C E N T R I C F I N A N C I A L C O R P O R AT I O N
A N N U A L R E P O R T 2 0 2 0
2020
A L O C A L S T O R Y L I N E | A F I N A N C I A L L I F E L I N E
CFCX I received exceptional and extremely responsive service
from Centric Bank during the pandemic, particularly
from Jackie Fahey and Sue Csira. Jackie is a rock star! My
practice has banked with another large, well-known bank
for years, and never once did I experience this level of
personal service. On the first day of the first round of the
PPP, I applied with my bank of record. I never heard back
from them–not even a status update following my many
phone calls. Receiving my PPP loan from Centric Bank was
a lifesaver for my 18 employees whose families depend
on their salaries. Another local business told me they also
received their PPP loan from ‘a small but mighty bank in the
area called Centric Bank.’ Since I received my loan, I have
referred several other businesses to Centric. These efforts
take a village and the work was done by people I may
never meet. Thank you to the Centric Bank village; I never
realized working with a community bank could be this
different. I am moving my full banking relationship to you.
PAUL ANGOTTI, DPM, FACFAS
Foot and Ankle Specialty Center
Willow Grove, PA
A L O C A L S T O R Y L I N E | A F I N A N C I A L L I F E L I N E
Centric Financial Corporation
Annual Report 2020
Letter to Shareholders, Customers, and Friends . . . . . . . . . . . . . . . . . . . . .
2
Relationship Banking Wins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
Community Uplift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Advocacy Tour with the SBA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Banking from the Heart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
Strengthening the Communities We Call Home . . . . . . . . . . . . . . . . . . . . .
8
Lifting up Main Street: Our PPP Story . . . . . . . . . . . . . . . . . . . . . . . . . . .
9
Doctor Centric Bank: Dedicated to the Helpers . . . . . . . . . . . . . . . . . . . . . 11
Centric Financial Corporation:
Financial Report 2020
Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Consolidated Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . 15
Consolidated Statement of Changes in Stockholders’ Equity . . . . . . . . . . . . 16
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 19
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Executive Leadership Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Senior Lending Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Branch Management, Treasury Management, Lending,
and Business Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Centric Bank Financial Centers and Commercial Lending Offices . . . . . . . . 55
Team Victories in 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Investor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Mission, Vision, and Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
The Centric Bank Way . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inside Back Cover
TA B L E O F C O N T E N T S | 1
A FINANCIAL LIFELINE To Our Shareholders,
Customers, and Friends:
e cannot help but look back and think how little we understood one year ago what
2020 would bring for our country, our communities, and our financial institution.
COVID-19 presented an incalculable perfect storm, but in my 30-year banking career, I
have never been prouder of our profession.
Blindsided by the global health pandemic in March 2020, our economy crashed. In less than two
weeks, over 80% of our Centric Bank team moved to remote work, something we would never have
considered possible just a few weeks prior. Thanks to recent technology upgrades and robust security
infrastructure, we were able to protect both the bank and customer data in every work environment.
As businesses closed due to government orders, our team reached out to our customers offering
assistance and loan deferments. Loan modifications peaked in the second quarter totaling
$220 million of our loan portfolio, or over 30%. We waived fees and provided skip payments to our
consumer loan customers in need. As businesses opened later in the year (with reduced capacities),
these loan deferments decreased to $22.2 million, or 2.3% of our outstanding loans.
We Revolve Around You became a call to action on behalf of our community. For our customers,
we are the first line of defense–the oxygen to more than 1,700 small businesses and counting. The
impact? Together, we deployed Small Business Administration Paycheck Protection Program (PPP)
funds to save more than 25,000 jobs.
Every person on our 137-member team rolled up their sleeves to rescue Main Street. Within a
week, our team created an online portal and a system to reach out and inform customers and
non-customers how to apply for a PPP loan. While mindful that we were an essential service,
we prioritized employee and customer safety. We installed and provided protective equipment,
enhanced security, and cross-trained teams to collect data and process PPP applications. And we
did it all while continuing normal bank operations in an abnormal world. Our team lived the Centric
Bank Way fundamentals, especially #4 Do Whatever It Takes and #9 Show Grit!
