Centric Financial Corporation Announces 4th Quarter and Year End 2021 Results

HARRISBURG, Pa., Jan. 31, 2022 /PRNewswire/ -- Centric Financial Corporation ("Centric" or "the Company") (OTC: CFCX), the parent company of Centric Bank ("the Bank"), today reported net income for the fourth quarter and year ended December 31, 2021, of $3.8 million, or $0.45, per basic and diluted share and $10.3 million, or $1.23 per basic and $1.22 per diluted share, respectively.  

Highlights of Performance:

• Net income of $3.8 million an increase of $4.5 million over the prior quarter. Net income increased $1.0 million, or 37%, over fourth quarter 2020, an increase of $0.12 per basic and diluted share.
• Net interest margin increased 40 basis points over prior quarter, and 83 basis points over fourth quarter 2020, ending the quarter at 4.47%.
• Cost of deposits remained at 0.38% for the current and prior quarter and improved 5 basis points from the fourth quarter 2020.
• Return on Average Assets of 1.50% for fourth quarter 2021 increased 45 basis points over fourth quarter 2020. Year-end 2021 ROAA was 0.96%, a 2 basis points increase over year-end 2020.
• Fourth quarter Return on Average Equity of 16.45% increased 22% over fourth quarter 2020. Year-end 2021 ROAE of 11.39% rose 26 basis points over last year.
• Tangible book value per share ended the quarter at $11.17, increasing $0.45 per share from the previous quarter and increasing $1.23 per share, or 12.4%, over year end 2020.
• Organic loan growth increased $66 million, or 9%, over the prior year-end.

Patricia A. Husic, President & CEO of Centric Financial Corporation and Centric Bank, stated, "Centric Financial had a good fourth quarter which contributed to our solid results for 2021. Loans, net of PPP, grew by 9% or $66 million for the year. The core growth was comprised of primarily commercial real estate loans totaling $57.6 million and C&I loans of $17.6 million, in our markets. We continue to focus on strategic and intentional loan growth and discipline in the pricing of our loans, yielding 4.58% at year-end excluding PPP.  The non-interest-bearing deposits grew by $33.5 million or 17%, which was a strong contributor to reducing our cost of funds to 0.40%, a decrease of 44%, from 0.71% at year-end 2020. Our net interest margin remained solid at 3.75% at year end, without PPP, and best in class amongst our peers, with no change in 2021. SBA loan activity has increased during the year, growing fee income by $427 thousand. Centric will continue to focus efforts on further reducing our non-performing assets in 2022. Both tangible book value and earnings per share experienced positive momentum in 2021, with growth rates of 12.4% and 17.29%, respectively. Our team will continue to be laser focused on executing our strategic plan, delivering smart profitable growth and financial results to our shareholders."

Results of Operations – Fourth Quarter

Net income for the quarter ended December 31, 2021 was $3.8 million, or $0.45 per basic and diluted share, an increase of $4.5 million over the third quarter.  Compared to fourth quarter 2020 net income increased $1.0 million, or 37%, and $0.12 per basic and diluted share.  Pre-tax pre-provision income of $5.4 million increased $239 thousand over the third quarter and increased $1.6 million over fourth quarter 2020 due to higher interest income. 

Net interest income for the quarter was $11.0 million, an increase of $611 thousand over the prior quarter.  PPP loan servicing fees contributed $2.3 million to interest income in the fourth quarter and $1.6 million in the third quarter. During the quarter Centric sold a $16.6 million pool of PPP loans which contributed $1.2 million of the total PPP income. Compared to fourth quarter 2020 net interest income increased $1.7 million and is due to higher PPP income along with increased interest on CRE lending of $740 thousand.  This resulted in an increase to the net interest margin of 83 basis points.  The major influences were organic loan growth of $66 million, and a reduction in the cost of funds.  

Noninterest income totaled $802 thousand for the fourth quarter, decreasing 9% from the third quarter 2021 and 32% from the fourth quarter 2020.  The quarter was impacted by a loss of the sale of PPP loans of $104 thousand and a loss on the sale of equity securities of $93 thousand which were offset somewhat by increased gains on sale of SBA loans by $120 thousand. Compared to fourth quarter 2020 noninterest income declined $379 thousand which is largely the result of gains and losses on investments with fourth quarter 2020 producing a gain of $295 thousand.  

