Centric Financial Corporation Announces Second Quarter 2022 Earnings

 Centric Financial Corporation (“Centric” or “the Company”) (OTC: CFCX), the parent company of Centric Bank (“the Bank”), reported net income of $2.9 million, or $0.34 per common share diluted, for the second quarter 2022. For the first six months of 2022, net income was $5.7 million, or $0.67 per common share diluted.   

Highlights of Performance: 

  • Core loan growth, excluding the impact of PPP loans, increased $29 million over the first quarter, an annualized growth rate of 14% and $75 million over the second quarter 2021.
  • Organic deposit growth was $1.4 million over prior quarter and increased $44 million, or 5%, over second quarter 2021.
  • Net interest margin increased 16 basis points over the first quarter, ending at 4.06%, and up 12 basis points over same quarter prior year. 
  • Tangible book value per share of $11.72 increased $0.28 per share from the previous quarter and increased $0.93per share, or 8.6%, over second quarter 2021.
  • Cost of deposits decreased one basis point from first quarter to 0.36%, a reduction from the 0.40% at second quarter 2021.
  • Return on Average Assets of 1.14% increased 5% over the prior quarter with a decline of 15 basis points from second quarter 2021 which was impacted by PPP deferred income of $3.3 million.  

Patricia A. Husic, President & CEO of Centric Financial Corporation and Centric Bank stated, “We again delivered a solid quarter of financial results. Organic loan growth for the quarter was $29 million, with the increase driven largely from commercial real estate and commercial loans. The annualized growth rate for the quarter was 14%. During the quarter, our return on average assets increased to 1.14% while our net interest margin expanded to 4.06%. Loans that repriced with rising rates and floors being exceeded contributed about 25%, while the volume of our loan growth drove the majority of those increases.

Our team continues to be intentional in their business development efforts and disciplined with the pricing of both loans and deposits. Non-interest bearing deposits remain consistent with the first quarter results, or 28% of total deposits. Our expansion in the greater Philadelphia region continues to drive in good momentum as we onboard full relationship customers in these markets. We are leveraging the Centric Way of Banking in those communities and our success is evidenced with our growth. Loans in that region comprise 54% of our total balance sheet and 29% of total non-interest bearing deposits. We have seized opportunities stemming from the impact of past M&A in the Philadelphiaregion, and there is more yet to capitalize upon.  Our company is well positioned for the future.”

Results of Operations – Second Quarter 

Net income for the quarter ended June 30, 2022 was $2.9 million, or $0.34 per diluted share, an increase of 5% over first quarter 2021.  Compared to second quarter 2021, net income declined $650 thousand, or 18%, and $0.08 per diluted share. The decline from the same quarter a year ago was the result of less PPP deferred fee income of $1.1 million as the PPP segment of lending has reduced by $131 million from June 30, 2021 and is currently $11.4 million in balances outstanding.

Net interest income for the quarter was $9.8 million, an increase of $667 thousand over first quarter.  The increase in the federal funds rate drove other interest income up $112 thousand with a decline in average balances.  Organic loan growth of $29 million coupled with rising rates increased interest on loans by $525 thousand over first quarter.   The cost of deposits remained consistent with first quarter while balances on borrowings declined $15 million at the end of the first quarter, reducing interest expense on borrowing in the second quarter by 15%. 

Organic loan growth expanded $75 million, loan yields increased by 6 basis points, and PPP deferred fee income declined $1.1 million compared to the second quarter 2021, culminating in a decline of $938 thousand in interest on loans.  Interest expense decreased by $223 thousand due to reduced cost of funds and a shift in the mix of deposits and reduced borrowings from the second quarter 2021 contributed to the reduction of net interest income of $626 thousand, producing a net interest margin of 4.06%, which is an increase of 12 basis points over the same period 2021.

Noninterest income totaled $1.0 million for the second quarter, an increase of 11%, or $100 thousand, over the prior quarter, driven by a reduction in mortgage related income of $149 thousand which was more than offset by other loan fee income, increasing $235 thousand.  Compared to the second quarter 2021, noninterest income increased $105 thousand, primarily due to increased swap referral fee income, increased service charge on deposits, and second quarter 2021 having a loss on equity securities of $80 thousand offset somewhat by a reduction in other loan and servicing income of $83 thousand.   