Against headwinds of uncertainty, confusion, and chaos, we met our strategic goals to grow core
deposits, grow lending to operating companies, increase the amount of deposits per relationship,
and lead in corporate citizenship while strengthening the communities where we conduct business.
FINANCIAL PERFORMANCE
For the year ended December 31, 2020, Centric Financial Corporation reported annual results of
$9.1 million in net income, an increase of $1.8 million, or 24%, over the prior year end results.
Earnings per share for 2020 was $1.05, both basic and diluted, and increased $0.21 per share over
2019. Return on assets remained consistent with the prior year, delivering solid results at 0.94%,
while return on equity increased 13% due to improved net income and the impact of the share
buyback program implemented in the year. Tangible book value ended the year at $9.94, increasing
$1.15 per share.
We ended the year by surpassing a new asset milestone, cresting the billion-dollar level at
$1.1 billion, up $286 million from 2019. The 34% growth in total assets was the result of our team’s
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A LOCAL STORYLINE robust participation in the PPP and organic commercial loan growth.
Compared to year end 2019, loans increased $261 million, or 37%, with $195 million in PPP loans
outstanding. Commercial real estate loans were the primary driver to the core loan growth of
$66 million, or 10% for 2020.
Total deposits ended the year at $926 million, an increase of $244 million, or 36% over the same
period in 2019. Our non-interest-bearing deposits increased $87 million, or 79% year-over-
year due to PPP funding and increases in existing core deposit relationships. Interest-bearing
checking and certificates of deposits increased $97 million and $50 million, respectively, due to
opportunities to onboard low-cost wholesale deposits, as well as deepening existing customer
relationships. We made an intentional decision to leverage wholesale funding strategies to support
PPP lending versus fully utilizing the Paycheck Protection Program Lending Facility (PPPLF) due
to significant savings in funding costs which amounted to over $450 thousand in the year.
The year was a continuation of the economic cycle with the prime interest rate declining 225 basis
points from July 2019 to 3.25% in April 2020. Although our net interest margin declined by 15
basis points in 2020, we ended the year strong at 3.65%. Our commitment to pricing discipline
with loans, fees earned from the PPP loans, and a continued focus on increasing the deposit
composition to lower-cost products were the drivers to maintaining a strong margin. We strive to
remain a high-performing financial institution, and we are proud to report that Centric’s net interest
margin ranked #1 among our peer banks in central PA and the Philadelphia region for 2020.
The residential mortgage area had a strong uptick in new home lending, construction, and
refinancing of loans with mortgage rates at historic low levels. During 2020, our team also closed
on 144 mortgages for over $39.2 million, a strong increase of $13.4 million, or 52% over the
volume of mortgages that our team produced the prior year.
We made significant strides in the Philadelphia market. Total loans in the Philadelphia region at
year end were $405 million, a growth of 71%, now comprising 42% of our total loan portfolio.
Total deposits grew 80% to $89 million from prior year end. Non-interest-bearing deposits
comprise 60% of our total deposits in this market.
In 2021, our team will remain active in providing a financial lifeline for small businesses with
the latest round of PPP funding. We will launch our new online banking and mobile app which
provides enhanced information and capabilities, as well as an intuitive user experience consistent
on every device. Our strategic goals are focused on continuing to drive double-digit organic
growth in both loans and deposits, and create efficiencies within our organization by delving into
data analytics, transforming processes, and investing in new technologies.
Our banking wins were especially meaningful this year. Standing above all recognitions is American
Banker’s Best Banks to Work For. This is our third consecutive win and speaks to our extraordinary
culture, team spirit, and purposeful work.
Service to others begins in our community, and we are grateful for the opportunity to strengthen,
support, and uplift you with resources and lifelines. As always, We Revolve Around You!
