------------------- ---------------------
Total interest expense 472 466
--------------------- ---------------------
Net interest income 1,169 1,008
Provision for loan losses - 12
--------------------- ---------------------
Net interest income after provision for loan losses 1,169 996
--------------------- ---------------------
Other income
Service charges on deposit accounts 45 53
Other service charges and fees 66 47
Net gains on loan sales 15 50
Other income 43 52
--------------------- ---------------------
Total other income 169 202
--------------------- ---------------------
Other expenses
Salaries and employee benefits 750 561
Net occupancy and equipment expenses 114 116
Data processing fees 101 97
Other expenses 240 200
--------------------- ---------------------
Total other expenses 1,205 974
--------------------- ---------------------
Income before income tax 133 224
Income tax expense 53 106
--------------------- ---------------------
Net income $ 80 $ 118
===================== =====================
Weighted average common shares 1,653 n/a
Earnings per share .05 n/a
See notes to consolidated condensed financial statements.
4
THIRD CENTURY BANCORP
Consolidated Condensed Statement of Stockholders' Equity
(Unaudited)
(Dollar amounts in thousands)
Common Stock
Shares Retained
Outstanding Amount Earnings Total
Balances, January 1, 2005 1,653,125 $14,290 $8,543 $22,833
Net and comprehensive income - 80 80
Cash dividends declared but not paid
($.04 per share outstanding) - (66) (66)
---------------- ---------------- ----------------
Balances, March 31, 2005 1,653,125 $14,290 $8,557 $22,847
================ ================ ================
See notes to consolidated condensed financial statements.
5
THIRD CENTURY BANCORP
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
---------------------------------------
2005 2004
------------------- -----------------
(in thousands)
Operating Activities
Net income $ 80 $ 118
Adjustments to reconcile net income to net cash provided by operating
activities
Provision for loan losses - 12
Depreciation 48 46
Investment securities (accretion) amortization, net (11) 5
Gain on sale of loans (15) (46)
Loans originated for sale in the secondary market (2,265) (2,959)
Proceeds from sale of loans in the secondary market 2,280 3,005
ESOP compensation expense 36 -
Net change in
Interest receivable (89) 8
Other assets 281 (341)
Other liabilities 7 (43)
------------------- -----------------
Net cash provided (used) by operating activities 352 (195)
Investing Activities
Purchases of FHLB stock (11) (11)
Purchases of securities held to maturity (2,400) (1,015)
Proceeds from maturities of securities held to maturity 3,500 -
Purchase of interest-bearing time deposits (200) -
Net changes in loans (1,248) 3,664
Purchases of premises and equipment (22) (2)
------------------- -----------------
Net cash provided (used) by investing activities (381) 2,636
Financing Activities
Net change in
Demand and savings deposits (1,502) 2,041
Certificate of deposits (689) 629
Paid cash dividend on Common Stock (66)
Proceeds from FHLB advances - 1,500
Payments on FHLB advances (500) (4,000)
------------------- -----------------
Net cash provided (used) by financing activities (2,757) 170
------------------- -----------------
Net Change in Cash and Equivalents (2,786) 2,611
Cash and Cash Equivalents, Beginning of Period 12,057 4,739
------------------- -----------------
Cash and Cash Equivalents, End of Period $ 9,271 $ 7,350
=================== =================
Additional Cash Flows Information
Interest paid $ 616 $ 580
Income tax paid (net of refunds) - -
See notes to consolidated condensed financial statements.
6
THIRD CENTURY BANCORP
Notes to Unaudited Consolidated Condensed Financial Statements
Third Century Bancorp (Third Century) is an Indiana corporation that was
formed on March 15, 2004 for the purpose of owning all of the capital stock of
Mutual Savings Bank (Mutual or Bank) following the completion of Mutual Savings
Bank's mutual-to-stock conversion. Third Century offered for sale 1,653,125
shares of its common stock at $10.00 per share in a public offering to eligible
depositors that was completed on June 14, 2004. On June 29, 2004, Third Century
purchased all of the capital stock issued by Mutual Savings Bank. Prior to that
date, Third Century had no assets or liabilities.
