Centric Financial Corporation Announces Record Breaking First Quarter 2021 Earnings

Rhea-AI Summary

Centric Financial Corporation (CFCX) announced strong first-quarter 2021 earnings with a net income of $3.6 million, or $0.43 per share, marking a 136% increase from Q1 2020. This growth is attributed to reduced funding costs and the recognition of $1.9 million in deferred fees from Paycheck Protection Program (PPP) loans. The Bank's return on average assets rose to 1.33%, while return on average equity reached 16.80%. Total loans grew by 44%, including substantial increases in non-interest-bearing deposits, which rose by 124%, contributing to a total deposit growth of 44% year-over-year.

Positive

• Net income increased 136% year-over-year to $3.6 million.
• Earnings per share rose to $0.43, a $0.26 increase from Q1 2020.
• Return on average assets (ROAA) improved to 1.33%, up 73% from Q1 2020.
• Return on average equity (ROAE) surged to 16.80%, an increase of 115% year-over-year.
• Total loans increased by 44% year-over-year, reaching $998 million.
• Total deposits grew by 44%, hitting $948 million, with non-interest-bearing deposits increasing by 124%.

Negative

• Noninterest expenses increased by $1.1 million from Q1 2020, primarily due to increased salaries and benefits.
• Provision expense normalized to $450,000, down $375,000 from Q1 2020 due to pandemic-related uncertainties.

HARRISBURG, Pa., May 7, 2021 /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 2021.  Net income for the quarter ending March 31, 2021 totaled $3.6 million, or $0.43, per basic and diluted share, a record high level of quarterly earnings.

Highlights of Performance:

• Net income increased $2.1 million, or 136%, over first quarter 2020, an increase of $0.26 per basic and diluted share due to reduced funding costs and recognition of $1.9 million in deferred fees.
• Return on Average Assets of 1.33% for first quarter 2021 increasing 73% over the same quarter 2020 due to a strong net interest margin and growth in non-interest income.
• First quarter Return on Average Equity of 16.80% increasing 115% over first quarter 2020.
• Tangible book value per share of $10.38 increased $1.39 per share, or 16% over the first quarter 2020.
• Net interest margin increased 16 basis points over first quarter 2020, ending at 3.98%.
• Cost of deposits decreased to 0.44%, a reduction of 82 basis points from the first quarter 2020
• Loans outstanding increased $305 million from the same period end last year including $216 million from Paycheck Protection Program (PPP) lending net of deferred fees. Core loan growth increased 13% over first quarter 2020, growing by $89 million.
• Participating in the second round of PPP lending, with $83 million generated in the first quarter.
• Total deposits grew 44%, or $288 million over the first quarter 2020, with noninterest bearing deposits reaching 27% of total deposits.

Patricia A. Husic, President & CEO of Centric Financial Corporation and Centric Bank stated, "Our strong first quarter results reflected expansion of our net interest margin as a result of significant recognition of deferred Paycheck Protection Program fees, impactful growth of non-interest bearing deposits, and further reduction in our overall cost of deposits. 

Our team had an equally strong quarter for loan originations and growing our pipeline; however, loan originations were offset by paydowns and payoffs due to sales of commercial real estate buildings and businesses. We are continuing to see momentum in all of the markets that we serve as the economy is showing strong signs of a rebound as businesses are more fully opening and demand for lending is increasing.

We have been disciplined in our pricing as evidenced by our net interest margin. Although our net interest margin remains healthy and surpasses our peers in the banking industry, we are focused on growing our non-interest income. We are building the pipeline of non-interest income sources, to include sales of residential mortgages, third party swap fees, momentum in the SBA loan pipeline and growth of cash management fees. 

In the first quarter, we upgraded our digital banking suite to Banno. The new online banking and mobile app delivered innovative features, enhanced security and a consistent experience on any device, and has been well received by our customers. During the past year, we have seen more than 25% of our customers move to our online banking technology and change the manner in which they conduct their banking business. We have selected Splunk Cloud, a technology that will enhance our data security and compliance and provide enterprise infrastructure monitoring for our Company. This technology will also provide us with the ability to obtain data intelligence about our customers and transactions and goes beyond the surface of the information provided by core banking software. A key strategic initiative is our focus on relevance to current and future customers while improving efficiency.