Noninterest expense of $6.4 million for the fourth quarter 2021 increased from the third quarter by $294 thousand.  This was driven by an increase in loan expenses of $257 thousand and increased SBA mortgage servicing amortization expense of $98 thousand which were offset by a decrease in salaries and benefits expense of $171 thousand.

Compared to fourth quarter 2020, noninterest expenses decreased $268 thousand which was influenced by reduced salaries and benefits expense of $425 thousand due to lower incentive compensation, reduced marketing and advertising expenses by $125 thousand, somewhat offset by increased lending expenses of $210 thousand. Fourth quarter 2020 saw elevated other operating expenses due to the prepayment penalty of $164 thousand on early termination of borrowings with the Federal Home Loan Bank. 

Results of Operations – Year to Date

Year-to-date 2021 net income was $10.3 million, or $1.23 and $1.22 per basic and diluted share, respectively, compared to $1.05 per basic and diluted share for the prior year.  Provision for credit loss expense increased $4.5 million year over year. 

Net interest income of $42.2 million increased $8.4 million, or 25%, over the prior year.  This was driven by a $6.1 million increase in interest and fees on loans, which included an increase in PPP income of $4.5 million and $1.6 million in core lending income.  Interest expense on deposits decreased $1.7 million due to the decline of 27 basis points in average cost.  Net interest margin ended the year at 4.11%, a 46-basis point improvement from the 3.65% achieved during 2020.

Noninterest income for 2021 totaled $3.6 million, consistent with 2020.  Mortgage income increased $203 thousand, from the production and sale of residential mortgage loans.  The gain on sale of SBA loans increased $426 thousand over last year excluding the impact of the PPP pool sale.  Cash management income increased $146 thousand while the gain on sale of all securities decreased $367 thousand.

Noninterest expense totaled $25.1 million, an increase of 10%, or $2.3 million, over 2020.  The Bank's largest noninterest expense is salaries and benefits which rose 6%, or $852 thousand. The limited increase was due to a reduction in incentive expense compared to 2020.  Healthcare costs rose $145 thousand year over year.  FDIC assessment expense increased $330 thousand based on deposit growth.  Loan and collection costs increased $362 thousand.  License and software fees increased $232 thousand, with $118 thousand related to PPP activity. 

Asset Quality

Year-to-date 2021, provision expense amounted to $7.6 million, an increase of $4.5 million from the $3.1 million expensed in 2020.  The increase year over year was related to replenishment of the provision from charge offs recorded in the third quarter.  The coverage ratio for the allowance for loan and lease loss is 1.42% of the total loan portfolio, normalizing as the balance of PPP loans has declined to under $40 million.  The balance for allowance for loan and lease losses was $12.4 million, an increase of $1.9 million from December 31, 2020.  Management believes the allowance for loan and lease losses on December 31, 2021 adequately reflects the inherent risk in the loan portfolio.

On December 31, 2021, nonperforming assets totaled $12.9 million, a decline of $969 thousand from the third quarter.  Total nonperforming assets were 1.31% of total assets at year end.  The increase in percentage of total assets is the result of the decline in total asset as seen in the table below.

	At Period End
	Dec 31,	Sep 30,	Jun 30,	Mar 31,	Dec 31,
Asset Quality  (in thousands)	2021	2021	2021	2021	2020
Nonaccrual Loans	$    12,672	$    10,389	$   10,178	$    10,120	$    10,811
Restructured loans still accruing	184	187	188	-	134
Loans 90+ days past due & still accruing	-	3,249	4,692	1,937	1,423
OREO	-	-	-	-	-
Total Nonperforming Assets	$    12,856	$    13,825	$   15,057	$    12,057	$    12,369
Total Assets	983,201	1,111,518	1,110,872	1,122,986	1,118,012
Nonperforming assets/total assets	1.31%	1.24%	1.36%	1.07%	1.11%

Balance Sheet

At the conclusion of 2021 the bank's balance sheet had declined to $983 million from $1.1 billion at year-end 2020.  The decline of PPP through forgiveness and the $16.6 million sale along with growth in core deposits allowed all wholesale funding to be released during the year.  The reduction year over year in wholesale funding was $232 million.  Borrowings decreased $20 million over the same period.  Total assets decreased $128 million from prior quarter-end for the reasons described above.  Compared to last quarter, cash and cash equivalents declined $79 million related to the release of wholesale funding which were held in interest bearing demand deposits and certificates of deposit.

