Centric Financial Corporation Announces 2nd Quarter 2019 Net Income
HARRISBURG, Pa., July 31, 2019 /PRNewswire/ -- Centric Financial Corporation ("Centric" or "the Company") (OTC: CFCX), the parent company of Centric Bank ("the Bank"), today reported net income of $1,944,000 or $0.22 per common share basic for the second quarter of 2019. Compared to first quarter 2019, net income increased $187,000, or 11%, and 2% over second quarter 2018.
Highlights
- Total assets ended at $787,000,000, an increase of $105 million, or 15%, over June 30, 2018.
- Net growth in loans outstanding of $61 million, or 10%, during the last 12 months.
- Total deposits grew $99 million, or 18%, from June 30, 2018.
- Total revenue grew $5 million, or 28%, over the six months ended June 2018.
- Net income available to common shareholders increased $184,000, or 5%, over the six months ended June 2018.
- The Company's year-to-date net interest margin experienced a six basis point decline to 3.95% compared to the same period one year prior. Net interest margin decreased one basis point compared to the first quarter 2019.
- Year-to-date Return on Average Assets was 1.01%, a decrease of 0.17%, from the six months ended June 30, 2018 and the year-to-date Return on Average Equity was 10.29% a decrease of 4.72% from the same period prior year.
- Tangible book value per share was $8.37 at June 30, 2019 and increase of $0.95 per shares or 13% over June 30, 2018.
Patricia A. Husic, President & CEO of Centric Financial Corporation and Centric Bank stated, "Centric Bank's second quarter was comprised of solid results, and highlighted by continued organic loan and deposit growth and overall good asset quality. Loan growth was 12% and deposits 23%, annualized for the six month period of June 30, 2019. Our loan growth was comprised equally from commercial real estate and C&I lending. Although our net interest margin contracted by 6 basis points from the same period in 2018, our loan pricing discipline and balance sheet management of our deposit and funding mix, has assisted in maintaining a relatively strong margin of 3.95% in light of the flat yield curve and continued pressure on deposit costs. The return on assets as of June 30, 2019, increased to 1.01% with an increase in net interest income, driven by increased earning assets and a stable net interest margin, and an increase in the gain on the sale of SBA loans.
At the end of June, our Doylestown Loan Production office expanded into a full service financial center, with a grand opening on July 8th. Centric is introducing Concierge Banking that is streamlined, personalized and nearly instantaneous in the Bucks County area.
We are confident that as we look to the remainder of 2019 and beyond, the expansion into new attractive markets and continuation of our core organic growth will have a positive impact on our franchise."
Operating Results
Centric's net interest income was $7,198,000 for the three months ended June 30, 2019, an increase of $1,099,000 or 18% over the second quarter 2018. Increased average earning assets of $120.4 million was a significant factor in the increase in net interest income. For the first six months of 2019 over the same period 2018, net interest margin has experienced a six basis point decline to 3.95% with cost of deposits at 1.48% and yield on earning assets at 5.45%.
Non-interest income totaled $1,191,000 for the second quarter 2019, a decrease from the second quarter 2018 of $237,000, or 25%. Other fees on loans, excluding gains on sold loans, increased $195,000 and other non-interest income increased $40,000, or 28%, over the second quarter 2018 results. For the six months ending June 2019, non-interest income was consistent with the same period prior year while other non-interest income grew by $564,000 (increase in servicing fee income). The gain on sale of SBA loans decreased by $553,000 due to the government shutdown during the first quarter 2019 and the delays it created and the volume of loans available for sale.
Non-interest expense for the second quarter 2019 was $5,419,000, an increase of $1,162,000, or 27%, over the same period prior year. The increase is due primarily to higher salary and benefit costs of $619,000, or 25%, with increased professional services of $90,000, or 66%, and increased Pennsylvania shares tax of $72,000. For the six months ended June 30, 2019 non-interest expense totaled $10,287,000, an increase of $1,938,000, or 23%, over the same period last year. Salaries and benefits were the most significant increase between the two periods, increasing $1,021,000, or 21%. Increases to sales and operations teams and the increase of our minimum hourly rate. Other factors in the increase were: professional fees of $153,000, or 63%; Pennsylvania shares tax of $106,000, or 41%; other operating expenses of $303,000, or 45%; and Directors fees of 101,000, or 136%.
