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Centric Financial Corporation Second Quarter 2018 Results

Harrisburg, Pennsylvania, July 30, 2018  –  Centric Financial Corporation (“Centric” or “the Company”) (OTC: CFCX), the parent company of Centric Bank (“the Bank”), today reported record net income of $1,898,000 or $0.26 per common share basic for the second quarter of 2018.  Compared to second quarter 2017, net income increased $673,000 or 55%.

For the six months ended June 30, 2018, Centric’s net income was $3,517,000 or $0.51 earnings per basic shares, an increase of $1,511,000, or 75% over the same period 2017.


• Raised common equity of $21 million during the second quarter from local investors and select institutional investors.
• Total assets increased $157 million or 30% over the same period in 2017.
• Net growth in loans outstanding of $135 million or 30% during the last 12 months.
• Total deposits grew $96 million or 21% from June 30, 2017.
• Total revenue grew $4 million or 30% over the six months ended June 2017.
• Net income available to common shareholders increased $1.5 million or 75% over the six months ended June 2017.
• The Company’s net interest margin expanded 5 basis points to 4.01% for the six months ended June 30, 2017 compared to 3.96% for the same period one year prior.
• Year-to-date annualized Return on Average Assets was 1.18%, which has increased significantly from the 0.80% metric for the same trailing period ended June 30, 2017.

Patricia A. Husic, President and CEO commented, “We are very pleased with the continued momentum and trajectory of the organic loan and deposit growth in the markets that we serve. Our loans grew by 30% over the past 12 months and deposits increased by 21% for the same period. Our focus continues to be on smart, profitable growth. The asset quality remains pristine, with non-performing assets to total assets decreasing to 0.32%.  Our team is intentional in the approach to grow the balance sheet as well as disciplined in their pricing and their effort is reflected in our net interest margin. Our net interest margin remained strong at 4.01%, despite the competition in our markets for deposits.”

“Net income after taxes totaled $3.7 million or an increase of 75% from the same period in 2017, with a ROA of 1.18%. As compared to the first quarter 2018, net income after taxes grew by 17.2%. Our team continues to be laser focused on our goals and executing our strategic plan.”

Operating Results

Centric’s net interest income was $6,099,000 for the three months ended June 30, 2018, an increase of $1,186,000 or 24% over the second quarter 2017.  Increased average earning assets and net interest margin were the significant factors contributing to the increase in net interest income for both the quarter and year-to-date results. Net interest margin was impacted in the second quarter due to the increasing cost of deposits and the positive impact of the prime rate increase on the loan portfolio.  Year over year net interest margin has increased 1.2% to 4.01%.

Non-interest income totaled $954,000 for the second quarter 2018, a slight decrease from the second quarter 2017 of $57,000 or 6%.  The decrease was attributable to reduced gain on the sale of Small Business Administration (SBA) loans and mortgages of $100,000 and $41,000 respectively, offset by increased loan servicing income of $45,000 and increased other fees on loans of $59,000.  For the six months ending June 2018 non-interest income totaled $2,050,000, an increase of $481,000 or 31% over the same period 2017. The growth in non-interest income is largely attributable to the gain on sale of SBA and other government guaranteed loans and is impacted by the increased dollar volume sold over prior year of $6,036,000 or 67%.  Other fees on loans increased $110,000 or 48% over year to date 2017.

Non-interest expense for the second quarter 2018 was $4,257,000, an increase of $528,000 or 14% over the same period prior year.  The increase is due primarily to higher salary and benefit costs of $255,000 or 12%, and increased occupancy expenses up $117,000 or 32% due largely to the new operations and executive offices in Enola. Other non-interest expense increased over the second quarter 2017 by $82,000 or 11% due to annual licensing fees, travel & lodging and other operational expenses.  For the six months ending June 30, non-interest expense totaled $8,349,000, an increase of $1,080,000, or 15%.  Salaries and benefits are the most significant change over year-to-date June 2017, increasing $589,000, or 14%, due to increased lending, business development, operational and executive team members.  Occupancy costs increased year over year by $243,000 largely due to our new operations and executive offices which opened in the fourth quarter 2017.  Advertising and marketing has increased over the prior year-to-date by $69,000 or 31% due to our increased sponsorships and support of our communities and customers.  Pennsylvania shares tax has increased over the prior year to date $59,000 or 29% due to increased earnings and equity.

Balance Sheet

Total assets at June 30, 2018 totaled $681,803,000 compared to $524,510,000 at June 30, 2017, an increase of $157,293,000 or 30%.  The increase is due to strong loan growth and an increase in cash and cash equivalents for both year over year and quarter over quarter results.  Quarter over quarter total assets increased $71,204,000 or 12% from the March 31, 2018 period end of $610,599,000.

Total loans for the period end June 30, 2018 were $600,879,000, an increase of $136,796,000 or 29% over the same period prior year and $52,659,000 or 10% over the first quarter of 2018.  The increase in loans for both prior year and prior quarter are attributed to the growth in commercial and industrial loans of $33,091,000 or 20% and $10,344,000 or 7%, respectively, and commercial real estate loans of $67,814,000 or 36% and $26,637,000 or 12%, respectively.

Total deposits ended June 30, 2018 at $554,417,000 an increase of $95,836,000 or 21% over the same period 2017 and $31,024,000 or 6% over the first quarter 2018.  The increase in deposits is attributed to the increase in money market funds and certificates of deposit.  The increase in money market deposits of $18,755,000 or 31% and $16,776 or 27% over prior year and prior quarter, respectively, has been generated by growth in new, and the expansion of, relationships at our branches.  The increase in time deposits of $90,489,000 or 58% and $15,697,000 or 7% over prior year and prior quarter has been the combined result of increased branch relationships and wholesale funding, managing the cost of deposits.

Shareholders equity ended the period at $64,942,000, an increase of $25,146,000 or 63% from June 30, 2017 and an increase of $21,698,000 or 50% from March 31, 2018.  The primary increase in equity is from the capital raise completed in May raising an additional $21,000,000 in common equity.  Regulatory capital ratios for the bank exceed “well capitalized” at June 30, 2018 and 2017, and March 31, 2018.

Asset Quality

Asset quality continues to be strong.  At June 30, 2018 the net charge-off ratio to average loans was 0.01%, an improvement of 0.05% over the first quarter 2018 of 0.06%.  Non-performing assets to total assets was 0.32%, a decrease from the prior quarter and the second quarter 2017 of 0.09% and 0.04%, respectively.  The ratio of allowance for loan and lease losses to total loans was 1.11% for the period ending June 30, 2018.  Management believes the allowance for loan and leases losses at June 30, 2018 adequately reflects the risk inherent in the loan portfolio.

About the Company

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 $682 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 was named a Top SBA Lender in the United States and ranked #1 in approved SBA 7(a) loans in Pennsylvania for banks under $1 billion in assets as of December 31, 2017.

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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Centric Bank Income Statement Q2 2018