**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**





(Mark
      one)





ý
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31,
                2007


OR





o
            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
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                Number)








80
      East
      Jefferson Street


Franklin,
      Indiana 46131


(Address
      of principal executive offices)





(317)
      736-7151


(Issuer’s
      telephone number)





Check
      whether the Issuer (1) filed all
      reports required to be filed by Section 13 or 15(d) of the Securities Exchange
      Act of 1934 during the past twelve months (or for such shorter period that
      the
      registrant was required to file such reports) and (2) has been subject to such
      filing requirements for the past 90 days.


YES  ý                      NO
      o





Indicate
      by check mark whether the
      Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
      Act).


YES  o                      NO  ý





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, 2007 – 1,611,003 common
      shares





Transitional
      Small Business Disclosure Format (Check one):  Yes o  No ý





THIRD
      CENTURY BANCORP


FORM
      10-QSB





INDEX


Page
                No.PART
                I.
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements
            3Consolidated
                Condensed Balance Sheets
            3Consolidated
                Condensed Statements of Income
            4Consolidated
                Condensed Statement of Stockholders’
                Equity
            5Consolidated
                Condensed Statements of Cash
                Flows
            6Notes
                to Unaudited Consolidated Condensed Financial
                Statements
            7Item
                2.
            Management’s
                Discussion and Analysis or Plan of
                Operation
            9Item
                3.
            Controls
                and Procedures
            13PART
                II.
            OTHER
                INFORMATION
            13Item
                1.
            Legal
                Proceedings
            13Item
                2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds
            14Item
                3.
            Defaults
                Upon Senior Securities
            14Item
                4.
            Submission
                of Matters to a Vote of Security
                Holders
            14Item
                5.
            Other
                Information
            14Item
                6.
            Exhibits
            14SIGNATURES
            15EXHIBIT
                INDEX
            E-1EXHIBITS


*Index*


**PARTI.**
            **FINANCIAL
                INFORMATION**


**Item1.**
            **Financial
                Statements**





**THIRD
      CENTURY BANCORP**


Consolidated
      Condensed Balance Sheets





**As
                of**
            
            
            **As
                of****March
                31, 2007**
              **(Unaudited)**
            
            
            **December
                31, 2006****Assets**
            
            (in
                thousands)Cash
                and due from
                banks
            
            $
            488
            
            
            $
            620Interest-earning
                demand
                deposits
            
            
            12,058
            
            
            
            8,872Cash
                and cash
                equivalents
            
            
            12,546
            
            
            
            9,492Held
                to maturity
                securities
            
            
            6,264
            
            
            
            5,209Loans,
                net of allowance for
                loan losses of $899 and $936
            
            
            111,436
            
            
            
            111,937Premises
                and
                equipment
            
            
            4,302
            
            
            
            4,328Federal
                Home Loan Bank
                stock
            
            
            1,255
            
            
            
            1,255Interest
                receivable
            
            
            631
            
            
            
            643Other
                assets
            
            
            720
            
            
            
            639Total
                assets
            
            $
            137,154
            
            
            $
            133,503**Liabilities**DepositsDemand
            
            $
            10,009
            
            
            $
            9,590Savings,
                NOW and money
                market
            
            
            41,243
            
            
            
            40,085Time
            
            
            41,229
            
            
            
            38,893Total
                deposits
            
            
            92,481
            
            
            
            88,568Federal
                Home Loan Bank
                advances
            
            
            24,600
            
            
            
            24,600Other
                liabilities
            
            
            568
            
            
            
            585Total
                liabilities
            
            
            117,649
            
            
            
            113,753**Commitments
                and Contingencies**
            
            
            –
            
            
            
            –**Equity
                Contributed by ESOP**
            
            
            354
            
            
            
            324**Stockholders'
                Equity**Preferred
                stock, without par
                value, authorized and unissued
              2,000,000
                shares
            
            
            –
            
            
            
            –Common
                stock, without par
                valueAuthorized  -
                20,000,000  sharesIssued
                and outstanding –
                1,627,843 and 1,653,125 shares
            
            
            13,431
            
            
            
            13,685Retained
                earnings
            
            
            5,720
            
            
            
            5,741Total
                stockholders'
                equity
            
            
            19,151
            
            
            
            19,426Total
                liabilities and
                stockholders’ equity
            
            $
            137,154
            
            
            $
            133,503








See
      notes
      to consolidated condensed financial statements.