Sincerely,
Donald E. Enders, Jr.
Chairman of the Board
Patricia A. Husic
President & CEO
L E T T E R T O S H A R E H O L D E R S | 3
Donald E. Enders, Jr.
Chairman of the Board
Patricia A. Husic
President & CEO
A FINANCIAL LIFELINE RELATIONSHIP BANKING WINS
“A s a proud SBA loan provider, Centric Bank has been
a lifeline for small business. You can’t put a price on
people’s livelihoods,” says CEO Patti Husic. “We go beyond
providing financial mechanisms for business growth. We
develop lasting partnerships with our customers.”
In a world of data and life behind screens, Centric Bank’s
customers’ biggest relief package was the value of a personal
relationship with their banker. A few of them shared how
much they treasured that connection.
“The service of your team members, especially Tim Merrill
and Chris Bickel, was above and beyond,” says Dan Hinckley,
president of IntePros Consulting, Plymouth Meeting, PA.
“One of my favorite Centric Bank Way principles is ‘Do
the right thing always,’” says Leslie Meck, EVP, Chief Retail
Officer. “Never is this posture more critical than in a crisis
like COVID-19. I was inspired by the teamwork, selflessness,
and commitment shown by our financial center employees
during such an uncertain time. As essential, frontline
workers, our 24-person retail team’s service and compassion
kept our doors open and ensured every customer had access
to funds. My team increased customer messaging by 70%
through thousands of phone calls about COVID restrictions,
Skip-A-Payment, lobbies reopening, PPP updates, the Loan
Forgiveness Portal, and PPP Round 2. Our managers and
business development officers jumped in with the lending
team to help customers and non-customers navigate our
“Centric Bank has been amazing! We just became a customer,
online portal. The team opened more than 1,400 new
and they made the process so incredibly easy,” says Christine
checking accounts in two months–more than we typically
Kondra, co-owner of Cornerstone Restaurant, Wayne, PA.
open in an entire year!”
My head is spinning right now. I cannot believe my PPP loan was approved and in my account in a week. You
guys rock! Jessica McCullen was amazing, Mary Anne Bayer was patient, kind, and understanding, and Peggy
Elder called with the great news. The Centric team is fantastic! Every step of the way, they held my hand and
helped me with the process. And to think I didn’t even have to leave my home or go to a branch.
A great team starts with a great leader, so kudos to you, Patti Husic, for leading a remarkable team. I am
speechless and humbled. My gratitude to you, Jessica, Mary Anne, and Peggy for this tremendous customer
service.
FL ORA POS TERARO, Talent/Senior Multi-Media Specialist
PennWatch
Harrisburg, PA
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A LOCAL STORYLINE Diaz Transcription Services and LBG
Rentals have been clients of Centric Bank
for over 10 years. There are challenges
as a small, woman- and minority-owned
business, but Centric Bank has stood
with us to ensure our growth won’t be
hindered by a lack of financial support.
The recent PPP and EIDL federal
programs for small businesses have
proven once again that Centric Bank will
go above and beyond by processing these
loans for us seamlessly and expeditiously.
They are responsive, customer-service
oriented, and a genuine partner to small
businesses.
JE NINE DIAZ, President
Diaz Transcription Services
Harrisburg, PA
“We increased by 10 times the number and volume of loans
made to businesses in low-income neighborhoods in 2020,”
says Kimberly Turner, EVP, Chief Risk Officer. “We were
proud to secure 271 loans totaling $28 million. Many of these
were PPP loans to help mom-and-pop businesses survive.”
Affordable housing continues to be a strategic focus. “We
financed the addition of 62 housing units with affordable rents
for low-to-moderate income people with 12 loans totaling
$3.3 million,” says Turner. “One of our bright spots of 2020
was creating a new position, Senior Compliance Analyst
and Assistant CRA Officer. Stacey Cammack brings insights,
experience, and fresh opportunities to the risk conversation.”