Noninterest expense of $6.6 million for the second quarter increased over first quarter by $448 thousand, or 7%.  Salaries and benefits increased $196 thousand due to the expansion of the lending teams in the Philadelphia area and supporting credit personnel, as well as filling vacancies in the Cash Management team.  Increases of $264 thousand in other non-interest expense were across areas such as loan and collection expense, travel, and SBA mortgage servicing rights amortization expense, partially offset by a reduction in FDIC assessment expense by $149 thousand. 

Compared to second quarter 2021, noninterest expenses increased 4%.  Salary and benefits and occupancy and equipment were relatively flat.  FDIC assessments decreased $155 thousand as peak deposits from PPP efforts and wholesale funding which supported the PPP lending have declined.  Loan and collection expense increased $100 thousand due to core lending efforts, and software and licensing costs increased $63 thousand. 

Results of Operations – Year to Date 

Net income for the first six months of 2022 ended at $5.7 million, or $0.67 per diluted share, a decrease of $1.5 millionover the prior year, as the reduction in PPP deferred fees declined by $2.5 million year over year due to PPP loan forgiveness of $131 million.  Excluding PPP deferred fees for both years, core net income before tax increased by $620 thousand, or 11%.

Net interest income decreased $1.8 million to $18.9 million over the six months ended June 30, 2021.   Interest and fees on loans decreased $2.4 million, primarily due to the $2.5 million decline in PPP deferred fee income.   Interest income on commercial real-estate loans increased $1.3 million, or 10%, over the same period last year, largely driven by volume.  Total interest expense declined $550 thousand, or 19%, from last year.  Reduction in rate and balances in certificates of deposit contributed $530 thousand to the decrease from last year.  Increases in money market deposit balances and increased rates of 6 basis points somewhat offset the benefit by $259 thousand.  Net interest margin for the period ending June 30, 2022, was 3.98%, a two basis point increase over the first six months of 2021.

Noninterest income totaled $2.0 million for the first six months of 2022, consistent with the same period 2021 with changes in revenue streams.  Loan fees increased 50%, or $292 thousand, along with swap referral fees increasing $223 thousand.  Gain on loans held for sale decreased $452 thousand. 

Noninterest expense totaled $12.8 million, consistent with the $12.6 million last year.  Salaries and benefits declined 3% due to lower commission on mortgage activity, open positions during 2022 and health insurance expense reduction of $98 thousand.  Data processing services increased 18% from expanded utilization of products on the Bank’s core operating systems.  Advertising and marketing expenses were reduced by 33%.  FDIC assessments were reduced in 2022 by $195 thousand connected to the release of wholesale funding at the end of 2021.  Other operating expenses increased $230,000, with increases in license fees and software maintenance, travel and lodging, and SBA mortgage servicing rights amortization

Asset Quality

Provision expense of $850 thousand for the first six months of 2022 was consistent with last year’s $900 thousand.  The coverage ratio for the allowance for loan and lease loss increased to 1.46% compared to $1.15% last year, or 1.36%, excluding PPP loans which declined by $131 million.  The allowance for loan and lease losses amounted to $13.2 millionand $11.1 million at June 30, 2022 and 2021, respectively.  Management believes the allowance for loan and lease losses at June 30, 2022 adequately reflects the inherent risk in the loan portfolio.

At June 30, 2022, nonperforming assets totaled $12.6 million, relatively flat from the first quarter and an improvement of $2.5 million over June 30, 2021.  Compared to last year, loans 90+ days past due were reduced by $4.7 million with $1.3 million moving into nonaccrual.  Other changes to nonaccrual loans consisted of SBA loans being processed for collection and reimbursement of the guarantee, while other relationships moved into nonaccrual status due to the hardships encountered during 2021.  SBA loans that were considered nonperforming at June 30, 2022 totaled $2.9 million, a decrease of $559 thousand from a year ago.  Nonperforming conventional loans also declined by $1.9 millionfrom a year ago.  Total nonperforming assets were 1.21% of total assets at quarter end, a reduction of 11%, from June 30, 2021.

