Centric Financial Corporation Announces Year End 2019 Net Income and Double-Digit Growth

News provided by

Centric Financial Corporation

Jan 28, 2020, 17:10 ET

HARRISBURG, Pa., Jan. 28, 2020 /PRNewswire/ -- Centric Financial Corporation ("Centric" or "the Company") (OTC: CFCX), the parent company of Centric Bank ("the Bank"), today reported net income for the year ended December 31, 2019 of $7,285,000, or $0.84, per common share-basic, and $1,930,000, or $0.22, for the fourth quarter 2019, respectively.  Compared to third quarter 2019, net income increased $276,000, or 17%. 

Highlights

  • Total assets ended at $832 million, an increase of $128 million, or 18%, over December 31, 2018.
  • Net growth in loans outstanding of $76 million, or 12%, during the last 12 months.
  • Total deposits grew $96 million, or 16%, from December 31, 2018.
  • Total revenue grew $6 million, or 17%, over the twelve months.
  • 3.75% net interest margin for fourth quarter, an increase of 15 basis points over third quarter 2019.
  • Year-to-date Return on Average Assets and Return on Average Equity at 0.95% and 9.87%, respectively.
  • Tangible book value per share was $8.79 at December 31, 2019, an increase of $0.84 per share, or 11% over December 31, 2018.
  • Opened our newest branch in Devon, Suburban Philadelphia, in December.

Patricia A. Husic, President & CEO of Centric Financial Corporation and Centric Bank stated, "During the fourth quarter 2019, our team continued to focus on smart profitable growth, intentionality on the type of lending mix and quality, and discipline in preserving our net interest margin, despite further interest rate cuts and competitive pressure."

Ms. Husic added, "At the end of December, construction was completed and we opened our first financial center in Chester County, one of the fastest growing counties in the Commonwealth of Pennsylvania. Our sixth financial center is located at 105 Lancaster Avenue in Devon, Pennsylvania, across from the historic Devon Horse Show.  This new full service banking office is across the street from our loan production and cash management office; both offices are strategically located on heavily traveled Rt. 30 in the heart of the Main Line community."

Operating Results

Centric's net interest income was $7,147,000 for the three months ended December 31, 2019, an increase of $263,000, or 4%, over the fourth quarter 2018 and an increase of $126,000, or 2%, over the third quarter 2019. 
Yield on average earning assets remained consistent with the fourth quarter 2018 at 5.23% with a slight increase over the third quarter 2019.  Cost of deposits in the quarter declined 17 basis points to 1.40% due to the bank's intentional strategy around pricing.  Competitive deposit pressure throughout the year drove the increase in cost of deposits 13 basis points higher than the fourth quarter 2018.  Year over year, Centric experienced a 40 basis point rise in the cost of deposits to 1.48% and experienced a 26 basis point increase in the yield on loans ending at 5.64%.  Net interest margin year over year saw a decline of 15 basis points with the fourth quarter 2019 experiencing an increase of 15 basis points over the third quarter. The quarter over quarter increase in margin is due to the focused efforts on reducing the cost of deposits.  Year over year net interest income increased $2,946,000, or 12%, to end 2019 at $28,119,000.

Non-interest income totaled $1,132,000 for the fourth quarter 2019, a slight decrease of $54,000 from the same quarter 2018, primarily due to less gain on the sale of SBA loans.  Swap referral fee income for the fourth quarter 2019 was $317,000, an increase of $200,000 over the same period 2018 and an increase over the third quarter 2019 of $161,000.  For the twelve months ending December 2019, non-interest income declined $339,000 compared to the same period prior year, from the decrease in income on sold loans of $1,033,000 offset by increases in servicing income of $306,000, and swap referral fees of $416,000.

Non-interest expense for the fourth quarter 2019 was $5,301,000, down from the third quarter 2019, and the fourth quarter 2018.  Salary and benefit costs rose $140,000, or 5%, from the fourth quarter 2018 due to the increased branch staff for both Devon and Doylestown and the Devon loan production team, while other non-interest expense decreased $223,000 from FDIC Small Bank Assessment Credits of $90,000, and reduced corresponding bank fees.  For the year ended December 31, 2019 non-interest expense totaled $20,912,000, an increase of $2,748,000, or 15%, over the same period last year.  Salaries and benefits increased $1,594,000, or 15%, from the strategic expansion into the Suburban Philadelphia market as well as additional staff to support the operations and infrastructure for the planned growth.  Amortization expense of mortgage servicing rights associated with the SBA portfolio increased year over year by $429,000.  Pennsylvania shares tax increased $310,000 year over year due to the increase in capital in 2018.

For the year ended December 31, 2019 net income totaled $7,285,000, a decrease of $719,000, or 9%, from last year. 

Balance Sheet

Total assets at December 31, 2019 were $832 million, an increase of $128 million, or 18% over the prior year-end and an increase of $41 million, or 5%, from September 30, 2019.