Balance Sheet
Total assets at June 30, 2019 were $786,752,000 compared to $681,803,000 at June 30, 2018, an increase of $104,949,000, or 15%. The increase is due to loan growth, an increase in investment securities and liquid assets over the same period prior year. Total assets increased $52,600,000, or 7%, from March 31, 2019.
Total loans for the period end June 30, 2019 were $662,708,000, an increase of $61,829,000, or 10%, over the same period prior year and $25,100,000, or 4%, over March 31, 2019. The increase in loans for both prior year and prior quarter are attributed to the growth in commercial and industrial loans of $29,288,000, or 18%, and $9,565,000, or 5%, respectively, and commercial real estate loans of $28,508,000, or 8% and $10,050,000, or 3%, respectively.
Total deposits ended June 30, 2019 at $653,874,000, an increase of $99,457,000, or 18%, over the same period 2018 and increased $39,953,000, or 7%, from the first quarter 2019. Non-interest deposits, money market, and certificates of deposit accounts increased $11,798,000, or 15%, $58,275,000, or 67%, and $36,448,000, or 15%, respectively, over the same period prior year. The growth in deposits from the first quarter is attributed to money market accounts by $26,490,000, or 22%. Consumer time deposits from the first quarter of 2019 grew by $31 million while wholesale time deposits of $22 million were allowed to mature due to the increase in deposit relationships.
The impact from the lease accounting standard effective January 1, 2019 increased other assets $5,578,000 and borrowings $5,602,000, with an additional increase to both in the second quarter of $3,826,000 due to new lease arrangements for the two Devon locations.
Shareholders equity ended the period at $73,735,000, an increase of $8,793,000, or 14%, from June 30, 2018 and an increase of $2,016,000, or 3%, from March 31, 2019. Regulatory capital ratios for the bank exceed "well capitalized" at June 30, 2019 and 2018, and March 31, 2019.
Asset Quality
Asset quality continues to be good. The second quarter 2019 net charge-off ratio to average loans was 0.03%, a decrease of 0.10% from the first quarter 2019 result of 0.13%, and an increase of 0.02% from June 30, 2018. Non-performing assets to total assets was 0.95%, an increase from the prior quarter of .76%, and second quarter prior year of 0.32%. The change, current quarter over first quarter 2019, in non-performing assets is due to non-accrual loans increasing $1,081,000. Of the change quarter over quarter $1,092,000 increased from SBA loans offset by payments received. Loans past due greater than 90 days increased $1,000,000. The increase in past due greater than 90 days is largely due to the migration of one loan that was below 90 days at the end of March 2019. The ratio of allowance for loan and lease losses to total loans was 1.17% at June 30, 2019. Management believes the allowance for loan and leases losses at June 30, 2019 adequately reflects the risk inherent in the loan portfolio.