Total loans ended the period at $875 million, a decline of $44 million from prior quarter.  PPP loan reductions were $42 million.  Year over year, core loan growth increased $66 million, or 9%.  Commercial loans increased $17.6 million and CRE loans increased $57.6 million over the prior year, while PPP loan balances declined $156 million to $40 million. 

Total deposits ended the period at $815 million, down $122 million from the prior quarter driven by a reduction in wholesale deposits.  Money market accounts grew by 47%, or $77 million, from the prior year end, while noninterest deposits increased 17%, or $33 million, demonstrating retention and expansion of core deposits.   Noninterest deposits to total deposits attained 28.2% at year end, compared to 24.2% and 21.2% for the prior quarter and prior year end, respectively.  

Shareholders' equity ended the period at $95 million. Year over year equity increased $10.7 million, or 13%.  At December 31, 2021, Centric held 307,519 shares of treasury stock with a balance of $2.2 million, repurchased under the Company's stock repurchase plan during 2020.  Tangible book value per share of $11.17 increased $0.45 over third quarter and increased $1.23 per share, or 13%, over year end 2020 as a result of increased earnings.  Centric Bank remains "Well Capitalized" with total risk-based capital of 13.53% on December 31, 2021.

Centric has provided an Investor Presentation which covers the Company's fourth quarter and full year 2021 results of operations.  The presentation is available on the Company's website at Documents | Centric Bank Investor Relations. 

 

Centric Financial Corporation
Consolidated Balance Sheet (Unaudited)
	At Period End
	Dec 31,	Sep 30,	Dec 31,
(Dollars in thousands)	2021	2021	2020
Assets
Cash and cash equivalents	$          45,077	$        124,034	$          82,100
Other investments	41,293	43,102	42,999
Loans	875,026	919,116	964,214
Less: allowance for loan losses	(12,407)	(11,775)	(10,487)
Net loans	862,619	907,341	953,727
Premises and equipment	13,036	13,198	13,880
Accrued interest receivable	4,152	4,644	6,016
Mortgage servicing rights	959	1,026	1,124
Goodwill	492	492	492
Other assets	15,573	17,681	17,674
Total Assets	$        983,201	$    1,111,518	$    1,118,012
Liabilities
Noninterest-bearing deposits	229,863	226,801	196,367
Interest-bearing demand deposits	219,997	308,396	269,182
Money market and savings	242,689	244,078	165,398
Certificates of deposit	122,600	157,677	295,528
Interest-bearing deposits	585,286	710,151	730,108
Total deposits	815,149	936,952	926,475
Short-term borrowings	-	10,000	20,000
Long-term debt & leases	70,250	70,480	83,421
Accrued interest payable	72	200	259
Other liabilities	2,519	2,501	3,354
Total Liabilities	887,990	1,020,133	1,033,509
Total Shareholders' Equity	95,211	91,385	84,503
Total Liabilities and Shareholders' Equity	$        983,201	$    1,111,518	$    1,118,012

 

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)	2021	2021	2021	2021	2020		2021	2020
Interest income
Interest and dividends on securities	$          289	$       334	$           349	$         365	$           337		$     1,337	$       1,097
Interest and fees on loans	11,935	11,311	11,411	11,413	10,501		46,070	39,981
Other	20	32	15	16	20		83	238
Total interest income	12,244	11,677	11,775	11,794	10,858		47,490	41,316
Interest expense
Interest on deposits	820	866	937	981	952		3,604	5,281
Interest on borrowings	402	400	424	501	561		1,727	2,255
Total interest expense	1,222	1,266	1,361	1,482	1,513		5,331	7,536
Net interest income	11,022	10,411	10,414	10,312	9,345		42,159	33,780
Provision for loan losses	604	6,092	450	450	325		7,596	3,100
Net interest income after provision expense	10,418	4,319	9,964	9,862	9,020		34,563	30,680
Noninterest income
Gain on sale of SBA loans	164	116	147	-	-		427	105
Gain on sale of mortgage loans	153	157	313	319	305		942	838
Other non-interest income	485	606	462	693	877		2,246	2,641
Noninterest income	802	879	922	1,012	1,182		3,615	3,584
Noninterest expense
Salaries and benefits	3,397	3,569	3,762	3,717	3,822		14,445	13,593
Occupancy and equipment	615	590	593	628	609		2,426	2,223
Professional fees	212	181	202	210	248		805	747
Data processing	312	327	294	280	280		1,213	1,124
Advertising and marketing	55	110	145	171	180		481	454
Other non-interest expense	1,810	1,329	1,349	1,285	1,529		5,773	4,695
Noninterest expense	6,401	6,106	6,345	6,291	6,668		25,143	22,836
Income before taxes	4,819	(908)	4,541	4,583	3,534		13,035	11,428
Income tax expense	991	(197)	943	949	738		2,686	2,371
Net income available to common shareholders	$       3,828	$     (711)	$       3,598	$     3,634	$       2,796		$   10,349	$       9,057

