Centric Financial Corporation Announces First Quarter 2022 Earnings

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05/02/2022 - 01:33 PM

HARRISBURG, Pa., May 2, 2022 /PRNewswire/ -- Centric Financial Corporation ("Centric" or "the Company") (OTC: CFCX), the parent company of Centric Bank ("the Bank"), announced earnings and financial results for the first quarter 2022. Net income for the quarter ending March 31, 2022, totaled $2.8 million, or $0.33, per basic and diluted share.

Highlights of Performance:

Core net income increased $340 thousand, or 17%, from the fourth quarter 2021.
Tangible book value per share growth of 2% over the prior quarter and 10%, or $1.05 per share over the first quarter 2021.
Organic loan growth, excluding Paycheck Protection Program loans, increased $29 million from prior quarter.
Core deposits increased $62 million from prior quarter with noninterest bearing deposits at 28% of total deposits.
Return on Average Assets of 1.09% for first quarter 2022 compared to 1.50% for the fourth quarter 2021. The change is reflective of the decreased in PPP revenue from forgiveness processing and sale of PPP loans at year-end 2021.

Patricia A. Husic, President & CEO of Centric Financial Corporation and Centric Bank stated, "We are pleased to deliver the first quarter financial results which represent solid earnings, growth in our balance sheet and non-interest income and a reduction in our adversely classified loans. Organic loan growth of $29 million, net of PPP, is great momentum to begin 2022. The 14% annualized growth was driven equally by commercial real estate and commercial lending (C&I). Our growth trajectory in the Philadelphia region continues, and as of the end of March, loans from this region represent 53% of our total portfolio. Driven largely by the C&I lending increase in the first quarter, noninterest bearing deposits grew by $17 million, or 7.4%.

We have also been focused on reducing our adversely classified loans, and at March 31, 2022, we delivered tangible results to decrease those loans by $7.7 million.

We surpassed our internal projections for the first quarter and our team is laser focused on executing our strategic initiatives and delivering smart profitable growth for our shareholders."

Results of Operations – First Quarter

First quarter 2022 net income of $2.8 million, or $0.33 per share, basic and diluted, down from net income of $3.8 million from the fourth quarter 2021. The change to the quarterly results is due to the reduction of PPP revenue which has been impacted by the $18 million decline in PPP balances from forgiveness processing and $16.6 million sale of those loans at year-end 2021. PPP revenue was $0.5 million and $2.3 million respectively. Net income excluding PPP was $2.4 million in the current quarter, increasing $339 thousand, or 17%, from the prior quarter. Net income decreased from the first quarter 2021 due to the reduction of $1.4 million in PPP revenue from significant PPP forgiveness. Net income exclusive of PPP revenue increased 12% over the first quarter of 2021.

The yield on the loan portfolio was 4.66% on March 31, 2022, which declined 61 basis points from the prior quarter due to reduction in PPP revenue which was elevated in the fourth quarter of 2021 by the recognition of $1.7 million from the sale of PPP loans. Cost of deposits reduced minimally from prior quarter and was reduced 7 basis points from the first quarter 2021. Current quarter's net interest margin was 3.90% versus 4.47% at fourth quarter 2021 and 3.98% at first quarter 2021.

Noninterest income totaled $927 thousand for the first quarter 2022, an increase of 16% over prior quarter with swap referral fees increasing $214 thousand. Noninterest income saw a decrease of 8% from the same quarter last year due to a reduction of mortgage related income as a result of the increased mortgage rates.

Noninterest expense for the first quarter was $6.2 million, an improvement of $245 thousand from last quarter. Changes from the fourth quarter of 2021 included an increase of $146 thousand in salaries and benefits and a reduction of $293 thousand in loan and collection expense.

Compared to the first quarter of 2021 noninterest expenses decreased $135 thousand due to a decline in salary and benefits expense of $174 thousand from the staffing realignment, reduced incentive compensation and health insurance expense. Advertising and marketing expense declined $69 thousand while data processing increased due to the mobile banking application which significantly improved the customer experience and the increase in core relationships year over year.