3
 *Index*


**THIRD
      CENTURY BANCORP**


Consolidated
      Condensed Statements of Income


(Unaudited)


**Three
                Months Ended**
              **March
                31,****2007**
            
            
            **2006**(dollars
                in thousands, except per share amounts)**Interest
                Income**Loans
                receivable
            
            $
            1,891
            
            
            $
            1,682Investment
                securities
            
            
            66
            
            
            
            92Federal
                Home Loan Bank stock
            
            
            13
            
            
            
            14Interest-earning
                deposits
            
            
            84
            
            
            
            47Total
                interest income
            
            
            2,054
            
            
            
            1,835**Interest
                expense**Deposits
            
            
            654
            
            
            
            480Federal
                Home Loan Bank advances
            
            
            284
            
            
            
            160Total
                interest expense
            
            
            938
            
            
            
            640**Net
                interest income**
            
            
            1,116
            
            
            
            1,195Provision
                for loan losses
            
            
            15
            
            
            
            15**Net
                interest income after provision for loan losses**
            
            
            1,101
            
            
            
            1,180**Other
                income**Service
                charges on deposit accounts
            
            
            66
            
            
            
            74Other
                service charges and fees
            
            
            68
            
            
            
            70Net
                gains on loan sales
            
            
            13
            
            
            
            19Other
                income
            
            
            45
            
            
            
            57Total
                other income
            
            
            192
            
            
            
            220**Other
                expenses**Salaries
                and employee benefits
            
            
            720
            
            
            
            733Net
                occupancy and equipment expenses
            
            
            142
            
            
            
            110Data
                processing fees
            
            
            103
            
            
            
            105Professional
                Services
            
            
            38
            
            
            
            26ATM
                Expense
            
            
            34
            
            
            
            29Other
                expenses
            
            
            176
            
            
            
            164Total
                other expenses
            
            
            1,213
            
            
            
            1,167**Income
                before income tax**
            
            
            80
            
            
            
            233Income
                tax expense
            
            
            40
            
            
            
            90**Net
                income**
            
            $
            40
            
            
            $
            143Weighted
                average common shares - basic
            
            
            1,482
            
            
            
            1,472Weighted
                average common shares- diluted
            
            
            1,488
            
            
            
            1,472Earnings
                per share - basic
            
            $
            0.03
            
            
            $
            0.10Earnings
                per share - diluted
            
            $
            0.03
            
            
            $
            0.10Dividends
                declared per share
            
            $
            0.04
            
            
            $
            0.04





See
      notes
      to consolidated condensed financial statements.


4
 *Index*


**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, 2007**
            
            
            1,653,125
            
            
            $
            13,685
            
            
            $
            5,741
            
            
            $
            19,426Net
                and comprehensive income
            
            
            –
            
            
            
            –
            
            
            
            40
            
            
            
            40Repurchase
                of stock
            
            
            (25,282
            )
            
            
            (294
            )
            
            
            –
            
            
            
            (294
            )RRP
                Shares Earned
            
            
            –
            
            
            
            40
            
            
            
            –
            
            
            
            40Dividends
                paid ($0.04 per share outstanding)
            
            
            –
            
            
            
            –
            
            
            
            (61
            )
            
            
            (61
            )**Balances,  March
                31, 2007**
            
            
            1,627,843
            
            
            $
            13,431
            
            
            $
            5,720
            
            
            $
            19,151





See
      notes
      to consolidated condensed financial statements.