Our Company is well positioned to take advantage of the growth opportunities related to merger disruption in the greater Philadelphia region and with the economic turnaround and increasing loan demand as businesses move to open more fully in our markets."

Results of Operations – First Quarter

Net income for the quarter ended March 31, 2021 was $3.6 million, or $0.43 per share, basic and diluted, an increase of $838 thousand, or 30%, and $0.10 per share, basic and diluted, over fourth quarter 2020.  Compared to first quarter 2020, net income increased $2.1 million, or 136%, and $0.26 per share, basic and diluted.

Net interest income for the quarter was $10.3 million, an increase of $3.1 million, or 44%, over first quarter 2020.  Factors included $55.3 million of PPP loans that received forgiveness by the SBA and contributed $1.9 million of income through recognition of net unamortized deferred fees during the quarter, an increase in net core lending of $89 million, reduced funding expense of $1.1 million, and reduced yield on earning assets of 64 basis points due to $216 million in outstanding PPP loans. Combined, these items contributed to a 16 basis point increase in the net interest margin for the first quarter of 2021.

Noninterest income totaled $1.0 million for the first quarter 2021, an increase of $240 thousand, or 31%, over the same quarter last year. Mortgage banking income of $387 thousand increased 141%, growing $226 thousand over first quarter 2020.  Cash management fee income is improving as we continue with our intentional efforts to onboard new relationships brought in by PPP generation, increasing 211% over first quarter of 2020.  Realized gain on equity securities increased $76 thousand.  

Noninterest expense for the first quarter was $6.3 million, a decline of $377 thousand from fourth quarter 2020. A decline of $105 thousand was related to salaries and benefits due to reduced mortgage commission accruals.  In the fourth quarter of 2020, a $189 thousand prepayment penalty expense was recognized to retire a long-term borrowing.  

Compared to the first quarter of 2020, noninterest expenses increased by $1.1 million, primarily due to increased salary and benefits of $611 thousand as a result of increased employees, performance based compensation related to mortgage commissions, annual increases in salaries and payroll taxes, and an increase in health insurance premiums.  FDIC assessments increased $113 thousand as a result of growth related to PPP new business customers and other core banking activities.  Loan and collection expense increased $129 thousand, and license and software expense rose $57 thousand due in part to upgrading the mobile banking application and support for the PPP loan application processing. 

Asset Quality

Provision expense normalized to $450 thousand in the first quarter 2021, a declined $375 thousand from first quarter 2020 due to uncertainties this time last year related to the COVID-19 pandemic, its effects on the economy and our customer base. Business operating capacities, particularly for restaurants, have elevated during early 2021.  The coverage ratio for the allowance for loan and lease loss is 1.09% of the total loan portfolio and 1.39% excluding PPP loans.  The allowance for loan and lease losses was $10.9 million at March 31, 2021; management believes the allowance for loan and lease losses adequately reflects the inherent risk in the loan portfolio.

The CARES Act and joint regulatory agency statements made provisions to assist borrowers with short-term modifications which are not treated as troubled debt restructurings.  As of March 31, 2021, qualifying loan deferral balances totaled $7.3 million, or less than 1% of total loans, a reduction of $13.8 million from December 31, 2020. 

At March 31, 2021, nonperforming assets of $12.1 million were consistent compared to last quarter.  Loans 90+ days past due increased $514 thousand and nonaccrual loans declined $692 thousand.  Total nonperforming assets improved 0.04% from the previous quarter and 0.27% from March 31, 2020.

