Centric Financial Corporation Announces First Quarter 2022 Earnings
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
SOURCE Centric Financial Corporation
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