At Period End
 Jun 30,Mar 31,Dec 31,Sep 30,Jun 30,
Asset Quality  (in thousands)20222022202120212021
Nonaccrual Loans $     12,382$     12,137$   12,674$     10,389$     10,178
Restructured loans still accruing179181184187188
Loans 90+ days past due & still accruing3,2494,692
Total Nonperforming Assets$     12,561$     12,318$   12,858$     13,825$     15,057
Total Assets1,035,8171,033,874983,2061,111,5181,110,872
Nonperforming assets/total assets1.21 %1.19 %1.31 %1.24 %1.36 %

Balance Sheet 

At June 30, 2022, Centric’s total assets were $1.0 billion compared to $1.1 billion at June 30, 2021, a decrease of $75 million and consistent with March 31, 2022.  Cash and cash equivalents were reduced by $9 million coinciding with the reduction in borrowings of $16 million.  Total loans outstanding decreased $56 million as a result of PPP loan forgiveness. 

Total loans ended the period at $904 million, an increase of $18 million from prior quarter.  Organic loan growth was $29 million.  Commercial loans increased $4 million and CRE loans increased $25 million.  Compared to the same period last year, PPP loan balances forgiven amounted to $131 million, resulting in core loan growth of $75 million, or 9%.  CRE grew $51 million and commercial loans increased 17%, or $38 million.  Remaining PPP loan balances outstanding were $11 million at period end.  Annualized core loan growth is 14% through June 30, 2022.    

Investments in securities declined from the prior quarter due to principal payments on mortgage-backed securities as well as a called debt security, and also decreased over last year by $3 million primarily due to the sale of an equity security late in 2021. 

Total deposits ended the period at $879 million, similar to the prior quarter in balances and mix.   From June 30, 2021, money market and savings grew 26%, or $58 million, while noninterest bearing deposits remained consistent.  Certificates of deposit and interest-bearing demand deposit balances declined $88 million and $40 million, respectively, largely due to a reduction in wholesale funding of $110 million at the end of 2021.

Short-term borrowings of $10 million matured in the fourth quarter 2021 and were not replaced as liquidity remained strong.  Long-term borrowings totaled $55 million at quarter end, consistent with the prior quarter and decreased $6 million from the same period last year. 

Shareholders’ equity increased $2.5 million over first quarter 2022 and ended the period at $100 million.  Year over year, equity increased $8 million, or 9%.  At June 30, 2022, Centric held 275,497 shares of treasury stock repurchased under the Company’s stock repurchase plan during 2020.  No new treasury shares have been purchased in 2022.  Tangible book value increased $0.28 per share over first quarter and ended the period at $11.72.  Tangible book value increased $0.93 per share, or 9%, from June 30, 2021, as a result of increased earnings over the period.  Centric Bank remains above bank regulatory “Well Capitalized” standards.