 

	At Period End
	Mar 31,	Dec 31,	Sep 30,	Jun 30,	Mar 31,
Asset Quality  (in thousands)	2021	2020	2020	2020	2020
Nonaccrual Loans	$    10,120	$    10,811	$     8,568	$      4,312	$      4,995
Restructured loans still accruing	-	134	460	2,749	2,751
Loans 90+ days past due & still accruing	1,937	1,423	2,969	3,477	3,576
OREO	-	-	-	-	-
Total Nonperforming Assets	$    12,057	$    12,369	$   11,997	$    10,538	$    11,323
Total Assets	1,122,986	1,118,012	1,074,756	1,040,400	842,973
Nonperforming assets/total assets	1.07%	1.11%	1.12%	1.01%	1.34%

 

SBA loans that were considered nonperforming at quarter end totaled $2.9 million, a reduction of $3.1 million from March 31, 2020.  The reduction of SBA nonperforming loans from the first quarter 2020 is the result of $2.3 million returned to performing with $156 thousand of the $2.3 million supported by SBA payment assistance.  $721 thousand received a deferral and the remainder were charged off and are waiting payment of guarantee from the SBA.

Balance Sheet

At March 31, 2021, Centric's total assets were $1.1 billion compared to $843 million at for the same period last year, an increase of $280 million, or 33%. The growth, year over year, was due to the significant volume of SBA guaranteed PPP loans totaling $216 million at period end and increasing core lending of $89 million.  Centric is participating in the current round of PPP lending which generated $83 million in loans, net of deferred fees and costs, during the first quarter.

Total loans ended the quarter at $998 million.  PPP loan reductions from forgiveness totaled $63 million, PPP round two new generation amounted to $83 million, and core loan growth was $13 million.  Compared to a year-ago, total loans have increased $303 million, or 44%.    

Investments in securities increased $9 million over March 31, 2020 with increases in tax free municipals of $12 million, and taxable municipals of $4 million, offset by sales of CMOs and MBS of $7 million.  The changes were brought about by execution of a strategy to increase tax-free holdings. 

Total deposits ended the quarter at $948 million, an increase of $288 million year over year, or 44%. Core deposit growth, federal stimulus funding to individuals, as well as SBA PPP proceeds to businesses helped to fund deposit growth during the quarter, with the most significant increase in noninterest-bearing deposits of $142 million, or 124%.  Money market and savings accounts increased $61 million in core deposit growth.  Interest-bearing demand deposits increased $71 million including $20 million in low cost wholesale deposits.   

Short-term borrowings declined 50% to $10 million at March 31, 2021 from the prior quarter and declined $15 million from the same period last year.  Long-term borrowings totaled $71 million at quarter end, a decrease of $12 million from prior quarter as maturing borrowings were not replaced due to excess liquidity.  Long-term borrowings reduced $6 million from first quarter 2020. Centric participated in the PPPLF in December, borrowing $4.7 million. At March 31, 2021 this balance had declined to $543 thousand as the PPP loans securing the borrowing were granted forgiveness through the Small Business Administration. 

Shareholders' equity increased $4 million over fourth quarter and ended the period at $88 million. Year over year equity increased $9 million, or 11%.  At March 31, 2021 Centric held 338,850 shares of treasury stock repurchased under the Company's stock repurchase plan during 2020.  No new treasury shares have been purchased in 2021.  Tangible book value increased 4% and 16% per share to $10.38 over December 31, 2020 and March 31, 2020, respectively, as a result of increased earnings and stock repurchases during 2020.  Centric Bank remains above bank regulatory "Well Capitalized" standards.

 

Centric Financial Corporation
Consolidated Balance Sheet (Unaudited)
	At Period End
	Mar 31,	Dec 31,	Mar 31,
(Dollars in thousands)	2021	2020	2020
Assets
Cash and cash equivalents	$           52,223	$           82,100	$           88,120
Other investments	44,041	42,999	34,996
Loans	998,210	964,214	693,024
Less: allowance for loan losses	(10,881)	(10,487)	(9,118)
Net loans	987,329	953,727	683,906
Premises and equipment	16,713	17,109	17,966
Accrued interest receivable	6,241	6,016	2,481
Mortgage servicing rights	1,087	1,124	1,285
Goodwill	492	492	492
Other assets	14,860	14,445	13,727
Total Assets	$     1,122,986	$     1,118,012	$        842,973
Liabilities
Noninterest-bearing deposits	256,342	196,367	114,272
Interest-bearing demand deposits	249,218	269,182	177,854
Money market and savings	207,545	165,398	146,076
Certificates of deposit	234,514	295,528	221,203
Interest-bearing deposits	691,277	730,108	545,133
Total deposits	947,619	926,475	659,405
Short-term borrowings	10,000	20,000	25,000
Long-term debt	71,070	83,421	77,279
Accrued interest payable	141	259	377
Other liabilities	5,965	3,354	1,589
Total Liabilities	1,034,795	1,033,509	763,650
Total Shareholders' Equity	88,191	84,503	79,323
Total Liabilities and Shareholders' Equity	$     1,122,986	$     1,118,012	$        842,973