 

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	2021	2021	2021	2021	2020		2021	2020
Net income	$     3,828	$       (711)	$    3,598	$       3,634	$     2,796		$   10,349	$    9,057
Basic earnings per common share	$       0.45	$      (0.08)	$      0.43	$          0.43	$       0.33		$       1.23	$      1.05
Diluted earnings per common share	$       0.45	$      (0.08)	$      0.42	$          0.43	$       0.33		$       1.22	$      1.05
Book value  (at period end)	$     11.23	$      10.78	$    10.85	$       10.43	$     10.00
Tangible book value (at period end)	$     11.17	$       10.72	$    10.79	$       10.38	$       9.94
Close price (at period end)	$       9.70	$         9.50	$      9.75	$          9.40	$       8.58
Common shares outstanding	8,481,197	8,477,518	8,475,143	8,452,057	8,448,903
Weighted average shares - basic	8,425,194	8,419,882	8,408,969	8,402,984	8,411,759		8,414,334	8,647,020
Weighted average shares - diluted	8,533,882	8,525,573	8,511,644	8,490,150	8,434,558		8,515,445	8,665,253
Performance Ratios (period to date)
Return on average assets	1.50%	-0.26%	1.29%	1.33%	1.05%		0.96%	0.94%
Return on average equity	16.45%	-3.04%	15.99%	16.80%	13.44%		11.39%	11.13%
Efficiency ratio	53.61%	54.09%	55.63%	55.53%	62.94%		54.70%	61.09%
Yield on loans	5.27%	4.80%	4.65%	4.76%	4.38%		4.86%	4.64%
Yield on average earning assets	4.97%	4.57%	4.45%	4.55%	4.23%		4.63%	4.46%
Cost of deposits	0.38%	0.38%	0.40%	0.44%	0.43%		0.40%	0.67%
Cost of funds	0.52%	0.51%	0.54%	0.59%	0.61%		0.54%	0.85%
Net interest margin	4.47%	4.07%	3.94%	3.98%	3.64%		4.11%	3.65%
Capital Ratios (at period end)
Shareholders' equity / asset ratio	9.68%	8.22%	8.28%	7.85%	7.56%
Tangible common equity / tangible assets	9.64%	8.18%	8.24%	7.81%	7.52%
Tier I leverage ratio (bank)	10.83%	9.79%	9.62%	9.39%	9.31%
Common tier 1 capital/risk-based capital (bank)	12.28%	11.56%	11.66%	11.59%	11.48%
Tier 1 risk-based capital (bank)	12.28%	11.56%	11.66%	11.59%	11.48%
Total risk-based capital (bank)	13.53%	12.81%	12.89%	12.83%	12.72%
Asset Quality Ratios
Net charge-offs/average loans (period to date)	-0.01%	2.31%	0.10%	0.02%	0.26%		0.60%	0.11%
Nonperforming assets / total assets (at period end)	1.38%	1.24%	1.36%	1.07%	1.11%
Allowance for loan losses / total loans	1.42%	1.28%	1.15%	1.09%	1.09%
Allowance for loan losses / nonaccrual loans	92.45%	113.35%	108.89%	107.52%	97.00%

 

