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Centric Financial Corporation Announces 3rd Quarter 2019 Net Income

November 6, 2019
Centric Financial Corporation (PRNewsfoto/Centric Financial Corp, Inc.)
Centric Financial Corporation (PRNewsfoto/Centric Financial Corp, Inc.)

HARRISBURG, Pa., Nov. 5, 2019 /PRNewswire/ -- Centric Financial Corporation (“Centric” or “the Company”) (OTC: CFCX), the parent company of Centric Bank (“the Bank”), today reported net income of $1,654,000 or $0.19 per common share basic for the third quarter of 2019. Compared to second quarter 2019, net income decreased $290,000, or -15%. Net interest income increased $293,000, or 4%, over third quarter 2018.

Highlights

Patricia A. Husic, President & CEO of Centric Financial Corporation and Centric Bank stated, “In the third quarter of 2019, we continued to execute successfully on our strategic growth plan. We have invested in hiring new team members during the year – retail team members to build out our new financial centers in Doylestown and Devon, commercial lenders for our loan production office on the Main Line in Chester County, and operational team members to support the infrastructure. Our team continues to be intentional and disciplined, focusing on smart profitable growth, asset quality, and maintaining a good net interest margin despite interest rate cuts and competitive pressure. We are also focused on increasing efficiency within our organization and maximizing the benefits from our new core system implemented in late 2018 and the loan workflow software nCino, which was introduced in January 2019 and has continued to be built out during the year.”

Centric Bank’s Devon Commercial Lending Office now offers full service banking as a temporary Concierge Branch while its Financial Center in Devon is under construction.

Patricia A. Husic was honored as one of American Banker’s 25 Most Powerful Women in Banking in the U.S. for the fifth consecutive year. The Centric Bank leadership team, 67% of whom are women, was named a Top Team for the third time.

Operating Results

Centric’s net interest income was $7,021,000 for the three months ended September 30, 2019, an increase of $293,000 or 4% over the third quarter 2018. Although average earning assets increased $83.9 million along with an increase in yield on loans of 18 basis points, the increase in volume of money market and time deposits, as well as the increased interest rates on time deposits of 59 basis points, offset much of the gain. For the first nine months of 2019 compared to the same period 2018, net income totaled $5,355,000, a decrease of $561,000, or 9%, from the $5,916,000 last year. Net interest income increased $2,683,000, or 15%, to $20,972,000. The net interest margin experienced a 15 basis point decline to 3.82% with cost of deposits at 1.51% and yield on earning assets at 5.37%.

Non-interest income totaled $922,000 for the third quarter 2019, a decrease from the third quarter 2018 of $276,000, or 23%, primarily due to the reduction in income on the sale of SBA loans of $314,000. Other fees on loans, excluding gains on sold loans, increased $53,000 while other non-interest income decreased $12,000, or 4%, over the third quarter 2018 results. For the nine months ending September 2019, non-interest income declined slightly by $285,000 compared to the same period prior year, due to the decline in income on sold loans of $881,000 while other fees on loans and servicing fees on loans increased $437,000 combined. Miscellaneous income increased $212,000 due to swap referral fees.

Non-interest expense for the third quarter 2019 was $5,324,000, an increase of $849,000, or 19%, over the same period prior year. The increase is due primarily to higher salary and benefit costs of $433,000, or 17%, with increased occupancy and equipment expense of $81,000, and increased Pennsylvania shares tax of $75,000. Off-setting these increases was an $84,000 reduction to the Bank’s FDIC assessment expense for their assessment credit of small banks. For the nine months ended September 30, 2019 non-interest expense totaled $15,611,000, an increase of $2,787,000, or 22%, over the same period last year. Salaries and benefits were the most significant increase between the two periods, increasing $1,454,000, or 20%. Other factors were an increase in the amortization of mortgage servicing rights of $254,000, professional fees of $195,000, Pennsylvania shares tax of $181,000, and Directors fees of 156,000.

Balance Sheet

Total assets at September 30, 2019 were $792 million compared to $717 million at September 30, 2018, an increase of $75 million, or 10%. The increase is due to loan growth, an increase in investment securities and leased assets over the same period prior year. Total assets increased $5 million, or 7%, from June 30, 2019.

Total loans for the period end September 30, 2019 were $674 million, an increase of $54 million, or 9%, over the same period prior year and $11 million, or 2%, over June 30, 2019. The increase in loans for both prior year and prior quarter are attributed to the growth in commercial and industrial loans of $22 million, or 12%, and $7 million, or 4%, respectively, and commercial real estate loans of $29 million, or 8% and $6 million, or 1%, respectively. Total securities increased over September 30, 2018 and over June 30, 2019 by $27 million and $6 million, respectively. The impact from the lease accounting standard effective January 1, 2019 increased other assets and borrowings by $9 million each.