The activities of Third Century are primarily limited to holding the stock
of Mutual Savings Bank. Mutual Savings Bank conducts business primarily in
Johnson County and surrounding counties. Mutual Savings Bank attracts deposits
from the general public and originates loans for consumer, residential and
commercial purposes. Mutual Savings Bank's profitability is significantly
dependent on net interest income, which is the difference between interest
income generated from interest-earning assets (i.e. loans and investments) and
the interest expense paid on interest-bearing liabilities (i.e. customer
deposits and borrowed funds). Net interest income is affected by the relative
amount of interest-earning assets and interest-bearing liabilities and the
interest received or paid on these balances. The level of interest paid or
received by Mutual Savings Bank can be significantly influenced by a number of
factors, such as governmental monetary policy, competition within our market
area and the performance of the national and local economies.
Mutual Savings Bank also owns one subsidiary, Mutual Financial Services,
Inc. (Financial), which is engaged primarily in mortgage life insurance sales
and servicing.
Note 1: Basis of Presentation
The accompanying unaudited consolidated condensed financial statements were
prepared in accordance with instructions for Form 10-QSB and, therefore, do not
include information or footnotes necessary for a complete presentation of
financial position, results of operations and cash flows in conformity with
accounting principles generally accepted in the United States of America.
Accordingly, these financial statements should be read in conjunction with the
consolidated financial statements and notes thereto of Mutual Savings Bank for
the fiscal year ended December 31, 2004 included in Third Century's Annual
Report filed as an attachment to its 10-KSB. However, in the opinion of
management, all adjustments (consisting of only normal recurring accruals) which
are necessary for a fair representation of the financial statements have been
included. The results of operations for the three-month period ended March 31,
2005, are not necessarily indicative of the results which may be expected for
the entire year.
The consolidated condensed balance sheet of Third Century as of December
31, 2004 has been derived from the audited consolidated balance sheet of Third
Century as of that date.
Note 2: Principles of Consolidation
The consolidated financial statements include the accounts of Third
Century, Mutual Savings Bank and Financial. All significant intercompany
balances and transactions have been eliminated in the accompanying consolidated
financial statements.
Note 3: Earnings Per Share
Earnings per share is computed based upon the weighted average common
shares outstanding during the period subsequent to Mutual Savings Bank's
conversion to a stock savings bank on June 29, 2004. Net income per share for
the periods prior to the conversion is not
7
meaningful. Unearned ESOP shares are not considered outstanding for the earnings
per share calculation and Third Century has no potentially dilutive shares. The
factors used in the earnings per share computation for the three months ending
March 31, 2005 were as follows:
Three Months Ended
March 31, 2005
Basic: --------------
Net income $ 80
========
Weighted average common shares 1,653
========
Basic earnings per common share $ .05
========
Note 4: Effect of Recent Accounting Pronouncements
In March 2004, the Emerging Issues Task Force (EITF) finalized and issued
EITF 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to
Certain Investments (EITF 03-1). EITF 03-1 provides recognition and measurement
guidance regarding when impairments of equity and debt securities are considered
other-than-temporary requiring a charge to earnings, and also requires
additional annual disclosures for investments in unrealized loss positions. The
additional annual disclosure requirements were previously issued by the EITF in
November 2003 and were effective for the year ended December 31, 2003. In
September 2004, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position (FSP) EITF 03-1-1, which delays the recognition and measurement
provisions of EITF 03-1 pending the issuance of further implementation guidance.
We are currently evaluating the effect of the recognition and measurement
provisions of EITF 03-1. While our analysis is pending the FASB's revisions to
EITF 03-1, we currently believe the adoption of EITF 03-1 will not result in a
material impact on Third Century's results of operations or financial condition.