Centric Financial Corporation |
|||
Consolidated Balance Sheet (Unaudited) |
|||
At Period End |
|||
Jun 30, |
Mar 31, |
Jun 30, |
|
(Dollars in thousands) |
2019 |
2019 |
2018 |
Assets |
|||
Cash and cash equivalents |
$ 63,802 |
$ 47,483 |
$ 47,957 |
Other investments |
34,529 |
27,541 |
14,261 |
Loans, net of allowance for loan and lease losses |
654,985 |
630,362 |
594,214 |
Premises and equipment |
16,410 |
12,308 |
6,596 |
Accrued interest receivable |
2,476 |
2,279 |
1,768 |
Other assets |
14,550 |
14,179 |
17,007 |
Total Assets |
$ 786,752 |
$ 734,152 |
$ 681,803 |
Liabilities |
|||
Noninterest-bearing deposits |
92,808 |
92,096 |
81,010 |
Interest-bearing demand deposits |
132,182 |
128,770 |
139,246 |
Money market and savings |
144,703 |
118,213 |
86,428 |
Certificates of deposit |
284,181 |
274,842 |
247,733 |
Interest-bearing deposits |
561,066 |
521,825 |
473,407 |
Total deposits |
653,874 |
613,921 |
554,417 |
Short-term borrowings |
- |
3,000 |
30,000 |
Long-term debt |
56,909 |
43,102 |
30,543 |
Accrued interest payable |
545 |
601 |
463 |
Other liabilities |
1,689 |
1,809 |
1,438 |
Total Liabilities |
713,017 |
662,433 |
616,861 |
Total Shareholders' Equity |
73,735 |
71,719 |
64,942 |
Total Liabilities and Shareholders' Equity |
$ 786,752 |
$ 734,152 |
$ 681,803 |
Centric Financial Corporation |
||||||
Consolidated Statement of Income (Unaudited) |
||||||
Three months ended |
Six months ended |
|||||
Jun 30, |
Mar 31, |
Jun 30, |
Jun 30, |
Jun 30, |
||
(Dollars in thousands) |
2019 |
2019 |
2018 |
2019 |
2018 |
|
Interest income |
||||||
Interest and dividends on securities |
$ 251 |
$ 269 |
$ 133 |
$ 520 |
$ 267 |
|
Interest and fees on loans |
9,471 |
8,752 |
7,554 |
18,223 |
14,099 |
|
Other |
323 |
209 |
101 |
532 |
186 |
|
Total interest income |
10,045 |
9,230 |
7,788 |
19,275 |
14,552 |
|
Interest expense |
||||||
Interest on deposits |
2,427 |
2,105 |
1,278 |
4,532 |
2,315 |
|
Interest on borrowings |
420 |
372 |
411 |
792 |
676 |
|
Total interest expense |
2,847 |
2,477 |
1,689 |
5,324 |
2,991 |
|
Net interest income |
7,198 |
6,753 |
6,099 |
13,951 |
11,561 |
|
Provision for loan losses |
525 |
535 |
435 |
1,060 |
870 |
|
Net interest income after provision expense |
6,673 |
6,218 |
5,664 |
12,891 |
10,691 |
|
Noninterest income |
||||||
Gain on sale of SBA loans |
454 |
72 |
474 |
526 |
1,079 |
|
Gain on sale of mortgage loans |
98 |
95 |
88 |
193 |
213 |
|
Other non-interest income |
639 |
683 |
392 |
1,322 |
758 |
|
Noninterest income |
1,191 |
850 |
954 |
2,041 |
2,050 |
|
Noninterest expense |
||||||
Salaries and benefits |
3,048 |
2,788 |
2,429 |
5,836 |
4,815 |
|
Occupancy and equipment |
494 |
470 |
479 |
964 |
979 |
|
Professional fees |
226 |
169 |
136 |
395 |
242 |
|
Data processing |
290 |
269 |
242 |
559 |
477 |
|
Advertising and marketing |
187 |
188 |
150 |
375 |
294 |
|
Other non-interest expense |
1,174 |
984 |
821 |
2,158 |
1,542 |
|
Noninterest expense |
5,419 |
4,868 |
4,257 |
10,287 |
8,349 |
|
Income before taxes |
2,445 |
2,200 |
2,361 |
4,645 |
4,392 |
|
Income tax expense |
501 |
443 |
463 |
944 |
875 |
|
Net income available to common shareholders |
$ 1,944 |
$ 1,757 |
$ 1,898 |
$ 3,701 |
$ 3,517 |
|
Centric Financial Corporation |
||||||||
Per Share Data & Performance Ratios (Unaudited)
|
||||||||
(Dollars in thousands except per share) |
Three months ended |
Six months ended |
||||||
Jun 30, |
Mar 31, |