Total deposits ended September 30, 2019 at $650 million, an increase of $55 million, or 9%, over the same period 2018 and declined $4 million from the second quarter 2019. Non-interest deposits and money market accounts increased $13 million, or 14%, and $59 million, or 60%, respectively, over the same period prior year. The growth in deposits from the second quarter is also attributed to non-interest deposits and money market accounts by $11 million and $14 million, respectively. Consumer time deposits remained consistent from the second quarter 2019, while $21 million of wholesale time deposits of were allowed to mature from June 30, 2019 through the end of the current quarter.

Shareholders equity ended the period at $76 million, an increase of $8 million, or 12%, from September 30, 2018 and an increase of $2 million, or 2%, from June 30, 2019. Regulatory capital ratios for the bank exceeded “well capitalized” at September 30, 2019 and 2018, and June 30, 2019.

Asset Quality

The third quarter 2019 net charge-off ratio to average loans increased to 0.20% from 0.03% during the second quarter 2019, but is consistent with the 0.21% from September 30, 2018. Non-performing assets to total assets was 1.14%, an increase from the 0.95% at prior quarter end, and up from the third quarter prior year of 0.25%. The change, current quarter over second quarter 2019, in non-performing assets is due to an increase of $2.4 million in restructured loans. Loans past due greater than 90 days decreased by $1 million. The increase in restructured loans is largely due to one borrower. The ratio of allowance for loan and lease losses to total loans was 1.17% at September 30, 2019, consistent with prior quarters. Management believes the allowance for loan and lease losses at September 30, 2019 adequately reflects the risk inherent in the loan portfolio.

Centric Financial Corporation




Consolidated Balance Sheet (Unaudited)





At Period End


Sep 30,

Jun 30,

Sep 30,

(Dollars in thousands)

2019

2019

2018

Assets




Cash and cash equivalents

$ 49,832

$ 63,802

$ 67,147

Other investments

42,040

34,529

14,203

Loans, net of allowance for loan and lease losses

666,206

654,985

613,838

Premises and equipment

16,741

16,410

6,519

Accrued interest receivable

2,256

2,476

1,960

Other assets

14,509

14,550

13,294

Total Assets

$ 791,584

$ 786,752

$ 716,961





Liabilities




Noninterest-bearing deposits

104,200

92,808

91,544

Interest-bearing demand deposits

125,239

132,182

133,788

Money market and savings

158,587

144,703

99,423

Certificates of deposit

261,535

284,181

269,526

Interest-bearing deposits

545,361

561,066

502,737

Total deposits

649,561

653,874

594,281

Short-term borrowings

7,500

-

22,500

Long-term debt

57,080

56,909

30,500

Accrued interest payable

492

545

629

Other liabilities

1,443

1,689

1,685

Total Liabilities

716,076

713,017

649,595

Total Shareholders' Equity

75,508

73,735

67,366

Total Liabilities and Shareholders' Equity

$ 791,584

$ 786,752

$ 716,961

Centric Financial Corporation







Consolidated Statement of Income (Unaudited)






Three months ended


Nine months ended


Sep 30,

Jun 30,

Sep 30,


Sep 30,

Sep 30,

(Dollars in thousands)

2019

2019

2018


2019

2018

Interest income







Interest and dividends on securities

$ 285

$ 251

$ 145


$ 805

$ 412

Interest and fees on loans

9,491

9,471

8,387


27,714

22,486

Other

388

323

320


920

506

Total interest income

10,164

10,045

8,852


29,439

23,404

Interest expense







Interest on deposits

2,666

2,427

1,687


7,198

4,002

Interest on borrowings

477

420

437


1,269

1,113

Total interest expense

3,143

2,847

2,124


8,467

5,115

Net interest income

7,021

7,198

6,728


20,972

18,289

Provision for loan losses

525

525

435


1,585

1,305

Net interest income after provision expense

6,496

6,673

6,293


19,387

16,984

Noninterest income







Gain on sale of SBA loans

135

454

449


661

1,528

Gain on sale of mortgage loans

99

98

93


292

306

Other non-interest income

688

639

656


2,010

1,414

Noninterest income

922

1,191

1,198


2,963

3,248

Noninterest expense







Salaries and benefits

3,057

3,048

2,624


8,893

7,439

Occupancy and equipment

552

494

471


1,516

1,450

Professional fees

162

226

120


557

362

Data processing

297

290

270


856

747

Advertising and marketing

188

187

150


563

444

Other non-interest expense

1,068

1,174

840


3,226

2,382

Noninterest expense

5,324

5,419

4,475


15,611

12,824

Income before taxes

2,094

2,445

3,016


6,739

7,408

Income tax expense

440

501

617


1,384

1,492

Net income available to common
shareholders

$ 1,654

$ 1,944

$ 2,399


$ 5,355

$ 5,916

Centric Financial Corporation








Per Share Data & Performance Ratios (Unaudited)