On December 12, 2003, the American Institute of Certified Public
Accountants issued Statement of Position No. 03-3, Accounting for Certain Loans
or Debt Securities Acquired in a Transfer (SOP 03-3). SOP 03-3 requires acquired
loans with poor credit quality to be recorded at fair value and prohibits
carrying over or creation of valuation allowances in the initial accounting for
the loans. SOP 03-3 also limits the yield that may be accreted to income. SOP
03-3 applies to the purchase of an individual loan, a pool of loans, a group of
loans, and loans acquired in a business combination. SOP 03-3 is effective for
loans acquired in fiscal years beginning after December 31, 2004. SOP 03-3 is
not expected to have a material impact on Third Century's results of operations
or financial condition.
In December, 2004, the FASB issued an amendment to SFAS 123 (SFAS 123R)
which eliminates the ability to account for share-based compensation
transactions using Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and generally requires that such transactions be
accounted for using a fair value-based method. SFAS 123R will be effective for
Third Century for the first quarter of 2006.
SFAS123R applies to all awards granted after the required effective date
and to awards modified, repurchased, or cancelled after that date. The
cumulative effect of initially applying this Statement, if any, is recognized as
of the required effective date.
As of the required effective date, Third Century will apply SFAS 123R using
a modified version of prospective application. Under that transition method,
compensation cost is recognized on or after the required effective date for the
portion of outstanding awards for which the requisite service has not yet been
rendered, based on the grant-date fair value of those awards calculated under
SFAS 123 for either recognition or pro forma disclosures. For periods before the
required
8
effective date, a company may elect to apply a modified version of retrospective
application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods by
SFAS 123.
Third Century will be required to first report compensation cost under SFAS
123R in the first quarter of 2006 in the event stock options are granted or
issued. We are currently evaluating the effect of the recognition and
measurement provisions of SFAS 123R but we currently believe the adoption of
SFAS 123R will not result in a material impact on Third Century's results of
operations or financial condition.
Item 2. Management's Discussion and Analysis or Plan of Operations.
Forward Looking Statements
This Quarterly Report on Form 10-QSB ("Form 10-QSB") contains statements
which constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-QSB and include statements regarding the intent, belief,
outlook, estimate or expectations of Third Century (as defined in the notes to
the consolidated condensed financial statements), its directors or its officers
primarily with respect to future events and the future financial performance of
Third Century. Readers of the Form 10-QSB are cautioned that any such forward
looking statements are not guarantees of future events or performance and
involve risks and uncertainties, and that actual results may differ materially
from those in the forward looking statements as a result of various factors. The
accompanying information contained in this Form 10-QSB identifies important
factors that could cause such differences. These factors include changes in
interest rates; loss of deposits and loan demand to other financial
institutions; substantial changes in financial markets; changes in real estate
values and the real estate market; or regulatory changes.
Critical Accounting Policies
Generally accepted accounting principles are complex and require management
to apply significant judgments to various accounting, reporting and disclosure
matters. Management of Third Century must use assumptions and estimates to apply
these principles where actual measurement is not possible or practical. For a
complete discussion of Third Century's significant accounting policies, see Note
1 to the Consolidated Financial Statements as of December 31, 2004. Certain
policies are considered critical because they are highly dependent upon
subjective or complex judgments, assumptions and estimates. Changes in such
estimates may have a significant impact on the financial statements. Management
has reviewed the application of these policies with the Audit Committee of Third
Century's Board of Directors. Those policies include the following:
Allowance for Loan Losses
The allowance for loan losses represents management's estimate of probable
losses inherent in the Bank's loan portfolios. In determining the appropriate
amount of the allowance for loan losses, management makes numerous assumptions,
estimates and assessments.
The strategy also emphasizes diversification on an industry and customer
level, regular credit quality reviews and quarterly management reviews of large
credit exposures and loans experiencing deterioration of credit quality.
Mutual's allowance consists of three components: probable losses estimated
from individual reviews of specific loans, probable losses estimated from
historical loss rates, and probable losses resulting from economic or other
deterioration above and beyond what is reflected in the first two components of
the allowance.