5
 *Index*


**THIRD
      CENTURY BANCORP**


Consolidated
      Condensed Statements of Cash Flows


(Unaudited)




**Three
                Months Ended March 31,****2007**
            
            
            **2006**(in
                thousands)**Operating
                Activities**Net
                income
            
            $
            40
            
            
            $
            143Adjustments
                to reconcile net income to net cash provided by operating
                activitiesProvision
                for loan losses
            
            
            15
            
            
            
            15Depreciation
            
            
            53
            
            
            
            44Investment securities (accretion) amortization, net
            
            
            39
            
            
            
            4Amortization
                of mortgage servicing rights
            
            
            11
            
            
            
            10Gain
                on sale of loans
            
            
            (13
            )
            
            
            (19
            )Loans
                originated for sale in the secondary market
            
            
            (698
            )
            
            
            (1,022
            )Proceeds
                from sale of loans in the secondary market
            
            
            711
            
            
            
            1,041RRP
                compensation expense
            
            
            40
            
            
            
            40ESOP
                compensation expense
            
            
            30
            
            
            
            34Net
                change inInterest
                receivable
            
            
            12
            
            
            
            5Other
                assets
            
            
            (86
            )
            
            
            22Other
                liabilities
            
            
            (18
            )
            
            
            43Net
                cash provided by operating activities
            
            
            136
            
            
            
            360**Investing
                Activities**Purchases
                of securities held to maturity
            
            
            (2,341
            )
            
            
            (1,000
            )Proceeds
                from maturities of securities held to maturity
            
            
            1,248
            
            
            
            2,074Proceeds
                from maturities of interest-bearing time deposits
            
            
            –
            
            
            
            200Net
                changes in loans
            
            
            480
            
            
            
            (3,475
            )Purchases
                of premises and equipment
            
            
            (27
            )
            
            
            (292
            )Net
                cash used by investing activities
            
            
            (640
            )
            
            
            (2,493
            )**Financing
                Activities**Net
                change inDemand
                and savings deposits
            
            
            1,578
            
            
            
            834Certificate
                of deposits
            
            
            2,335
            
            
            
            (547
            )Cash
                dividend on common stock
            
            
            (61
            )
            
            
            (68
            )Repurchase
                shares of common stock
            
            
            (294
            )
            
            
            –Proceeds
                from FHLB advances
            
            
            –
            
            
            
            1,000Payments
                on FHLB advances
            
            
            –
            
            
            
            (2,000
            )Net
                cash provided (used) by financing activities
            
            
            3,558
            
            
            
            (781
            )**Net
                Change in Cash and Equivalents**
            
            ****
            **3,054**
            
            
            ****
            **(2,914**
            **)****Cash
                and Cash Equivalents, Beginning of Period**
            
            ****
            **9,492**
            
            
            ****
            **7,853****Cash
                and Cash Equivalents, End of Period**
            
            **$**
            **12,546**
            
            
            **$**
            **4,939****Additional
                Cash Flows Information**Interest
                paid
            
            $
            918
            
            
            $
            634Income
                tax paid (net of refunds)
            
            $
            12
            
            
            $
            30**Noncash
                Activity**Return
                of capital declared March 16, 2006 paid May 8, 2006
            
            
            
            
            
            $
            3,306See
                notes to consolidated condensed financial statements.


6
 *Index*


**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’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.  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. Mutual conducts business primarily in Johnson County, southeast Marion
      County and surrounding counties.   Mutual attracts deposits from
      the general public and originates loans for consumer, residential and commercial
      purposes. Mutual’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 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
      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
      Third Century for the fiscal year ended December 31, 2006 included in Third
      Century’s Annual Report filed as an attachment to its Form
      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, 2007, 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, 2006
      has been derived from the audited consolidated balance sheet of Third Century
      as
      of that date.




Note
      2:  Change in Accounting Principle




Effective
      January 1, 2007, Third Century Bancorp adopted Statement of Financial Accounting
      Standards No. 156 (SFAS No. 156), *Accounting for Servicing of Financial
      Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and
      Servicing of Financial Assets and Extinguishments of
      Liabilities*.  SFAS 156 requires that all separately recognized
      servicing assets and servicing liabilities be initially measured at fair value,
      if practicable, and permits entities to elect either fair value measurement
      with
      changes in fair value reflected in earnings or the amortization and impairment
      requirements of SFAS No. 140 for subsequent measurement.  The Company
      elected to continue with the amortization and impairment requirements of SFAS
      No. 140, which will not have a material effect on our financial condition or
      results of operations.