Centric Financial Corporation
Consolidated Average Balance Sheets and Average Yield / Cost (Unaudited)
	Three Months Ended
	December 31, 2021				December 31, 2020
	Average				Average
	Balance	Interest	Rate		Balance	Interest	Rate
Interest Earning Assets
Fed funds & bank balances	$       33,332	$         20	0.25		$       31,862	$         20	0.24
Restricted stock	2,659	35	5.22		3,846	57	5.93
Total securities	41,873	254	2.43		32,936	280	3.40
Total loans	899,496	11,935	5.27		953,608	10,501	4.38
Total Earning Assets	977,360	12,244	4.97		1,022,252	10,858	4.23
Allowance for loan losses	(12,004)				(10,955)
Non-earning assets	55,687				51,876
Total Average Assets	$  1,021,043				$  1,063,173
Interest-Bearing Liabilities
Checking, money market, savings	464,878	557	0.48		466,405	381	0.32
Certificates of deposit	150,402	263	0.69		203,947	571	1.11
Total interest-bearing deposits	615,280	820	0.53		670,351	952	0.56
Noninterest-bearing deposits	237,722				204,422
Total deposits	853,002	820	0.38		874,773	952	0.43
Total borrowings	72,283	402	2.21		103,257	561	2.15
Total Interest-Bearing Liabilities	687,564	1,222	0.71		773,608	1,513	0.78
Cost of funds			0.52				0.61
Other liabilities	2,654				1,937
Total Average Liabilities	927,939				979,968
Total Shareholders' Equity	93,104				83,206
Total Avg. Liabilities and Shareholders' Equity	$  1,021,043				$  1,063,173
Interest Rate Spread			4.27				3.45
Net Interest Income		$ 11,022				$   9,345
Interest Rate Margin			4.47				3.64

 

Centric Financial Corporation
Consolidated Average Balance Sheets and Average Yield / Cost (Unaudited)
	Twelve Months Ended
	December 31, 2021				December 31, 2020
	Average				Average
	Balance	Interest	Rate		Balance	Interest	Rate
Interest Earning Assets
Fed funds & bank balances	$       31,825	$         83	0.26		$       29,733	$      238	0.80
Restricted stock	2,969	167	5.64		3,554	197	5.54
Total securities	42,787	1,170	2.73		32,287	900	2.65
Total loans	947,689	46,070	4.86		860,744	39,981	4.64
Total Earning Assets	1,025,271	47,490	4.63		926,319	41,316	4.46
Allowance for loan losses	(11,408)				(9,824)
Non-earning assets	65,300				52,108
Total Average Assets	$  1,079,163				$     968,603
Interest-Bearing Liabilities
Checking, money market, savings	470,657	2,084	0.44		388,951	1,805	0.46
Certificates of deposit	194,845	1,520	0.78		214,670	3,475	1.62
Total interest-bearing deposits	665,502	3,604	0.54		603,621	5,281	0.87
Noninterest-bearing deposits	237,786				185,514
Total deposits	903,288	3,604	0.40		789,135	5,281	0.67
Total borrowings	81,838	1,727	2.10		95,931	2,255	2.33
Total Interest-Bearing Liabilities	747,340	5,331	0.71		699,552	7,536	1.07
Cost of funds			0.54				0.85
Other liabilities	3,212				2,193
Total Average Liabilities	988,338				887,259
Total Shareholders' Equity	90,825				81,344
Total Avg. Liabilities and Shareholders' Equity	$  1,079,163				$     968,603
Interest Rate Spread			3.92				3.38
Net Interest Income		$ 42,159				$ 33,780
Interest Rate Margin			4.11				3.65

 

About the Company

Founded in 2007, Centric Financial Corporation, and its subsidiary, Centric Bank, is headquartered in south central Pennsylvania with assets of $983 million and remains a 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.  An American Banker 2021, 2020, 2019 and 2018 Best Banks to Work For, three-time Best Places to Work, Top 50 Fastest-Growing Companies for eight years, and three times ranked a Top 200 Publicly Traded Community Bank by American Banker for financial performance.    

Centric Bank has financial centers located in Harrisburg, Hershey, Mechanicsburg, Camp Hill, Doylestown, Devon, and Lancaster, 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 residual effects of the Covid-19 pandemic on business and impact to the economy, the effects of competition, development of competing financial products and services; changes in laws and regulations, the interest rate environment; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatilities in the securities markets;  other 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