Asset Quality

Provision expense was reduced by 34% to $400 thousand in the first quarter 2022 from the prior quarter as the coverage ratio increased to 1.45%. The allowance for loan and lease losses was $12.8 million on March 31, 2022. The provision expense saw a reduction of 11% from the first quarter 2021. Management believes the allowance for loan and lease losses adequately reflects the inherent risk in the loan portfolio.

On March 31, 2022, nonperforming assets of $12.3 million, declined $540 thousand from prior quarter. Total nonperforming assets improved to 1.19% of total assets for the current quarter. SBA loans considered nonperforming at quarter end totaled $2.4 million, a reduction of $451 thousand from March 31, 2021.

	At Period End
	Mar 31,	Dec 31,	Sep 30,	Jun 30,	Mar 31,
Asset Quality (in thousands)	2022	2021	2021	2021	2021
Nonaccrual Loans	$ 12,137	$ 12,674	$ 10,389	$ 10,178	$ 10,120
Restructured loans still accruing	181	184	187	188	-
Loans 90+ days past due & still accruing	-	-	3,249	4,692	1,937
OREO	-	-	-	-	-
Total Nonperforming Assets	$ 12,318	$ 12,858	$ 13,825	$ 15,057	$ 12,057
Total Assets	1,033,874	983,206	1,111,518	1,110,872	1,122,986
Nonperforming assets/total assets	1.19%	1.31%	1.24%	1.36%	1.07%

Balance Sheet

Centric ended the current quarter with total assets of $1.0 billion compared to $983 million the prior quarter, an increase of $51 million. Cash and cash equivalents increased $37 million from prior quarter due to the increase in core deposits. Borrowings decreased in the first quarter $15 million compared to prior quarter and have reduced $26 million from a year ago. Assets decreased $89 million due to the forgiveness of $194 million in PPP loans and corresponding release of wholesale deposits from first quarter 2021.

Total loans ended March 31, 2022, at $886 million, an increase of $11 million from the prior quarter. PPP loan balances decreased $18 million from the prior quarter due to forgiveness processing. Core loan growth increased $29 million, or 3%, from the prior quarter demonstrating an annualized growth rate of 14%. The Philadelphia region continues to drive strong performance and represents 53% of loans outstanding.

Growth in core loans outstanding from first quarter 2021 is $82 million, or 10%. Commercial loans increased $41 million, or 20%, and commercial real estate loans increased $52 million, or 10% year over year, while PPP loans have decreased $194 million.

Total deposits ended the quarter at $877 million, an increase of $62 million from the fourth quarter 2021. Noninterest bearing deposits remain at 28% of total deposits as core deposit growth was 8% over year-end balances. Money market accounts saw the largest increase at $47 million during the first quarter 2022. Year over year PPP forgiveness and sale coupled with growth in core deposit relationships enabled $145 million in wholesale funding to be released in the last twelve months.

Shareholders' equity increased $3 million over fourth quarter 2021 ending the quarter at $98 million. Earnings drove the quarter's results with a decrease to equity related to the mark-to-market adjustment to the available for sale investment portfolio, dampening the growth by $0.06 per share as interest rates rose. Shareholders' equity increased $9 million, or 11%, over same quarter prior period. Centric's share price increased 6% from a year ago with tangible book value per share growth of 10%, ending the period at $11.43. Centric Bank continues to exceed "Well Capitalized" guidelines.

Centric has provided an Investor Presentation which covers the Company's first quarter results of operations. The presentation is available on the Company's website at https://investors.centricbank.com/filings/Docs/default.aspx.