The
      Company and its subsidiary file income tax returns in the U.S. federal and
      Indiana jurisdictions.  With few exceptions, the Company is no longer
      subject to U.S. federal, state and local examinations by tax authorities for
      years before 2003.


7
 *Index*





The
      Company adopted the provisions of the Financial Accounting Standards Board
      (FASB) Interpretation No. 48 (FIN 48), *Accounting for Uncertainty in Income
      Taxes – an interpretation of FASB Statement No. 109*, on January 1,
      2007.  FIN 48 prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken in a tax return.  FIN 48 also
      provides guidance on derecognition, classification, interest and penalties,
      accounting in interim periods, and disclosure and transition.  As a
      result of the implementation of FIN 48, the Company did not identify any
      uncertain tax positions that it believes should be recognized in the financial
      statements.




Note
      3: Principles of Consolidation




The
      consolidated financial statements include the accounts of Third Century, Mutual
      and Financial.  All significant intercompany balances and transactions
      have been eliminated in the accompanying consolidated financial
      statements.




Note
      4: Earnings Per Share




Earnings
      per share is computed based upon the weighted average common shares outstanding
      during the period. Unearned ESOP shares and unearned RRP shares are not
      considered outstanding for the earnings per share calculation.  The
      following table presents the factors used in the earnings per share computation
      for the three months ending March 31, 2007 and March 31, 2006:




**Three
                Months**
              **Ended**
              **March
                31,**
            
            
            **Three
                Months**
              **Ended**
              **March
                31,****2007**
            
            
            **2006**Basic:Net
                income
            
            $
            40
            
            
            $
            143Weighted
                average common shares outstanding
            
            
            1,482
            
            
            
            1,472Basic
                earnings per common share
            
            $
            0.03
            
            
            $
            0.10Diluted:Net
                Income
            
            $
            40
            
            
            $
            143Weighted
                average common sharesoutstanding
            
            
            1,482
            
            
            
            1,472Add:  Dilutive
                effects of assumed exercises of stock options
            
            
            6
            
            
            
            –Average
                shares and dilutivepotential
                common shares
            
            
            1,488
            
            
            
            1,472Diluted
                earnings per common share
            
            $
            0.03
            
            
            $
            0.10




Note
      5: Effect of Recent Accounting Pronouncements




In
      September 2006, the FASB issued Statement No. 157, *Fair Value
      Measurements*.  This Statement defines fair value, establishes a
      framework for measuring fair value and expands disclosures about fair value
      measurements. This Statement establishes a fair value hierarchy about the
      assumptions used to measure fair value and clarifies assumptions about risk
      and
      the effect of a restriction on the sale or




8
 *Index*


use
      of an
      asset. The standard is effective for fiscal years beginning after November
      15,
      2007. The Company is currently evaluating and has not yet determined the impact
      the new standard is expected to have on its financial position and results
      of
      operations.




In
      September 2006, the FASB Emerging Issues Task Force (EITF) finalized Issue
      No.
      06−5, *Accounting for Purchases of Life Insurance - Determining the Amount
      That Could Be Realized in Accordance with FASB Technical Bulletin No. 85−4*
      (Accounting for Purchases of Life Insurance).  This issue requires
      that a policyholder consider contractual terms of a life insurance policy in
      determining the amount that could be realized under the insurance
      contract.  It also requires that if the contract provides for a
      greater surrender value if all individual policies in a group are surrendered
      at
      the same time, that the surrender value be determined based on the assumption
      that policies will be surrendered on an individual basis.  Lastly, the
      issue discusses whether the cash surrender value should be discounted when
      the
      policyholder is contractually limited in its ability to surrender a
      policy.  This issue is effective for fiscal years beginning after
      December 15, 2006.  The Company does not expect that the adoption EITF
      No. 06-5 will have a material impact on financial condition of results of
      operations.