Total loans ended the year at $702 million, an increase of $76 million, or 12%, over the same period prior year and $28 million, or 4%, over September 30, 2019.  The increase in loans year over year are attributed to the growth in commercial and industrial loans of $22 million, or 12%, and commercial real estate loans of $57 million, or 15%.  Our further strategic expansion into the Suburban Philadelphia market has experienced growth in loans outstanding of $72 million, or 43%, over the prior year-end.

Total deposits ended the year of 2019 at $682 million with an increase of $96 million, or 16%, over the prior year and increased $32 million from third quarter 2019.  Non-interest deposits increased $16 million, or 17%, with interest-bearing demand and money market accounts increasing $52 million, and $47 million respectively, over year-end 2018 while certificates of deposit decreased $19 million as part of the bank's focus on reducing the cost of deposits. 

Shareholders' equity ended the period at $77 million, an increase of $8 million, or 11%, from December 31, 2018 and an increase of $2 million, or 3%, from September 30, 2019.  Regulatory capital ratios for the bank exceeded "well capitalized" at December 31, 2019 and 2018, and September 30, 2019.

Asset Quality

For the fourth quarter, the provision for loan losses was $544,000, slightly above the third quarter 2019.  The increase in the provision for loan losses over last year-end was primarily attributable to an increase in the loan portfolio.

The ratio of allowance for loan and lease losses to total loans was 1.18% at December 31, 2019, consistent with prior quarters.  Management believes the allowance for loan and lease losses at December 31, 2019 adequately reflects the risk inherent in the loan portfolio.

Nonperforming assets ratio was 1.45%, up from the 1.14% at the prior quarter end, and up from the fourth quarter 2018 of 0.41%.  The largest change over the prior quarter is due to an increase of $3.8 million in "Loans 90+ days past due" in the commercial and industrial portfolio.  Of the $3.8 million increase in the commercial and industrial portfolio, $1.0 million is attributable to SBA loans.  $2.5 million of the increase are from one lending relationship in the conventional portfolio and are anticipated to return to performing early in the first quarter.

At Period End

Dec 31,

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Asset Quality  (in thousands)

2019

2019

2019

2019

2018

Non-Accrual Loans

5,171

5,551

5,429

4,537

1,073

TDRs that are not in NA or PD

2,785

2,945

546

552

611

Loans 90+ Days Past Due

4,078

501

1,499

499

1,211

OREO

21

-

-

11

-

Total Nonperforming Assets

12,055

8,997

7,474

5,599

2,895

Total Assets

832,204

791,584

786,752

734,152

704,396

Nonperforming assets/total assets

1.45%

1.14%

0.95%

0.76%

0.41%

SBA loans account for $4.4 million, or 36.5%, of nonperforming assets and 11% of SBA loans outstanding.  Nonperforming loans in the conventional portfolio are 1.16% of that portfolio at December 31, 2019.  Non-accrual loans experienced a net reduction in SBA loans as a component of non-accrual loans by $297,000.

Centric Financial Corporation


Consolidated Balance Sheet (Unaudited)



At Period End

Dec 31,

Sep 30,

Dec 31,

(Dollars in thousands)

2019

2019

2018

Assets


Cash and cash equivalents

$       66,869

$       49,832

$       36,308

Other investments

36,621

42,040

28,544

Loans, net of allowance for loan and lease losses

693,495

666,206

618,814

Premises and equipment

17,887

16,741

6,439

Accrued interest receivable

2,304

2,256

1,993

Other assets

15,028

14,509

12,298

Total Assets

$     832,204

$     791,584

$     704,396




Liabilities


   Noninterest-bearing deposits

109,799

104,200

93,685

   Interest-bearing demand deposits

172,538

125,239

120,601

   Money market and savings

154,188

158,587

107,091

   Certificates of deposit

245,535

261,535

264,808

   Interest-bearing deposits

572,261

545,361

492,500

      Total deposits

682,060

649,561

586,185

Short-term borrowings

-

7,500

15,500

Long-term debt

70,435

57,080

30,500

Accrued interest payable

399

492

511

Other liabilities

1,821

1,443

1,927

Total Liabilities

754,715

716,076

634,623

Total Shareholders' Equity

77,489

75,508

69,773

Total Liabilities and Shareholders' Equity

$     832,204

$     791,584

$     704,396


 

Centric Financial Corporation






Consolidated Statement of Income (Unaudited)





Three months ended

Twelve months ended

Dec 31,

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Dec 31,

Dec 31,

(Dollars in thousands)