As a leader in corporate citizenship, Centric Bank sponsored
over 50 events and organizations and contributed more
than $125,000 in 2020. Partners included Rotary Club of the
West Shore Flags for Heroes, African-American Chamber
of Commerce of Central PA, American Heart Association,
community libraries, Susquehanna SCORE, YWCA of
Greater Harrisburg, Friends Association of West Chester,
High Hopes for Haiti, Feel Your Boobies Foundation, Fair
Housing Council of Harrisburg, SACA (Spanish American
Civic Association), and many more.
COMMUNITY UPLIFT
G iving back to the community is deeply embedded in
the Centric culture, and in a year of great need, the
bank doubled its Community Reinvestment Act (CRA)
donations to $89,000 for organizations that serve low-to-
moderate income communities. The Central Pennsylvania
Food Bank, Daily Bread Community Food Pantry, Chester
County Food Bank, and Bucks County Housing Group
received a collective $46,500. In addition, our team delivered
550 meals to frontline hospital workers and volunteered at
The Salvation Army Harrisburg Capital City Region and the
Central Pennsylvania Food Bank. While working through
the pandemic, the Centric team donated 565 hours to many
organizations dedicated to low-income families like the
Chester County Family Academy Foundation and Habitat for
Humanity of Greater Harrisburg.
“During COVID-19, Centric Bank provided extraordinary
financial support for Central Pennsylvania Food Bank’s Crisis
Response. As a result of their 2020 contributions, which
totaled $40,000, our food bank was able to provide 250,000
healthy meals to central Pennsylvanians struggling with
hunger,” says Joe Arthur, Executive Director.
C O M M U N I T Y U P L I F T | 5
A FINANCIAL LIFELINE As a fourth-generation meat processor,
Agostino Foods had a longstanding dream
of moving from a strictly raw processor to
producing high quality, fully cooked meats
and entrées. Partnering with Centric Bank
allowed us to follow that dream. Our loan
officer was truly knowledgeable and took
the time to understand our unique business.
Unlike our experiences with larger banks,
which made us feel like we needed to fit their
lending models like a puzzle piece, Centric
Bank treated us as a partner. We needed a
bank with lending products and vision that
would support our family owned company
for future generations. Thanks to Centric
Bank, we proudly opened a new facility in
Fallsington, PA, only five miles from our raw
facility in Bristol.
JOHN PASS ANANTE, President
Agostino Foods
Bristol, PA
ADVOCACY TOUR WITH THE SBA
collectively facing the greatest challenge in a generation–the
health and economic crisis of coronavirus–the roundtable
focused on our business owners’ triumphs and goals, and
how the SBA lending program has helped them sustain their
businesses and keep their people employed,” says Husic.
On June 19, 2020, Patti Husic hosted former SBA
Administrator Jovita Carranza in Camp Hill, PA, for a
Women-Owned Small Business Roundtable. In an advocacy
tour on behalf of America’s 30 million small businesses,
Administrator Carranza,
joined by former U.S.
Secretary of Labor
Eugene Scalia, discussed
the impact of the PPP
on local small businesses
and met with four
Centric Bank women-
owned businesses that
received these funds.
“As one of the largest
PPP providers in our
region, it was a privilege
for us to welcome
Administrator Carranza.
In a time when local
small business owners are
Former SBA Administrator Jovita Carranza (right) visits Sweet Confections Cakes
Owner Darmayne Robertson (left) on a Centric Bank PPP Tour.
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Darmayne Robertson,
founder of minority-
owned, women-owned,
and veteran-owned
Sweet Confections
Cakes, echoed every
business owner: “It was
pretty much a lifesaver.”
Jessica Meyers, owner
of JEM Group, says,
“We are grateful to
have a partner like the
SBA to help us through
this challenging time.
Centric was the #1
reason we could bring
our people back.”