9
Larger commercial loans that exhibit probable or observed credit weaknesses
are subject to individual review. Where appropriate, reserves are allocated to
individual loans based on management's estimate of the borrower's ability to
repay the loan given the availability of collateral, other sources of cash flow
and legal options available to Mutual. Included in the review of individual
loans are those that are impaired as provided in SFAS No. 114, Accounting by
Creditors for Impairment of a Loan. Any allowances for impaired loans are
determined by the present value of expected future cash flows discounted at the
loan's effective interest rate or fair value of the underlying collateral.
Mutual evaluates the collectibility of both principal and interest when
assessing the need for a loss accrual. Historical loss rates are applied to
other commercial loans not subject to specific reserve allocations.
Homogenous smaller balance loans, such as consumer installment and
residential mortgage loans are not individually risk graded. Reserves are
established for each pool of loans based on the expected net charge-offs for one
year. Loss rates are based on the average net charge-off history by loan
category.
Historical loss rates for commercial and consumer loans may be adjusted for
significant factors that, in management's judgment, reflect the impact of any
current conditions on loss recognition. Factors which management considers in
the analysis include the effects of the national and local economies, trends in
the nature and volume of loans (delinquencies, charge-offs and nonaccrual
loans), changes in mix, asset quality trends, risk management and loan
administration, changes in the internal lending policies and credit standards,
collection practices and examination results from bank regulatory agencies and
the Bank's internal loan review.
An unallocated reserve is maintained to recognize the imprecision in
estimating and measuring loss when evaluating reserves for individual loans or
pools of loans. Allowances on individual loans are reviewed quarterly and
historical loss rates are reviewed annually and adjusted as necessary based on
changing borrower and/or collateral conditions and actual collection and
charge-off experience.
Mutual's primary market area for lending is Johnson County, Indiana. When
evaluating the adequacy of allowance, consideration is given to this regional
geographic concentration and the closely associated effect changing economic
conditions have on Mutual's customers.
Mortgage Servicing Rights
Mortgage servicing rights (MSRs) associated with loans originated and sold,
where servicing is retained, are capitalized and included in other intangible
assets in the consolidated balance sheet. The value of the capitalized servicing
rights represents the present value of the future servicing fees arising from
the right to service loans in the portfolio. Critical accounting policies for
MSRs relate to the initial valuation and subsequent impairment tests. The
methodology used to determine the valuation of MSRs requires the development and
use of a number of estimates, including anticipated principal amortization and
prepayments of that principal balance. Events that may significantly affect the
estimates used are changes in interest rates, mortgage loan prepayment speeds
and the payment performance of the underlying loans. The carrying value of the
MSRs is periodically reviewed for impairment based on a determination of fair
value. For purposes of measuring impairment, the servicing rights are compared
to a valuation prepared based on a discounted cash flow methodology, utilizing
current prepayment speeds and discount rates. Impairment, if any, is recognized
through a valuation allowance and is recorded as amortization of intangible
assets.
10
Comparison of Financial Condition at March 31, 2005 and December 31, 2004
Total assets decreased $2.7 million or 2.09% to $123.5 million at March 31,
2005 from $126.2 million at December 31, 2004. Cash and cash equivalents
decreased $2.8 million or 23.11% during the quarter. In January, a business
customer, in the normal course of its business, withdrew approximately $4.0
million, previously on deposit as of December 31, 2004, from its
non-interest-bearing checking account.
Total liabilities decreased $2.7 million or 2.52% to $100.6 million at
March 31, 2005 from $103.3 million at December 31, 2004. During the quarter,
balances in the demand deposit accounts, savings accounts, including money
market and NOW accounts, and time deposits declined by an aggregate total of
$2.2 million or 2.54% to $84.2 million at March 31, 2005. This decline in
balances included the customer withdrawal described in the preceding paragraph.