Dec 31, |
Sep 30, |
Jun 30, |
Jun 30, |
Jun 30, |
||
Earnings and Per Share Data |
2019 |
2019 |
2018 |
2018 |
2018 |
2019 |
2018 |
|
Net income |
$ 1,944 |
$ 1,757 |
$ 2,088 |
$ 2,399 |
$ 1,898 |
$ 3,701 |
$ 3,517 |
|
Basic earnings per common share |
$ 0.22 |
$ 0.21 |
$ 0.24 |
$ 0.28 |
$ 0.26 |
$ 0.42 |
$ 0.51 |
|
Book value (at period end) |
$ 8.43 |
$ 8.20 |
$ 8.01 |
$ 7.74 |
$ 7.48 |
|||
Tangible book value (at period end) |
$ 8.37 |
$ 8.15 |
$ 7.95 |
$ 7.69 |
$ 7.42 |
|||
Common shares outstanding |
8,746,455 |
8,742,290 |
8,714,975 |
8,698,318 |
8,686,988 |
|||
Average shares outstanding - basic (period to date) |
8,713,808 |
8,706,540 |
8,696,391 |
8,675,765 |
7,309,401 |
8,710,510 |
6,845,287 |
|
Performance Ratios (period to date) |
||||||||
Return on average assets |
1.02% |
0.99% |
1.16% |
1.35% |
1.21% |
1.01% |
1.18% |
|
Return on average equity |
10.69% |
9.89% |
12.15% |
14.48% |
14.77% |
10.29% |
15.01% |
|
Efficiency ratio |
64.97% |
64.00% |
66.04% |
56.33% |
60.44% |
64.53% |
61.23% |
|
Net interest margin |
3.94% |
3.95% |
3.91% |
3.87% |
4.00% |
3.95% |
4.01% |
|
Capital Ratios (at period end) |
||||||||
Shareholders' equity/asset ratio |
9.37% |
9.77% |
9.91% |
9.40% |
9.53% |
|||
Tangible common equity/tangible assets |
9.32% |
9.71% |
9.84% |
9.33% |
9.46% |
|||
Tier I leverage ratio (bank) |
11.39% |
11.86% |
11.48% |
11.26% |
12.29% |
|||
Common tier 1 capital/risk-based capital (bank) |
12.53% |
12.87% |
12.86% |
12.68% |
12.61% |
|||
Tier 1 risk-based capital (bank) |
12.53% |
12.87% |
12.86% |
12.68% |
12.61% |
|||
Total risk-based capital (bank) |
13.68% |
14.00% |
13.96% |
13.79% |
13.73% |
|||
Asset Quality Ratios |
||||||||
Net charge-offs/average loans (period to date) |
0.03% |
0.13% |
-0.01% |
0.21% |
0.01% |
|||
Nonperforming assets/total assets (at period end) |
0.95% |
0.76% |
0.41% |
0.25% |
0.32% |
|||
Allowance for loan & leases losses as a % of loans |
1.17% |
1.14% |
1.10% |
1.09% |
1.11% |
|||
Allowance for loan & leases losses/nonaccrual loans |
142.24% |
159.73% |
644.11% |
616.52% |
491.62% |
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About the Company
An American Banker Best Banks to Work For 2018, a three-time Best Places to Work and Top 50 Fastest-Growing Companies for six years, Centric Financial Corporation is headquartered in south central Pennsylvania with assets of $787 million and remains the leader in organic loan growth in central Pennsylvania. A locally owned, locally loaned community bank, Centric Bank provides highly competitive and pro-growth financial services to businesses, professionals, individuals, families and the health care industry. With a Five-Star Bauer Financial Rating, Centric Bank, named a Top SBA Lender in the United States, also ranked #1 in approved SBA 7(a) loans in the Commonwealth for banks under $1 billion in assets as of September 30, 2018.
Founded in 2007, Pennsylvania-based Centric Bank has financial centers located in Harrisburg, Hershey, Mechanicsburg, Camp Hill and Doylestown, and loan production offices in Lancaster and suburban Philadelphia. To learn more about Centric Bank, call 717.657.7727 or visit CentricBank.com. Connect with them on Twitter at @CentricBank and Facebook at Centric Bank.
Centric Financial Corporation is traded over the counter (OTC-Pink) - 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
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