A LOCAL STORYLINE BANKING FROM THE HEART
T he Centric Bank team finished strong in 2020 and
delivered core organic growth of 10%, exclusive of
the $195 million in PPP loans at year end. With net income
growth of 24% over 2019, COVID-19 accelerated change in
every department–technology, remote work, cross-training,
commercial lending, retail, and new account growth. “Our
137-person team became a solutions center for problems
that never existed in our lifetime,” says Husic. “Every team
member shifted energy and focus to align our mission to our
true north: saving jobs and businesses.”
With enormous challenges facing every employee, Christine
Pavlakovich, EVP, Chief Human Resources Officer, surveyed
the team regularly to gauge how they felt about their work
environment, their own health and wellness, and general
feelings about the pandemic. From those interviews,
Pavlakovich provided continuous access to resources and
information to help associates balance the new work-from-
home space. Senior leadership began hosting quarterly
Town Hall meetings to keep relationships strong. “We sent
care packages home to all employees with snacks and office
supplies. We celebrated winning the 50 Fastest Growing
Companies award with a thank you card and a $50 gift
card for every employee. Continuous outreach helps us feel
a sense of belonging and connection. HR and Marketing
created a weekly newsletter, The Centric Globe, which features
policy updates, highlights on team members, birthdays
and anniversaries, and wellness tips. Each week, different
departments share what the Centric Bank Way fundamentals
mean to them through articles and videos. We Revolve Around
You begins at home–our bank home,” says Pavlakovich.
Centric Bank’s digital transformation was key to the PPP
success. “Every goal of our IT department was accelerated
to meet the overwhelming demands of COVID-19,” says
Clair Finkenbinder III, EVP, Chief Information Officer
and Director of Operations. “We expanded and invested in
our mobile workforce efforts enabling Centric to provide
Continued on page 10
I absolutely love my home. I always wanted
a home of my own but believed I was
too old for my dream to come true. After
over 40 years of renting, I was frustrated
with the rent increases, the noise, and
new neighbors moving in and out of my
life. Then my daughter told me about Fair
Housing Council of Harrisburg’s First Time
Homebuyer Program, sponsored by Centric
Bank. The program teaches first-time
buyers the ins and outs of homeownership,
and I met Chris Conrad from Centric Bank.
He was very honest and answered my
questions. At first, I was nervous I didn’t
have what it takes to own a home. But
Getty Wilson kept me calm through the
stress, helped me improve my credit, and
was kind and thoughtful. The Centric Bank
team is the best, and they do whatever it
takes to get you into your dream home.
TRACI CAR TER, Homeowner
Harrisburg, PA
B A N K I N G F R O M T H E H E A R T | 7
A FINANCIAL LIFELINE S T R E N G T H E N I N G T H E C O M M U N I T I E S
We Call Home
“BRING IT”
EVERY DAY.
KEEP THINGS
FUN.
CONTRIBUTE
TO THE
COMMUNITY.
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A LOCAL STORYLINE L I F T I N G U P M A I N S T R E E T
Our PPP Story
“I want to commend Patrick Snyder for his efforts on the PPP program.
Patrick’s customer service and communication were exceptional. As
a former bank director and CEO, I can be critical of bank customer
service. Patrick did a great job. In fact, we are moving our entire
relationship to Centric. We don’t borrow money, and this is the first
time in 15 years since starting the business that we have a loan. We will
keep Centric Bank at the top of our referral list. Congratulations to your
entire Centric team on the great work!”
ROBERT J. McCORMACK, Managing Partner
Murphy McCormack Capital Advisors
Lewisburg, PA
1,400
NEW CHECKING
ACCOUNTS IN TWO
MONTHS
71%
LOANS TO NEW CUSTOMERS
1,700+
LOANS
PROCESSED
25,000
JOBS SAVED
$220 MILLION
TOTAL LOANS
31%
PPP CUSTOMERS
ONBOARDED
“Your team opened my new account electronically, and we will be moving
our business banking to Centric. They treated me with respect, and I felt as if
I was your #1 client. I cannot express how grateful I am for this relationship.”