Total equity increased from $22.8 million at December 31, 2004 to $22.9
million at March 31, 2005, representing an increase of $14,000 or 0.06%. The
equity contributed by the ESOP increased $36,000 from $64,000 at December 31,
2004 to $100,000 at March 31, 2005.
Comparison of Operating Results for the Three Months Ended March 31, 2005 and
2004
General. Net income for the quarter ended March 31, 2005 was $80,000
compared to net income of $118,000 for the quarter ended March 31, 2004. The
decrease of $38,000 was primarily the result of increased salaries and employee
benefits. This category increased $189,000 from $561,000 for the quarter ended
March 31, 2004 to $750,000 for the quarter ended March 31, 2005, or 33.69%.
Officer and employee salaries increased approximately $80,000, or 19.60%,
from $408,000 at March 31, 2004 to $488,000 at March 31, 2005. The increase was
due to the addition of a Compliance Officer and a Staff Accountant in response
to the additional regulatory burden place upon public companies. In addition,
the contributions paid to the employee pension plan increased $41,000 or
161.01%. Also, in July 2004, the Bank recorded the monthly release of shares
from its ESOP trust, which resulted in expense of approximately $39,000 for the
quarter ended March 31, 2005.
As of May 1, 2005, the Bank froze the multi-employer defined benefit
pension plan as a cost-control measure for the future. No additional liability
was incurred as a result of this action.
Interest Income. Interest income for the quarter ended March 31, 2005 was
$1.6 million compared to $1.5 million for the quarter ended March 31, 2004. The
change between these reporting periods was an increase of $167,000, which
consisted primarily of an increase in loan interest income by $72,000.
Investment income increased by $60,000 and interest income on interest-bearing
deposits increased $40,000 during the quarter. Average interest-bearing assets
for the quarter ended March 31, 2005 was $119 million, which represented an
increase of $14.2 million or 13.52%, from the quarter ended March 31, 2004. The
yield on those assets decreased from 5.60% at March 31, 2004 to 5.49% at March
31, 2005. The average yield on loans increased by 16 basis points, the average
yield on interest-bearing deposits increased by 146 basis points and the average
yield on investments increased 130 basis points. The average balances for loans
increased $2.1 million to $99.0 million, the average balances for
interest-bearing deposits increased $2.3 million to $9.2 million and the average
balances for investments increased $9.2 million to $9.9 million at March 31,
2005.
Interest Expense. Interest expense for the quarter ended March 31, 2005 was
$472,000 compared to $466,000 for the quarter ended March 31, 2004, an increase
of $6,000 or 1.29%. Average interest-bearing liabilities increased to $94.6
million from $93.7 million, with the average interest rate remaining constant at
1.99% for both of the comparative quarters.
11
Net Interest Income. Net interest income of $1.2 million for the quarter
ended March 31, 2005 reflects an increase of $200,000 or 15.97% from the net
interest income for the quarter ended March 31, 2004.
Provision for Loan Losses. Mutual Savings Bank did not allocate to its
provision for loan losses for the quarter ended March 31, 2005, while a $12,000
provision was made during the quarter ended March 31, 2004. In evaluating the
adequacy of loan loss allowances, management considers factors such as
delinquency trends, portfolio composition, past loss experience and other
factors such as general economic conditions. During the past year, Mutual
Savings Bank's level of nonperforming assets decreased from $508,000 at March
31, 2004, to $203,000 at March 31, 2005 and the percentage of nonperforming
assets to total assets decreased from 0.48% to 0.16% for the same respective
time periods. For the quarter ended March 31, 2005, Mutual Savings Bank charged
off loans net of recoveries of $10,287 which represents a decrease of $23,113
from the quarter ended March 31, 2004.
Other Income. Other income was $169,000 for the quarter ended March 31,
2005 and $202,000 for the quarter ended March 31, 2004, which represented a
decrease of $33,000 or 16.34% between the reporting periods. The decline of
$35,000 in net gains on loan sales from $50,000 at the quarter ended March 31,
2004 to $15,000 at the quarter ended March 31, 2005, was due to the reduction in
loans sold during the comparative reporting periods. In the first quarter of
2004, Mutual Savings Bank sold $3.0 million of loans to the secondary market as
compared to $2.3 million in the first quarter of 2005.