Centric Financial Corporation
Consolidated Balance Sheet (Unaudited)
	At Period End
	Mar 31,	Dec 31,	Mar 31,
(Dollars in thousands)	2022	2021	2021
Assets
Cash and cash equivalents	$ 82,481	$ 45,077	$ 52,223
Other investments	43,333	41,275	44,041
Loans	885,820	875,026	998,210
Less: allowance for loan losses	(12,808)	(12,407)	(10,881)
Net loans	873,012	862,619	987,329
Premises and equipment	12,800	13,036	13,640
Accrued interest receivable	3,938	4,152	6,241
Mortgage servicing rights	867	959	1,087
Goodwill	492	492	492
Other assets	16,951	15,596	17,933
Total Assets	$ 1,033,874	$ 983,206	$ 1,122,986

Liabilities
Noninterest-bearing deposits	246,908	229,863	256,342
Interest-bearing demand deposits	222,657	219,997	249,218
Money market and savings	289,980	242,689	207,545
Certificates of deposit	117,932	122,600	234,514
Total interest-bearing deposits	630,569	585,286	691,277
Total deposits	877,477	815,149	947,619
Short-term borrowings	-	-	10,000
Long-term debt & leases	54,913	70,251	71,070
Accrued interest payable	87	72	141
Other liabilities	3,678	2,519	5,965
Total Liabilities	936,155	887,991	1,034,795
Total Shareholders' Equity	97,719	95,215	88,191
Total Liabilities and Shareholders' Equity	$ 1,033,874	$ 983,206	$ 1,122,986

Centric Financial Corporation
Consolidated Statement of Income (Unaudited)
	Three months ended
	Mar 31,	Dec 31,	Sep 30,	Jun 30,	Mar 31,
(Dollars in thousands)	2022	2021	2021	2021	2021
Interest income
Interest and dividends on securities	$ 307	$ 289	$ 334	$ 349	$ 365
Interest and fees on loans	9,948	11,935	11,311	11,411	11,413
Other	37	20	32	15	16
Total interest income	10,292	12,244	11,677	11,775	11,794
Interest expense
Interest on deposits	788	820	866	937	981
Interest on borrowings	383	402	400	424	501
Total interest expense	1,171	1,222	1,266	1,361	1,482
Net interest income	9,121	11,022	10,411	10,414	10,312
Provision for loan losses	400	604	6,092	450	450
Net interest income after provision expense	8,721	10,418	4,319	9,964	9,862
Noninterest income
Gain on sale of SBA loans	-	164	116	147	-
Gain on sale of mortgage loans	79	153	157	313	319
Other non-interest income	848	485	606	462	693
Noninterest income	927	802	879	922	1,012
Noninterest expense
Salaries and benefits	3,543	3,397	3,569	3,762	3,717
Occupancy and equipment	627	615	590	593	628
Professional fees	219	212	181	202	210
Data processing	332	312	327	294	280
Advertising and marketing	102	55	110	145	171
Other non-interest expense	1,333	1,810	1,329	1,349	1,285
Noninterest expense	6,156	6,401	6,106	6,345	6,291
Income before taxes	3,492	4,819	(908)	4,541	4,583
Income tax expense	693	991	(197)	943	949
Net income available to common shareholders	$ 2,799	$ 3,828	$ (711)	$ 3,598	$ 3,634

Centric Financial Corporation
Per Share Data & Performance Ratios (Unaudited)

(Dollars in thousands except per share)	Three months ended
	Mar 31,	Dec 31,	Sep 30,	Jun 30,	Mar 31,
Earnings and Per Share Data	2022	2021	2021	2021	2021
Net income	$ 2,799	$ 3,828	$ (711)	$ 3,598	$ 3,634
Basic earnings per common share	$ 0.33	$ 0.45	$ (0.08)	$ 0.43	$ 0.43
Diluted earnings per common share	$ 0.33	$ 0.45	$ (0.08)	$ 0.42	$ 0.43
Book value (at period end)	$ 11.49	$ 11.23	$ 10.78	$ 10.85	$ 10.43
Tangible book value (at period end)	$ 11.43	$ 11.17	$ 10.72	$ 10.79	$ 10.38
Close price (at period end)	$ 9.95	$ 9.70	$ 9.50	$ 9.75	$ 9.40
Common shares outstanding	8,503,283	8,481,197	8,477,518	8,475,143	8,452,057
Weighted average shares - basic	8,450,699	8,425,194	8,419,882	8,408,969	8,402,984
Weighted average shares - diluted	8,552,790	8,533,882	8,525,573	8,511,644	8,490,150