 

Centric Financial Corporation
Consolidated Statement of Income (Unaudited)
	Three months ended
	Mar 31,		Dec 31,		Sep 30,		Jun 30,		Mar 31,
(Dollars in thousands)	2021		2020		2020		2020		2020
Interest income
Interest and dividends on securities	$           365		$           337		$           292		$           217		$           251
Interest and fees on loans	11,413		10,501		10,238		9,894		9,348
Other	16		20		36		47		135
Total interest income	11,794		10,858		10,566		10,158		9,734
Interest expense
Interest on deposits	981		952		1,022		1,279		2,028
Interest on borrowings	501		561		578		581		535
Total interest expense	1,482		1,513		1,600		1,860		2,563
Net interest income	10,312		9,345		8,966		8,298		7,171
Provision for loan losses	450		325		975		975		825
Net interest income after provision expense	9,862		9,020		7,991		7,323		6,346
Noninterest income
Gain on sale of SBA loans	-		-		26		12		67
Gain on sale of mortgage loans	319		305		251		130		152
Other non-interest income	693		877		630		581		553
Noninterest income	1,012		1,182		907		723		772
Noninterest expense
Salaries and benefits	3,717		3,822		3,501		3,164		3,106
Occupancy and equipment	628		609		541		518		555
Professional fees	210		248		199		151		149
Data processing	280		280		291		267		286
Advertising and marketing	171		180		129		70		75
Other non-interest expense	1,285		1,529		1,129		1,026		1,011
Noninterest expense	6,291		6,668		5,790		5,196		5,182
Income before taxes	4,583		3,534		3,108		2,850		1,936
Income tax expense	949		738		647		591		395
Net income available to common shareholders	$        3,634		$        2,796		$        2,461		$        2,259		$        1,541

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	2021	2020		2020			2020		2020
Net income	$        3,634	$        2,796		$        2,461			$        2,259		$        1,541
Basic earnings per common share	$          0.43	$          0.33		$          0.28			$          0.26		$          0.18
Diluted earnings per common share	$          0.43	$          0.33		$          0.28			$          0.26		$          0.18
Book value  (at period end)	$        10.43	$        10.00		$          9.69			$          9.33		$          9.05
Tangible book value (at period end)	$        10.38	$          9.94		$          9.64			$          9.27		$          8.99
Close price (at period end)	$          9.40	$          8.58		$          7.50			$          6.85		$          6.96
Common shares outstanding	8,452,057	8,448,903		8,436,407			8,758,565		8,764,174
Weighted average shares - basic	8,402,984	8,411,759		8,670,112			8,742,308		8,745,680
Weighted average shares - diluted	8,490,150	8,434,558		8,683,524			8,752,821		8,767,433
Performance Ratios (period to date)
Return on average assets	1.33%	1.05%		0.94%			0.94%		0.77%
Return on average equity	16.80%	13.44%		11.89%			11.22%		7.82%
Efficiency ratio	55.53%	62.94%		58.82%			57.65%		65.39%
Yield on Loans	4.76%	4.38%		4.39%			4.62%		5.38%
Yield on Average Earning Assets	4.55%	4.23%		4.20%			4.41%		5.19%
Cost of Deposits	0.44%	0.43%		0.47%			0.66%		1.26%
Cost of Funds	0.59%	0.61%		0.66%			0.85%		1.43%
Net interest margin	3.98%	3.64%		3.56%			3.60%		3.82%
Capital Ratios (at period end)
Shareholders' equity / asset ratio	7.85%	7.56%		7.61%			7.85%		9.41%
Tangible common equity / tangible assets	7.81%	7.52%		7.57%			7.81%		9.36%
Tier I leverage ratio (bank)	9.39%	9.31%		9.17%			9.87%		11.54%
Common tier 1 capital/risk-based capital (bank)	11.61%	11.48%		11.53%			11.89%		12.62%
Tier 1 risk-based capital (bank)	11.61%	11.48%		11.53%			11.89%		12.62%
Total risk-based capital (bank)	12.86%	12.72%		12.78%			13.14%		13.88%
Asset Quality Ratios
Net charge-offs/average loans (period to date)	0.02%	0.26%		0.00%			0.14%		0.00%
Nonperforming assets / total assets (at period end)	1.07%	1.11%		1.12%			1.01%		1.34%
Allowance for loan losses / total loans	1.09%	1.09%		1.14%			1.06%		1.32%
Allowance for loan losses / nonaccrual loans	107.52%	97.00%		125.71%			227.18%		182.53%

