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Centric Financial Corporation Announces 1st Quarter 2019 Results; 9% Increase in Earnings and Double-Digit Growth in Loans, Deposits, and Assets

Harrisburg, Pennsylvania, May 3, 2019  –  Centric Financial Corporation (“Centric” or “the Company”) (OTC: CFCX), the parent company of Centric Bank (“the Bank”), today reported net income of $1,757,000 or $0.21 per common share basic for the first quarter of 2019.  Compared to first quarter 2018, net income increased $138,000, or 9%.  
  • Total assets increased $124 million or 20% over March 31, 2018.
  • Net growth in loans outstanding of $88 million or 16% during the last 12 months.
  • Total deposits grew $91 million or 17% from March 31, 2018.
  • Total revenue grew $2 million or 28% over the three months ended March 2018.
  • Net income available to common shareholders increased $138,000 or 9% over the three months ended March 2018.
  • The Company’s year-to-date net interest margin experienced an eight basis point decline to 3.95% compared to the same period one year prior and held constant with the fourth quarter of 2018.
  • Year-to-date Return on Average Assets was .99%, a decrease of 0.15% from the three months ended March 31, 2018.
“Our first quarter results reflect a positive earnings growth as well as the continuation of our organic growth of loans and deposits in the communities that we serve,” says Patricia (Patti) A. Husic, President & CEO of Centric Financial Corporation and Centric Bank. “Regulatory approval has been obtained for our new branch in Devon and the construction process began on May 1 for this financial center. Our team remains laser focused on executing the strategic plan and successfully growing our core banking business, profitability, and delivering performance returns to our shareholders.”
Operating Results
Centric’s net interest income was $6,753,000 for the three months ended March 31, 2019, an increase of $1,291,000 or 24% over the first quarter 2018.  Increased average earning assets was the significant factor to the increase in net interest income for the quarter’s results. First quarter 2019 over first quarter 2018 net interest margin has experienced an eight basis point decline to 3.95% with cost of deposits at 1.42% and yield on earning assets at 5.40%.
Non-interest income totaled $850,000 for the first quarter 2019, a decrease from the first quarter 2018 of $246,000 or 22%.  The decrease was attributable to reduced gain on the sale of SBA and mortgage loans of $533,000, or 88% and $30,000, or 24% respectively. The change in income from SBA sales was affected by the 35 day long partial government shutdown which ended on January 25, 2019 and the backlog of work the shutdown created with the Small Business Administration. Other fees on loans increased $228,000 or 156%, other non-interest income increased $146,000, or 155% over the first quarter 2018 results.
Non-interest expense for the first quarter 2019 was $4,868,000, an increase of $776,000 or 19% over the same period prior year. The increase is due primarily to higher salary and benefit costs of $402,000 or 17%, with increased professional services $63,000 or 59%, and increased directors fees $61,000, or 184%. Licensing and software expense increased $50,000 or 50% due to increased staffing and new technology initiatives, and data processing expense increased $34,000, or 14%.  
Balance Sheet 
Total assets at March 31, 2019 were $734,152,000 compared to $610,599,000 at March 31, 2018, an increase of $123,553,000 or 20%. The increase is due to strong loan growth and an increase in investment securities and liquid assets over the same period prior-year. Total assets increased $29,756,000 or 4% from December 31, 2018.
Total loans for the period end March 31, 2019 were $637,608,000, an increase of $89,388,000 or 16% over the same period prior year and $11,881,000 or 2% over December 31, 2018. The increase in loans for both prior year and prior quarter are attributed to the growth in commercial and industrial loans of $35,530,000 or 23% and $3,210,000 or 2% respectively, and commercial real estate loans of $52,905,000 or 16% and $10,396,000 or 3% respectively.
Total deposits ended March 31, 2019 at $613,921,000, an increase of $90,528,000 or 17% over the same period 2018 and increased $27,736,000 or 5% from the fourth quarter 2018. The growth in deposits is attributed to growth in all segments with money market and certificates of deposit increasing $42,806,000, or 68% and $42,806,000, or 18%, respectively, over the same period prior year, and increasing $11,122,000, or 10% and $10,034,000, or 4%, respectively, over December 31, 2018. The increase in non-interest bearing deposits was $16,550,000 or 22% over the same period prior year and decreased $1,589,000 or 2% from the prior quarter end.  The increase in time deposits from the first quarter of 2018 and the prior quarter has been the combined result of new and increased branch relationships and wholesale funding.
The impact from the lease accounting standard effective January 1, 2019 increased other assets $5,578,000 and borrowings $5,602,000.
Shareholders equity ended the period at $71,719,000, an increase of $28,475,000 or 66% from March 31, 2018 and an increase of $1,946,000 or 3% from December 31, 2018.  Regulatory capital ratios for the bank exceed “well capitalized” at March 31, 2019 and 2018, and December 31, 2018.
Asset Quality
Asset quality continues to be good. The first quarter 2019 net charge-off ratio to average loans was 0.13%, an increase of 0.14% from the fourth quarter 2018 result of -0.01%, and an increase of 0.07% from March 31, 2018.  Non-performing assets to total assets was 0.76%, an increase from the prior quarter and first quarter prior year of 0.35%. The change, current quarter over last quarter, in non-performing assets is due to non-accrual loans increasing $3,464,000 offset by loans past due greater than 90 days decreasing $712,000. The ratio of allowance for loan and lease losses to total loans was 1.14% at March 31, 2019. Management believes the allowance for loan and leases losses at March 31, 2019 adequately reflects the risk inherent in the loan portfolio.
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 $734 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, and Camp Hill, and loan production offices in Lancaster and suburban Philadelphia. To learn more about Centric Bank, call 717.657.7727 or visit Connect with them on Twitter at @CentricBank and Facebook at Centric Bank.
Centric Financial Corporation is traded over the counter (OTC-Pink) - CFCX.
Forward Looking Statement

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.

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