On
      February 15, 2007, the FASB issued its Statement No. 159, *The Fair Value
      Option for Financial Assets and Financial Liabilities—Including an Amendment of
      FASB Statement No. 115*.  FAS 159 permits entities to elect to
      report most financial assets and liabilities at their fair value with changes
      in
      fair value included in net income.  The fair value option may be
      applied on an instrument-by-instrument or instrument class-by-class
      basis.  The option is not available for deposits withdrawable on
      demand, pension plan assets and obligations, leases, instruments classified
      as
      stockholders’ equity, investments in consolidated subsidiaries and variable
      interest entities and certain insurance policies. The new standard is effective
      at the beginning of the Company’s fiscal year beginning January 1, 2008, and
      early application may be elected in certain circumstances.  The
      Company is currently evaluating and has not yet determined the impact the new
      standard is expected to have on its financial position and results of
      operations.







**Item2.**
            **Management’s
                Discussion and Analysis or Plan of
                Operation**





**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, as discussed further below:




(a)           **Regulatory
      Risk**.  The banking industry is heavily
      regulated.  These regulations are intended to protect depositors, not
      shareholders.  Third Century and Mutual are subject to regulation and
      supervision by the Indiana Department of Financial Institutions, Federal Deposit
      Insurance Corporation, and the Board of Governors of the Federal Reserve
      System.  The burden imposed by federal and state regulations puts
      banks at a competitive disadvantage compared to less regulated competitors
      such
      as finance companies, mortgage banking companies and leasing
      companies.  The banking industry continues to lose market share to
      such competitors.




(b)           **Legislation**.  Because
      of concerns relating to the competitiveness and the safety and soundness of
      the
      industry, Congress continues to consider a number of wide-ranging




9
 *Index*


proposals
      for altering the structure, regulation, and competitive relationships of the
      nation’s financial institutions.  Management cannot predict whether or
      in what form any of these proposals will be adopted or the extent to which
      the
      business of Third Century or Mutual may be affected thereby.




(c)           **Credit
      Risk**.  One of the greatest risks facing lenders is credit
      risk, that is, the risk of losing principal and interest due to a borrower’s
      failure to perform according to the terms of a loan agreement.  While
      management attempts to provide an allowance for loan losses at a level adequate
      to cover probable incurred losses based on loan portfolio growth, past loss
      experience, general economic conditions, information about specific borrower
      situations, and other factors (all as discussed below in Critical Accounting
      Policies--Allowance for Loan Losses), future adjustments to reserves may become
      necessary, and net income could be significantly affected, if circumstances
      differ substantially from assumptions used with respect to such
      factors.




(d)           **Exposure
      to Local Economic Conditions**.  Mutual’s primary market area
      for deposits and loans encompasses Johnson County and southeast Marion County,
      in central Indiana.  A substantial percent of the Bank’s business
      activities are within this area.  This concentration exposes the Bank
      to risks resulting from changes in the local economy.  A dramatic drop
      in local real estate values would, for example, adversely affect the quality
      of
      the Bank’s loan portfolio.




(e)           **Interest
      Rate Risk.**Third Century’s earnings depend to a great extent
      upon the level of net interest income, which is the difference between interest
      income earned on loans and investments and the interest expense paid on deposits
      and other borrowings.  Interest rate risk is the risk that the
      earnings and capital will be adversely affected by changes in interest
      rates.




(f)           **Competition**.  The
      activities of Third Century and Mutual in the geographic market served involve
      competition with other banks as well as with other financial institutions and
      enterprises, many of which have substantially greater resources than those
      available to Third Century. In addition, non-bank competitors are generally
      not
      subject to the extensive regulation applicable to Third Century and
      Mutual.





**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 of Third Century’s Form 10KSB as of December
      31, 2006. 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




10
 *Index*


resulting
      from economic or other deterioration above and beyond what is reflected in
      the
      first two components of the allowance.




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 southeastern Marion County and Johnson
      County, Indiana. When evaluating the adequacy of the 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 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.