KIM KENAWELL-HOFFECKER, Owner
Avantra Family Wealth
Mechanicsburg, PA
17
101
STATES
COUNTIES
321
CITIES
“Centric Bank was there from the beginning for
me and still is today. Without Centric and these
loans, I’m not sure how we would have survived as
a business. I will never forget what Centric Bank
continues to do for me. 50 jobs saved!”
ADAM STURGES, Owner
Sturges Speakeasy
Harrisburg, PA
70% INCREASED CUSTOMER
MESSAGING
“Just wanted to let you know how
exceptional your bank has been during this
time, especially with getting the PPP loans
processed and funded. Paul Zwally, Shannon
Deatrich, and Joe Rebarchak have all been
unbelievable in both their responsiveness and
efficiency. Great job!”
DARRIN DINELLO, Owner
Dinello Law, William Penn Settlement and
North Mountain Settlement
Harrisburg, PA
86%
NEW CUSTOMERS
FROM
PHILADELPHIA
REGION
1,253
NEW
CUSTOMERS
“I was with a bank for at
least 30 years and never
had customer service even
close to what was provided
to me by Centric Bank. I
am not a computer person,
so a PPP application was a
challenge for me. Spencer
Beck walked me through
the application. When I
had problems getting the
right numbers, he took the
extra time to work with my
accountant. Spencer went
above all my expectations
and had my application
completed in a day! After
working with my bank for
three weeks, I still hadn’t
received the application
from them. Amber Spotts
called me and helped me
set up my account. This
took all day because of
my lack of knowledge. Not
once did Amber get short
with me. She was polite
and patient, and even
offered to help me with
setting up online banking.
Centric Bank accomplished
in two days what my
bank couldn’t do in three
weeks. I will be switching
accounts to Centric Bank
because customer service
is a huge part of business.
Thank you, Spencer and
Amber! Your service was
incredible!”
CURTIS SHENK, Principal
CLS Auctioneering, Inc.
Manheim, PA
“I missed the initial PPP loan with my bank. When I heard they were getting additional funds, I emailed the
application to my banker. She said there was no more money, but a conversation with a friend revealed
that there was. I called Centric Bank and left a message. Kevin Boland called me back. I emailed him my
application, and he had it in the system in no time. This was well after 5 p.m. I am leaving my bank and
calling Amber Spotts tomorrow to switch banks! Kudos to Kevin!”
MATTHEW GOKEY, Owner
Matthew Gokey Auctioneers, Inc. and Bering Real Estate
Landisville, PA
58%
CURRENT CUSTOMERS
FROM HARRISBURG
REGION
L I F T I N G U P M A I N S T R E E T : O U R P P P S T O R Y | 9
A FINANCIAL LIFELINE Continued from page 7
uninterrupted service to our customers while maintaining the
highest level of security and integrity to our customers’ data.
Our employees adjusted quickly to their new work-from-home
environment and were encouraged to innovate, collaborate,
and be the solution for our customers,” says Finkenbinder.
With productivity rising and customer engagement robust
on new channels, many employees have welcomed the
virtual shift. “My father is 85 and lives in Pittsburgh. With us
working remotely, I can visit him more frequently, monitor
his health, and still do my work.” Another team member
drives 67 miles to work one way. She has two young children
in first and third grades who need help with virtual learning.
“With my children so young, it was essential for me to be
home to help them with their online learning and to ensure
they are thriving. This was all possible with remote work.”
The Centric team added two new positions, welcomed five
interns, and promoted nine employees. With a 60% female
executive leadership team and a 70% female workforce, the bank
sends a clear message that all voices are welcome, and diversity,
equity, and inclusion are drivers for Centric Bank’s success.
To ensure equitable access to capital and PPP funding across
non-customers and minority-owned businesses, Patti Husic
provided news interviews, answered questions on social
media forums, and shared precise steps for small businesses
to participate. As an outgrowth of “Black-Owned Businesses:
Stories of Struggle & Success,” an interview with Joyce M.