2019

2019

2019

2019

2018

2019

2018

Interest income







Interest and dividends on securities

$         290

$          285

$          251

$          269

$          231

$      1,095

$          643

Interest and fees on loans

9,508

9,491

9,471

8,752

8,667

37,222

31,153

Other

172

388

323

209

291

1,092

797

   Total interest income

9,970

10,164

10,045

9,230

9,189

39,409

32,593

Interest expense







Interest on deposits

2,295

2,666

2,427

2,105

1,911

9,493

5,913

Interest on borrowings

528

477

420

372

394

1,797

1,507

   Total interest expense

2,823

3,143

2,847

2,477

2,305

11,290

7,420

Net interest income

7,147

7,021

7,198

6,753

6,884

28,119

25,173

Provision for loan losses

544

525

525

535

125

2,129

1,430

Net interest income after provision
expense

6,603

6,496

6,673

6,218

6,759

25,990

23,743

Noninterest income







Gain on sale of SBA loans

75

135

454

72

249

736

1,777

Gain on sale of mortgage loans

192

99

98

95

170

484

476

Other non-interest income

865

688

639

683

767

2,875

2,181

   Noninterest income

1,132

922

1,191

850

1,186

4,095

4,434

Noninterest expense







Salaries and benefits

3,042

3,057

3,048

2,788

2,902

11,935

10,341

Occupancy and equipment

516

552

494

470

506

2,032

1,956

Professional fees

184

162

226

169

167

741

529

Data processing

275

297

290

269

265

1,131

1,012

Advertising and marketing

128

188

187

188

121

691

565

Other non-interest expense

1,156

1,068

1,174

984

1,379

4,382

3,761

   Noninterest expense

5,301

5,324

5,419

4,868

5,340

20,912

18,164

Income before taxes

2,434

2,094

2,445

2,200

2,605

9,173

10,013

Income tax expense

504

440

501

443

517

1,888

2,009

Net income available to common 
shareholders

$     1,930

$      1,654

$      1,944

$      1,757

$      2,088

$      7,285

$      8,004

Centric Financial Corporation





Per Share Data & Performance Ratios (Unaudited)













(Dollars in thousands except per share)

Three months ended

Twelve months ended

Dec 31,

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Dec 31,

Dec 31,

Earnings and Per Share Data

2019

2019

2019

2019

2018

2019

2018

Net income

$     1,930

$    1,654

$    1,944

$    1,757

$    2,088

$    7,285

$    8,004

Basic earnings per common share

$       0.22

$      0.19

$       0.22

$       0.21

$       0.24

$       0.84

$       1.03

Book value  (at period end)

$       8.85

$      8.62

$       8.43

$       8.20

$       8.01


Tangible book value (at period end)

$       8.79

$      8.56

$       8.37

$       8.15

$       7.95


Common shares outstanding

8,758,646

8,758,689

8,746,455

8,742,290

8,714,975


Average shares outstanding - basic (period
to date)

8,736,927

8,731,179

8,713,808

8,706,540

8,696,391

8,723,449

7,773,912









Performance Ratios (period to date)







Return on average assets

0.97%

0.82%

1.02%

0.99%

1.16%

0.95%

1.22%

Return on average equity

10.08%

8.86%

10.69%

9.89%

12.15%

9.87%

13.98%

Efficiency ratio

63.27%

66.81%

64.97%

64.00%

66.04%

64.90%

61.16%









Yield on Loans

5.52%

5.62%

5.83%

5.62%

5.52%

5.64%

5.38%

Yield on Average Earning Assets

5.23%

5.22%

5.50%

5.40%

5.23%

5.33%

5.12%

Cost of Deposits

1.40%

1.57%

1.53%

1.42%

1.27%

1.48%

1.08%

Cost of Funds

1.56%

1.71%

1.67%

1.57%

1.41%

1.63%

1.24%

Net interest margin

3.75%

3.60%

3.94%

3.95%

3.91%

3.80%

3.95%









Capital Ratios (at period end)







Shareholders' equity/asset ratio

9.31%

9.54%

9.37%

9.77%

9.91%


Tangible common equity/tangible assets

9.26%

9.48%

9.32%

9.71%

9.84%


Tier I leverage ratio (bank)

11.41%

10.95%

11.39%

11.86%

11.48%


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

12.47%

12.67%

12.53%

12.87%

12.86%


Tier 1 risk-based capital (bank)

12.47%

12.67%

12.53%

12.87%

12.86%


Total risk-based capital (bank)

13.63%

13.83%

13.68%

14.00%

13.96%











Asset Quality Ratios









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

0.10%

0.20%

0.03%

0.13%

-0.01%


Nonperforming assets/total assets (at
period end)

1.45%

1.14%

0.95%

0.76%

0.41%


Allowance for loan & leases losses as a % of
loans

1.18%

1.17%

1.17%

1.14%

1.10%


Allowance for loan & leases
losses/nonaccrual loans

160.37%

142.63%

142.24%

159.73%

644.11%


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 $832 million and remains a top leader in organic loan growth. A locally owned, locally loaned community bank, Centric Bank provides 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 December 31, 2019. 

Founded in 2007, Pennsylvania-based Centric Bank has financial centers located in Harrisburg, Hershey, Mechanicsburg, Camp Hill, Doylestown and Devon, loan production offices in Lancaster 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

SOURCE Centric Financial Corporation

Related Links

http://www.centricbank.com

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