**Comparison
      of Financial Condition at March 31, 2007 and at December 31,
      2006**




Total
      assets increased $3.7 million or 2.73% to $137.2 million at March 31, 2007
      from
      $133.5 million at December 31, 2006.  Total interest-earning demand
      deposits grew by $3.2 million or 35.91% to $12.1 million at March 31, 2007
      from
      $8.9 million at December 31, 2006.  In addition, investments held to
      maturity increased to $6.3 million at March 31, 2007 from $5.2 million at
      December 31, 2006, which




11
 *Index*


represented
      an increase of $1.1 million or 20.25%.  The increases in
      interest-earning demand deposits and investments reflected the investment of
      $3.9 million in new deposits.




Total
      liabilities increased by $3.9 million or 3.42% to $117.6 million at March 31,
      2007 from $113.7 million at December 31, 2006.   The majority of
      this increase was due to growth in total deposits to $92.5 million at March
      31,
      2007 from $88.6 million at December 31, 2006.  Time deposits increased
      to $41.2 million at March 31, 2007, which represented an increase of $2.3
      million, or 6.01%, and savings, NOW and money market balances increased to
      $41.2
      million at March 31, 2007, which represented an increase of $1.2 million, or
      2.89% from $40.0 million at December 31, 2006, respectively.  The Bank
      continued to offer special rates for new time deposits opened at Mutual and
      opened several new money market accounts which represented $1.5 million in
      new
      balances as of March 31, 2007.  Mutual does not currently bid for
      public funds or offer brokered deposits.




Total
      stockholders’ equity decreased to $19.2 million at March 31, 2007 from $19.4
      million at December 31, 2006, representing a decrease of $275,000 or
      1.42%.  On November 17, 2006, the Company announced that its Board of
      Directors had authorized the repurchase of up to 5% of its outstanding shares
      of
      common stock, or 82,656 shares, commencing November 17, 2006.  For the
      quarter ended March 31, 2007, the Company paid $294,000 to repurchase 25,282
      shares of stock. The equity contributed by the ESOP increased $30,000 to
      $354,000 at March 31, 2007 from $324,000 at December 31, 2006. Third Century
      paid year-to-date cash dividends of $61,000.




**Comparison
      of Operating Results for the Three Months Ended March 31, 2007 and
      2006**




*General.*  Net
      income for the quarter ended March 31, 2007 was $40,000 compared to net income
      of $143,000 for the quarter ended March 31, 2006.  Net interest income
      decreased $79,000 or 6.61% and other income decreased by $28,000, or 12.73%
      for
      the quarter ended March 31, 2007 compared to the quarter ended March 31,
      2006.  In contrast, other expenses increased by $46,000 or
      3.94%.  See the following subsections for further discussion of these
      changes.




*Interest
      Income.*  Interest income for the quarter ended March 31, 2007 was
      $2.1 million compared to $1.8 million for the quarter ended March 31,
      2006.  The increase during the comparative periods of $219,000,
      consisted primarily of an increase in interest income from loans of $209,000
      or
      12.43%.




The
      average balances of interest-earning assets for the quarter ended March 31,
      2007
      was $128.5 million, which represented an increase of $5.5 million or 4.47%,
      from
      the quarter ended March 31, 2006.  The average yield on the average
      balance of interest-earning assets increased to 6.39% for the quarter ended
      March 31, 2007 from 5.97% for the quarter ended March 31, 2006. The average
      yield on loan balances increased by 41 basis points, the average yield on
      interest-earning deposit balances increased 40 basis points and the average
      yield on investment balances increased 77 basis points during the quarter ended
      March 31, 2007 as compared to the quarter ended March 31, 2006.  The
      average balances for loans increased $5.9 million to $113.5 million and the
      average balance for interest-earning deposits increased $3.1 million to $8.2
      million, while the average balances for investments decreased $3.7 million
      to
      $5.5 million during the quarter ended at March 31, 2007 as compared to the
      quarter ended March 31, 2006.