(Dollars in thousands except per share)

Three months ended


Nine months ended


Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,


Sep 30,

Sep 30,

Earnings and Per Share Data

2019

2019

2019

2018

2018


2019

2018

Net income

$ 1,654

$ 1,944

$ 1,757

$ 2,088

$ 2,399


$ 5,355

$ 5,916

Basic earnings per common share

$ 0.19

$ 0.22

$ 0.21

$ 0.24

$ 0.28


$ 0.61

$ 0.79

Book value (at period end)

$ 8.62

$ 8.43

$ 8.20

$ 8.01

$ 7.74




Tangible book value (at period end)

$ 8.56

$ 8.37

$ 8.15

$ 7.95

$ 7.69




Close price (at period end)

$ 9.70

$ 10.10

$ 10.70

$ 9.74

$ 12.50




Common shares outstanding

8,758,689

8,746,455

8,742,290

8,714,975

8,698,318




Average shares outstanding - basic
(period to date)

8,731,179

8,713,808

8,706,540

8,696,391

8,675,765


8,717,641

7,463,040










Performance Ratios (period to date)









Return on average assets

0.82%

1.02%

0.99%

1.16%

1.35%


0.94%

1.24%

Return on average equity

8.86%

10.69%

9.89%

12.15%

14.48%


9.80%

14.77%

Efficiency ratio

66.81%

64.97%

64.00%

66.04%

56.33%


65.29%

59.33%

Net interest margin

3.60%

3.94%

3.95%

3.91%

3.87%


3.82%

3.96%










Capital Ratios (at period end)









Shareholders' equity/asset ratio

9.54%

9.37%

9.77%

9.91%

9.40%




Tangible common equity/tangible assets

9.48%

9.32%

9.71%

9.84%

9.33%




Tier I leverage ratio (bank)

10.95%

11.39%

11.86%

11.48%

11.26%




Common tier 1 capital/risk-based capital (bank)

12.67%

12.53%

12.87%

12.86%

12.68%




Tier 1 risk-based capital (bank)

12.67%

12.53%

12.87%

12.86%

12.68%




Total risk-based capital (bank)

13.83%

13.68%

14.00%

13.96%

13.79%













Asset Quality Ratios









Net charge-offs/average loans
(period to date)

0.20%

0.03%

0.13%

-0.01%

0.21%




Nonperforming assets/total assets
(at period end)

1.14%

0.95%

0.76%

0.41%

0.25%




Allowance for loan & leases losses as
a % of loans

1.17%

1.17%

1.14%

1.10%

1.09%




Allowance for loan & leases
losses/nonaccrual loans

142.63%

142.24%

159.73%

644.11%

616.52%




About the Company

An American Banker 2019 and 2018 Best Banks to Work For, three-time Best Places to Work, and Top 50 Fastest-Growing Companies for six years, Centric Bank is headquartered in south central Pennsylvania with assets of $792 million and remains a top leader in organic loan growth. A locally owned, locally loaned community bank, Centric Bank provides highly competitive and pro-growth financial services to businesses, professionals, individuals, families, and the health care industry. Centric Bank was one of the Top 10 SBA Lenders in the Eastern District of PA at September 30, 2019.

Founded in 2007, Pennsylvania-based Centric Bank has financial centers located in Harrisburg, Hershey, Mechanicsburg, Camp Hill and Doylestown, loan production offices in Lancaster, Doylestown, and Devon, and an Operations and Executive Office campus in Hampden Township, Cumberland County. To learn more about Centric Bank, call 717.657.7727, or visit CentricBank.com. Connect with them on Twitter, Facebook, LinkedIn, and Instagram.

Centric Financial Corporation is traded over the counter (OTC-Pink) with the ticker symbol CFCX.

Cautionary Note Regarding Forward-looking Statements:
This news release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise are not statements of historical facts. Actual results and trends could differ materially from those set forth in such statements and there can be no assurances that we will be able to continue to successfully execute on our strategic plan. Factors that could cause actual results to differ from those expressed or implied by the forward looking statements include, but are not limited to, the following: changes in current or future market conditions; the effects of competition, development of competing financial products and services; changes in laws and regulations, interest rate movements; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatilities in the securities markets; deteriorating economic conditions; and other risks and uncertainties.

Contact: Patricia A. Husic
President & CEO
717.909.8309

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SOURCE Centric Financial Corporation