Centric Financial Corporation
Consolidated Balance Sheet (Unaudited)
At Period End
Jun 30,Mar 31,Jun 30,
(Dollars in thousands)202220222021
Cash and cash equivalents$           69,247$           82,481$           78,309
Other investments40,91643,33344,401
  Less: allowance for loan losses(13,172)(12,808)(11,082)
Net loans891,031873,012949,111
Premises and equipment12,63212,80013,425
Accrued interest receivable3,7093,9385,624
Mortgage servicing rights7478671,037
Other assets17,04316,95118,473
Total Assets$      1,035,817$      1,033,874$      1,110,872
   Noninterest-bearing deposits247,258246,908244,342
      Interest-bearing demand deposits226,210222,657266,014
      Money market and savings281,547289,980223,246
      Certificates of deposit123,880117,932211,537
   Total interest-bearing deposits631,637630,569700,797
Total deposits878,895877,477945,139
Short-term borrowings10,000
Long-term debt & leases54,72354,91360,687
Accrued interest payable8287107
Other liabilities1,9233,6782,961
Total Liabilities935,623936,1551,018,894
Total Shareholders’ Equity100,19497,71991,978
Total Liabilities and Shareholders’ Equity$      1,035,817$      1,033,874$      1,110,872
Centric Financial Corporation
Consolidated Statement of Income 
Three months endedSix months ended
Jun 30,Mar 31,Dec 31,Sep 30,Jun 30,Jun 30,Jun 30,
(Dollars in thousands)2022202220212021202120222021
Interest income
Interest and dividends on securities$         288$         307$           289$         334$           349$           595$         714
Interest and fees on loans10,4739,94811,93511,31111,41120,42122,824
   Total interest income10,91010,29212,24411,67711,77521,20223,569
Interest expense
Interest on deposits7967888208669371,5841,918
Interest on borrowings326383402400424709925
   Total interest expense1,1221,1711,2221,2661,3612,2932,843
Net interest income9,7889,12111,02210,41110,41418,90920,726
Provision for loan losses4504006046,092450850900
Net interest income after provision expense9,3388,72110,4184,3199,96418,05919,826
Noninterest income
Gain on sale of SBA loans164116147147
Gain on sale of mortgage loans10079153157313179632
Other non-interest income9278484856064621,7751,155
   Noninterest income1,0279278028799221,9541,934
Noninterest expense
Salaries and benefits3,7393,5433,3973,5693,7627,2827,479
Occupancy and equipment5896276155905931,2161,221
Professional fees227219212181202446412
Data processing343332312327294675574
Advertising and marketing10910255110145211316
Other non-interest expense1,5971,3331,8101,3291,3492,9302,634
   Noninterest expense6,6046,1566,4016,1066,34512,76012,636
Income before taxes3,7613,4924,819(908)4,5417,2539,124
Income tax expense813693991(197)9431,5061,892
Net income available to common shareholders$     2,948$     2,799$       3,828$      (711)$       3,598$       5,747$     7,232
Centric Financial Corporation
Per Share Data & Performance Ratios (Unaudited)
(Dollars in thousands except per share) Three months endedSix months ended
Jun 30,Mar 31,Dec 31,Sep 30,Jun 30,Jun 30,Jun 30,
Earnings and Per Share Data2022202220212021202120222021
Net income$    2,948$    2,799$      3,828$      (711)$       3,598$     5,747$     7,232
Basic earnings per common share$      0.35$      0.33$        0.45$     (0.08)$         0.43$       0.68$       0.86
Diluted earnings per common share$      0.34$      0.33$        0.45$     (0.08)$         0.42$       0.67$       0.85
Book value  (at period end)$    11.77$    11.49$      11.23$     10.78$       10.85
Tangible book value (at period end)$    11.72$    11.43$      11.17$     10.72$       10.79
Close price (at period end)$      9.92$      9.95$        9.70$       9.50$         9.75
Common shares outstanding8,510,4628,503,2838,481,1978,477,5188,475,143
Weighted average shares – basic8,466,8978,450,6998,425,1948,419,8828,408,9698,458,8438,405,994
Weighted average shares – diluted8,564,0018,552,7908,533,8828,525,5738,511,6448,558,4408,500,956
Performance Ratios (period to date)
Return on average assets 1.14 %1.09 %1.50 %-0.26 %1.29 %1.11 %1.31 %
Return on average equity 11.88 %11.57 %16.45 %-3.04 %15.99 %11.72 %16.39 %
Efficiency ratio60.13 %61.46 %53.61 %54.09 %55.63 %60.77 %55.58 %
Yield on loans4.72 %4.66 %5.27 %4.80 %4.65 %4.69 %4.70 %
Yield on average earning assets4.53 %4.40 %4.97 %4.57 %4.45 %4.47 %4.50 %
Cost of deposits0.36 %0.37 %0.38 %0.38 %0.40 %0.37 %0.42 %
Cost of funds0.48 %0.51 %0.52 %0.51 %0.54 %0.50 %0.56 %
Net interest margin4.06 %3.90 %4.47 %4.07 %3.94 %3.98 %3.96 %
Capital Ratios (at period end)