*Interest
      Expense.*  Interest expense for the quarter ended March 31, 2007
      was $938,000 compared to $640,000 for the quarter ended March 31, 2006, an
      increase of $298,000 or 46.56%.  The average balance of
      interest-bearing liabilities increased to $102.5 million for the quarter ended
      March 31, 2007 from $94.1 million for the quarter ended March 31, 2006, with
      the
      average interest rate increasing to 3.66% for the quarter ended March 31, 2007
      from 2.72% for the quarter ended March 31, 2006.




*Net
      Interest Income.*  Net interest income of $1.1 million for the
      quarter ended March 31, 2007 reflects a $79,000 or 6.61% decrease from the
      net
      interest income before provision for loan losses for the quarter ended March
      31,
      2006.




*Provision
      for Loan Losses.*  Mutual recorded a provision for loan losses of
      $15,000 during the quarter ended March 31, 2007 and March 31,
      2006.  In evaluating the adequacy of loan loss allowances, management
      considers factors such as delinquency trends, portfolio compositions, past
      loss
      experience




12
 *Index*


and
      other
      factors such as general economic conditions.  During the past year,
      Mutual’s nonperforming assets increased to $259,000 at March 31, 2007 from
      $243,000 at March 31, 2006 and the percentage of nonperforming assets to total
      assets was 0.19% for both respective time periods.  Mutual recorded
      charge offs of $53,000 less recoveries of $1,000 for the quarter ended March
      31,
      2007 and charge offs of $1,000 less recoveries of $2,000 for the quarter ended
      March 31, 2006.




*Other
      Income.*  Total other income was $192,000 for the quarter ended
      March 31, 2007 and $220,000 for the quarter ended March 31, 2006, which
      represents a decrease of $28,000 or 12.73%.  Income from fiduciary
      services decreased $13,000, or 47.27%, to $15,000 and service charges on deposit
      accounts decreased $8,000, or 10.84%, to $66,000, respectively, for the quarter
      ended March 31, 2007.  The decrease in income from fiduciary services
      was due to two estate fees collected in March 2006 of approximately
      $14,000.  The decrease in service charges on deposit accounts was due
      to the changes made to the Bank’s deposit fee structure which encouraged changes
      in some customers’ account management practices.




*Other
      Expense.*  Total other expense for each of the quarters ended
      March 31, 2007 and 2006 was approximately $1.2 million.  Net occupancy
      and equipment expenses increased $32,000 or 29.09% to $142,000 for the quarter
      ended March 31, 2007.  The Bank started recording depreciation and
      utility expenses for its Franklin Central Branch, which opened June 1,
      2006.  Increased property tax rates and taxable property in 2006
      resulted in increased real estate tax expense for 2007.




*Income
      Taxes.*  Mutual recognized income tax expense of $40,000 for the
      quarter ended March 31, 2007, as compared to $90,000 for the quarter ended
      March
      31, 2006, which represents an increase in the effective tax rate to 38.95%
      at
      March 31, 2007 from 38.63% at March 31, 2006.




**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.




**Item3.**
            **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 (the “Exchange Act”)), 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 effective in ensuring that
      information required to be disclosed by Third Century in reports it files or
      submits under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the Securities and Exchange Commission’s
      rules and forms.




B.  Changes
      in internal control over financial reporting.  There were no
      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.




**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,




13
 *Index*


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,
      2007 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**




None.







**Item6.**
            **Exhibits**




The
      exhibits filed as part of this Form 10-QSB are listed in the Exhibit Index,
      which is incorporated by this reference.







14
 *Index*


**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
                4, 2007
            By:
            /s/
                Robert D. HeuchanRobert
                D. Heuchan
              President
                and Chief Executive OfficerBy:
            /s/
                Debra K. HarlowDebra
                K. Harlow
              Chief
                Financial Officer





15
 *Index*


**Exhibit
      Index**





**Exhibit
                No.**
            **Description**31.1
            Rule
                13a-14(a) Certification of Robert D. Heuchan,
                President and Chief Executive Officer31.2
            Rule
                13a-14(a) Certification of Debra K. Harlow, Vice
                President and Chief Financial Officer32.1
            Section
                1350 Certification of Robert D.
                Heuchan32.2
            Section
                1350 Certification of Debra K.
                Harlow







E-1