Other Expense. Other expense for the quarter ended March 31, 2005 was $1.2
million compared to $974,000 for the same period last year, an increase of
$231,000 or 23.72%. As previously explained, the salaries and employee benefits
increased during this period by $189,000, or 33.69%.
Income Taxes. Mutual Savings Bank recognized income tax expense of $53,000
for the quarter ended March 31, 2005, as compared to $106,000 for the quarter
ended March 31, 2004, which represents a decrease in the effective tax rate from
47.32% to 39.85%.
Other
The Securities and Exchange Commission maintains a Web site that contains
reports, proxy information statements, and other information regarding
registrants that file electronically with the Commission, including Third
Century. The address is http://www.sec.gov.
Item 3. Controls and Procedures
A. Evaluation of disclosure controls and procedures. Third Century's chief
executive officer and chief financial officer, after evaluating the
effectiveness of Third Century's disclosure controls and procedures (as defined
in Sections 13a-15(e) and 15d-15(e) of regulations promulgated under the
Securities Exchange Act of 1934, as amended), as of the end of the most recent
fiscal quarter covered by this quarterly report (the "Evaluation Date"), have
concluded that as of the Evaluation Date, Third Century's disclosure controls
and procedures were adequate and are designed to ensure that material
information relating to Third Century would be made known to such officers by
others within Third Century on a timely basis.
B. Changes in internal controls. There were no significant changes in Third
Century's internal control over financial reporting identified in connection
with Third Century's evaluation of controls that occurred during Third Century's
last fiscal quarter that have materially affected, or are reasonably likely to
materially affect, Third Century's internal control over financial reporting.
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Third Century, from time to time, is a party to routine litigation, which arises
in the normal course of business, such as claims to enforce liens, condemnation
proceedings on properties in which Mutual Savings Bank holds security interests,
claims involving the making and servicing of real property loans, and other
issues incident to the business of Third Century. There were no lawsuits pending
or known to be contemplated against Third Century at March 31, 2005 that would
have a material effect on Third Century's operations or income.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
On April 14, 2005, Mutual Savings Bank executed the First Amendment to the Third
Century Bancorp Employee Stock Ownership Plan and Trust Agreement (the
"Amendment"). The Amendment modifies the Third Century Bancorp Employee Stock
Ownership Plan and Trust Agreement (the "Plan") to change the mandatory small
benefit cashout threshold from $5,000 to $1,000, effective with respect to
distributions of benefits on or after March 28, 2005. A copy of the Amendment
accompanies this Report as Exhibit 10.3 and is incorporated herein by this
reference.
Item 6. Exhibits.
The exhibits filed as part of this Form 10-QSB are listed in the Exhibit Index,
which is incorporated by this reference.
13
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THIRD CENTURY BANCORP
Date: May 16, 2005 By: /s/ Robert D. Heuchan
------------------------------------
Robert D Heuchan
President and Chief Executive Officer
Date: May 16, 2005 By: /s/ Debra K. Harlow
-------------------------------------
Debra K. Harlow
Chief Financial Officer
14
Exhibit Index
Exhibit No. Description
----------- -----------------------------------------------------------------
10.1 Purchase Agreement between Mutual Savings Bank and Thomas A.
Grant, Inc.
10.2 Real Estate Proposition between Mutual Savings Bank and J. Andrew
Woods
10.3 First Amendment to the Third Century Bancorp Employee Stock
Ownership Plan and Trust Agreement
31.1 Rule 13a-14(a) Certification of Robert D. Heuchan, President and
Chief Executive Officer
31.2 Rule 13a-14(a) Certification of Debra K. Harlow, Vice President
and Chief Financial Officer
32.1 Section 1350 Certification of Robert D. Heuchan
32.2 Section 1350 Certification of Debra K. Harlow
E-1