 

Centric Financial Corporation
Consolidated Average Balance Sheets and Average Yield / Cost (Unaudited)
	Three Months Ended
	March 31, 2021				March 31, 2020
	Average				Average
	Balance	Interest	Rate		Balance	Interest	Rate
INTEREST EARNING ASSETS
Fed Funds & Bank Balances	$       31,025	$         16	0.21		$       20,512	$      135	2.65
Restricted Invest - Bank Stocks	3,490	53	6.14		2,536	43	6.83
Total Securities	42,411	312	2.95		32,326	207	2.57
Total Loans	972,741	11,413	4.76		698,734	9,348	5.38
Total Earning Assets	1,049,668	11,794	4.55		754,109	9,734	5.19
Allowance for Loan Losses	(10,695)				(8,628)
Non-earning Assets	58,184				55,412
TOTAL AVERAGE ASSETS	$  1,097,156				$     800,893
INTEREST BEARING LIABILITIES
Checking, Money Market, Savings	434,614	462	0.43		303,077	720	0.96
Time Deposits	250,439	519	0.84		232,225	1,307	2.26
Total Interest-Bearing Deposits	685,053	980	0.58		535,302	2,028	1.52
Non-Interest-Bearing Deposits	222,483				111,361
Total Deposits	907,537	980	0.44		646,663	2,028	1.26
Total Borrowings	99,312	501	2.02		73,209	535	2.91
Total Interest-Bearing Liabilities	784,365	1,482	0.76		608,511	2,563	1.69
COST OF FUNDS			0.59				1.43
Other Liabilities	3,805				2,267
TOTAL AVERAGE LIABILITIES	1,010,654				722,139
STOCKHOLDER'S EQUITY	86,502				78,754
TOTAL AVG. LIABILITIES & EQUITY	$  1,097,156				$     800,893
INTEREST RATE SPREAD			3.79				3.50
NET INTEREST INCOME		$ 10,312				$   7,171
INTEREST RATE MARGIN			3.98				3.82

About the Company

Founded in 2007, Centric Financial Corporation, and its subsidiary, Centric Bank, is headquartered in south central Pennsylvania with assets of $1.1 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 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 the Covid-19 pandemic limitations on business and how it will impact 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

FAQ

What were Centric Financial Corporation's earnings in Q1 2021?

Centric Financial Corporation reported net income of $3.6 million for Q1 2021.

How much did Centric's earnings per share increase in Q1 2021?

Earnings per share increased to $0.43 in Q1 2021, up $0.26 from Q1 2020.

What is the return on average assets for Centric Financial in Q1 2021?

The return on average assets for Q1 2021 was 1.33%.

What was the total loan growth for Centric Financial Corporation in Q1 2021?

Total loans increased by 44% year-over-year, reaching $998 million.

How did total deposits change for Centric Financial Corporation in Q1 2021?

Total deposits grew by 44% year-over-year, amounting to $948 million.