Davis, Opinion Page Editor for PennLive, Centric Bank
created free resource guides to help minority small businesses
through the pandemic and beyond. “If we are not more
intentional in our outreach efforts, our customers will remain
the same,” says Husic. “At Centric Bank, we’re constantly
looking to expand the landscape of who we’re lending to.
There must be deliberate and sustained efforts to help BIPOC
businesses succeed.”
With 2020 being a year of uncertainty, we had a sense of comfort knowing that Centric Bank was right by
our side. The team at Centric Bank, specifically Christopher Bickel and William Farina, provided exceptional
support in securing a loan for a new hotel and acquiring PPP funding for our other businesses. Unlike many
other banks, they took the time to get to know us to help us achieve our goals!
KI RAN PATEL, President, and ANIL PATEL , Vice President
Motel 6 and Pooja Hospitality
Maple Shade, NJ
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A LOCAL STORYLINE Working with Patti Husic and Centric
Bank has been one of the best decisions
for my practice. From my initial land
purchase, through my building process
and opening six years ago, and most
recently through two rounds of PPP
applications and funding, Centric
supported me with expertise and
commitment. Listening to the troubles
of my colleagues dealing with less
responsive banks made me especially
relieved to have the Centric Bank team
on my side. I’m looking forward to
continuing our partnership for many
years to come.
SARAH LOREI, DMD , Owner
Millennium Way Dental Studio
Enola, PA
“Patti is determined to do her part to dismantle any vestiges
of racism in banking,” says Davis.
As an industry voice, Husic was named to American Bankers
Association’s 15-person inaugural Diversity, Equity, and
Inclusion Advisory Group formed in 2020. The group is
charged with bringing solutions to national challenges of
advancing women and people of color to key banking roles
and creating a more diverse customer base.
DOCTOR CENTRIC BANK:
DEDICATED TO THE HELPERS
W hile COVID-19 delivered a crushing blow to health
care practices and professionals both physically and
financially, Doctor Centric Bank, a division of Centric Bank,
remained on call. Providing concierge service and guidance on
PPP funding, 100% practice financing, cash flow management,
leasing for equipment and technology, and personal and
business banking, the Doctor Centric team is more than a
financial lifeline; they are a trusted and loyal partner. “We
protect the protectors,” says Jeff Myers, SEVP, Chief Lending
Officer. “Community health was the most important concern
in 2020, and our dedicated team of health care bankers met
every unforeseen medical practice challenge COVID-19
unleashed. We really see our value in protecting the health care
ecosystem so doctors can remain singularly focused on health
and wellness in a post-COVID world,” says Myers.
Among the 1,700+ PPP loans the team provided, 17% or
$37.6 million was in health care lending. Acknowledging the
pandemic’s immense strain on time and resources, Dr. Sarah
Lorei, owner of Millennium Way Dental Studio, says, “It’s
not often that a bank president and CEO personally checks
in with you to see if you need anything during a pandemic.
Centric Bank’s service never lets us down!”
No words of praise speak more to the heart of the Centric team
than American Banker’s Best Banks to Work For Award. “I am
deeply grateful for every member of the Centric family,” says
Husic. “The skills and commitment required for an all-bank
transition to a fully virtual model almost overnight was
extraordinary. Because of this team, more than 25,000 jobs
were saved. Working tirelessly through PPP applications, they
sacrificed family time to ensure every small business owner
was served, invented workarounds to fluid federal guidelines,
and kept local businesses open. That’s banking from the heart!”