Shareholders’ equity / asset ratio9.67 %9.45 %9.68 %8.22 %8.28 %
Tangible common equity / tangible assets9.63 %9.41 %9.64 %8.18 %8.24 %
Tier I leverage ratio (bank)11.26 %11.10 %10.83 %9.79 %9.62 %
Common tier 1 capital/risk-based capital (bank)12.13 %12.25 %12.28 %11.56 %11.66 %
Tier 1 risk-based capital (bank)12.13 %12.25 %12.28 %11.56 %11.66 %
Total risk-based capital (bank)13.38 %13.50 %13.53 %12.81 %12.89 %
Asset Quality Ratios 
Net charge-offs/average loans (period to date)0.04 %0.00 %-0.01 %2.31 %0.10 %0.02 %0.06 %
Nonperforming assets / total assets (at period end)1.21 %1.19 %1.31 %1.24 %1.36 %
Allowance for loan losses / total loans1.46 %1.45 %1.42 %1.28 %1.15 %
Allowance for loan losses / nonaccrual loans106.38 %105.53 %92.45 %113.35 %108.89 %
Centric Financial Corporation
Consolidated Average Balance Sheets and Average Yield / Cost (Unaudited)
Three Months Ended
June 30, 2022June 30, 2021
 Average   Average  
 Balance  Interest   Rate  Balance  Interest   Rate 
Interest Earning Assets
Fed funds & bank balances$       33,221$      1491.81$       31,197$         150.20
Restricted stock1,870285.942,786476.77
Total securities41,7972602.4943,4543022.78
Total loans889,72910,4734.72983,64411,4114.65
Total Earning Assets966,61710,9104.531,061,08111,7754.45
Allowance for loan losses(13,039)(11,118)
Non-earning assets 84,62161,386
Total Average Assets$  1,038,199$  1,111,349
Interest-Bearing Liabilities
Checking, money market, savings514,6876080.48484,8325260.43
Certificates of deposit115,3881880.65208,8924110.79
Total interest-bearing deposits630,0757960.51693,7249370.54
Noninterest-bearing deposits250,949247,169
Total deposits881,0247960.36940,8939370.40
Total borrowings54,8413262.3777,0024242.19
Total Interest-Bearing Liabilities684,9161,1220.66770,7261,3610.71
      Cost of funds0.480.54
Other liabilities 3,0303,439
Total Average Liabilities938,8951,021,334
Total Shareholders’ Equity99,30390,015
Total Avg. Liabilities and Shareholders’ Equity$  1,038,199$  1,111,349
Interest Rate Spread3.873.74
Net Interest Income $   9,788$ 10,414
Interest Rate Margin4.063.94
Centric Financial Corporation
Consolidated Average Balance Sheets and Average Yield / Cost (Unaudited)
Six Months Ended
June 30, 2022June 30, 2021
 Average   Average  
 Balance  Interest   Rate  Balance  Interest   Rate 
Interest Earning Assets
Fed funds & bank balances$       35,100$      1861.07$       31,112$         310.20
Restricted stock2,139595.553,1361006.42
Total securities42,3135362.5342,9356142.86
Total loans877,63320,4214.69978,22222,8244.70
Total Earning Assets957,18421,2024.471,055,40623,5694.50
Allowance for loan losses(12,844)(10,908)
Non-earning assets 86,63259,794
Total Average Assets$  1,030,972$  1,104,292
Interest-Bearing Liabilities
Checking, money market, savings506,6531,1840.47459,8629880.44
Certificates of deposit120,0564000.67229,5519300.82
Total interest-bearing deposits626,7091,5840.51689,4131,9180.56
Noninterest-bearing deposits241,242234,894
Total deposits867,9511,5840.37924,3071,9180.42
Total borrowings61,9077092.2988,0959252.10
Total Interest-Bearing Liabilities688,6152,2930.67777,5082,8430.73
      Cost of funds0.500.56
Other liabilities 3,0573,621
Total Average Liabilities932,9151,016,024
Total Shareholders’ Equity98,05788,268
Total Avg. Liabilities and Shareholders’ Equity$  1,030,972$  1,104,292
Interest Rate Spread3.803.77
Net Interest Income $ 18,909$ 20,726
Interest Rate Margin3.983.96

About the Company

An American Banker 2021, 2020, 2019, and 2018 Best Banks to Work For, four-time American Banker Most Powerful Women in Banking Top Team, three-time Best Places to Work, and Top 50 Fastest-Growing Companies for eight years, 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 highly competitive and pro-growth financial services to businesses, professionals, individuals, families, and to the health care and dental industries with the Doctor Centric Bank Division. Centric Bank was named one of the Top 200 Community Banks in the U.S. in 2022, 2021, 2020, and 2019. 

Founded in 2007, Pennsylvania-based Centric Bank has financial centers located in Harrisburg, Hershey, Mechanicsburg, Camp Hill, Doylestown, Devon, and Lancaster, as well as commercial loan offices in Devon, Doylestown, Lancaster, 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 them on TwitterFacebookLinkedIn, 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

SOURCE Centric Financial Corporation

Leave a Reply

Your email address will not be published.