Performance Ratios (period to date)
Return on average assets	1.09%	1.50%	-0.26%	1.29%	1.33%
Return on average equity	11.57%	16.45%	-3.04%	15.99%	16.80%
Efficiency ratio	61.46%	53.61%	54.09%	55.63%	55.53%

Yield on loans	4.66%	5.27%	4.80%	4.65%	4.76%
Yield on average earning assets	4.40%	4.97%	4.57%	4.45%	4.55%
Cost of deposits	0.37%	0.38%	0.38%	0.40%	0.44%
Cost of funds	0.51%	0.52%	0.51%	0.54%	0.59%
Net interest margin	3.90%	4.47%	4.07%	3.94%	3.98%

Capital Ratios (at period end)
Shareholders' equity / asset ratio	9.45%	9.68%	8.22%	8.28%	7.85%
Tangible common equity / tangible assets	9.41%	9.64%	8.18%	8.24%	7.81%
Tier I leverage ratio (bank)	11.10%	10.83%	9.79%	9.62%	9.39%
Common tier 1 capital/risk-based capital (bank)	12.25%	12.28%	11.56%	11.66%	11.59%
Tier 1 risk-based capital (bank)	12.25%	12.28%	11.56%	11.66%	11.59%
Total risk-based capital (bank)	13.50%	13.53%	12.81%	12.89%	12.83%

Asset Quality Ratios
Net charge-offs/average loans (period to date)	0.00%	-0.01%	2.31%	0.10%	0.02%
Nonperforming assets / total assets (at period end)	1.19%	1.31%	1.24%	1.36%	1.07%
Allowance for loan losses / total loans	1.45%	1.42%	1.28%	1.15%	1.09%
Allowance for loan losses / nonaccrual loans	105.53%	92.45%	113.35%	108.89%	107.52%

Centric Financial Corporation
Consolidated Average Balance Sheets and Average Yield / Cost (Unaudited)
	Three Months Ended
	March 31, 2022			March 31, 2021
	Average			Average
	Balance	Interest	Rate	Balance	Interest	Rate
Interest Earning Assets
Fed funds & bank balances	$ 37,000	$ 37	0.40	$ 31,025	$ 16	0.21
Restricted stock	2,411	31	5.24	3,490	53	6.14
Total securities	42,834	276	2.58	42,411	312	2.95
Total loans	865,402	9,948	4.66	972,741	11,413	4.76
Total Earning Assets	947,647	10,292	4.40	1,049,668	11,794	4.55

Allowance for loan losses	(12,647)			(10,695)
Non-earning assets	88,665			58,184
Total Average Assets	$ 1,023,665			$ 1,097,156


Interest-Bearing Liabilities
Checking, money market, savings	498,529	575	0.46	434,614	462	0.43
Certificates of deposit	124,777	212	0.69	250,439	519	0.84
Total interest-bearing deposits	623,306	788	0.51	685,053	981	0.58
Noninterest-bearing deposits	231,427			222,483
Total deposits	854,733	788	0.37	907,537	981	0.44
Total borrowings	69,051	383	2.22	99,312	501	2.02
Total Interest-Bearing Liabilities	692,356	1,171	0.68	784,365	1,482	0.76
Cost of funds			0.51			0.59
Other liabilities	3,085			3,805
Total Average Liabilities	926,868			1,010,654
Total Shareholders' Equity	96,797			86,502
Total Avg. Liabilities and Shareholders' Equity	$ 1,023,665			$ 1,097,156
Interest Rate Spread			3.72			3.79
Net Interest Income		$ 9,121			$ 10,312
Interest Rate Margin			3.90			3.98

About the Company

Founded in 2007, Centric Financial Corporation, and its subsidiary, Centric Bank, is headquartered in south central Pennsylvania with assets of $1.0 billion 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 2020, 2019 and 2018 Best Banks to Work For, three-time Best Places to Work, Top 50 Fastest-Growing Companies for seven years, and twice 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 888.274.2033, or visit CentricBank.com. Connect with us 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; changes in key personnel; the effects of terrorism, natural disasters and pandemics and their impact on the economy; cybersecurity risks; the effects of competition and 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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