D O C T O R C E N T R I C B A N K : D E D I C AT E D T O T H E H E L P E R S | 1 1
A FINANCIAL LIFELINE Independent Auditor’s Report
INDEPENDENT AUDITOR’S REPORT
Board of Directors
Centric Financial Corporation
Harrisburg, Pennsylvania
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of Centric Financial Corporation
and subsidiary, which comprise the consolidated balance sheet as of December 31, 2020 and 2019; the
related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and
cash flows for the years then ended; and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Centric Financial Corporation and subsidiary as of December 31, 2020
and 2019, and the results of their operations and their cash flows for the years then ended, in accordance
with accounting principles generally accepted in the United States of America.
Cranberry Township, Pennsylvania
March 16, 2021
1 2 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Consolidated Balance Sheet
CENTRIC FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
ASSETS
Cash and due from banks
Interest-bearing deposits in other banks
Federal funds sold
Cash and cash equivalents
Investments in certificates of deposits
Securities available for sale
Securities held to maturity, fair value of $28,685 and $4,068
Equity securities
Loans held for sale
Loans
Less: allowance for loan losses
Net loans
Premises and equipment, net
Accrued interest receivable
Regulatory stock
Cash surrender value life insurance
Mortgage servicing rights
Other assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits - noninterest-bearing
Deposits - interest-bearing
Total deposits
Operating lease liability
Finance lease liability
Short-term borrowings
Long-term debt
Total borrowed funds
Other liabilities
Total Liabilities
STOCKHOLDERS' EQUITY
Common stock, $1.00 par; 12,000,000 shares authorized; 8,790,907 shares issued and
8,448,903 outstanding at December 31, 2020; 8,758,646 shares issued and outstanding at
December 31, 2019
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Treasury stock - at cost, 342,004 shares at December 31, 2020
Total Stockholders' Equity
December 31,
2020
2019
$ 51,464
579
30,057
82,100
$ 44,736
1,980
20,153
66,869
-
12,599
28,282
2,118
2,166
964,214
10,487
953,727
13,880
6,016
3,653
4,296
1,124
8,051
2,747
29,865
4,009
-
1,687
703,143
8,293
694,850
14,053
2,304
2,460
4,193
1,337
7,830
$ 1,118,012
$ 832,204
$ 196,367
730,108
926,475
$ 109,799
572,261
682,060
3,224
5,519
20,000
74,678
103,421
3,849
5,631
-
60,955
70,435
3,613
1,033,509
2,220
754,715
8,791
46,505
31,561
71
(2,425)
84,503
8,759
46,205
22,504
21
-
77,489
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 1,118,012
$ 832,204
See notes to consolidated financial statements.
4
F I N A N C I A L S | 1 3
A FINANCIAL LIFELINE Consolidated Statement of Income
CENTRIC FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except share and per share data)
INTEREST INCOME
Interest and fees on loans
Interest and dividends on securities
Interest-bearing deposits in other banks
Federal funds sold
Total interest income
INTEREST EXPENSE
Interest on deposits
Interest on borrowings
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
NONINTEREST INCOME
Service charges on deposit accounts
Other loan fees and servicing income
Net gain on sale of loans
Customer swap referral fees
Earnings on cash surrender value of life insurance
Unrealized gain on equity securities
Net gain on sale of securities
Other income
Total noninterest income
NONINTEREST EXPENSE
Salaries and employee benefits
Occupancy and equipment
Legal and professional fees
Data processing
Advertising and marketing
Shares tax
Directors expense
Federal deposit insurance
Other expenses
Total noninterest expense
Income before income tax expense
Income tax expense
NET INCOME
PER SHARE DATA
Basic earnings per share
Diluted earnings per share
Average shares outstanding (basic)
Average shares outstanding (diluted)
Year Ended December 31,
2019
2020
$ 39,981
1,097
36
202
41,316
$ 37,222
1,095
105
987
39,409
5,281
2,255
7,536
33,780
3,100
30,680
215
1,273
943
140
103
108
209
593
3,584
13,593
2,223
747
1,124
454
795
502
467
2,931
22,836
11,428
2,371
9,493
1,797
11,290
28,119
2,129
25,990
296
1,345
1,220
533
108
-
-
593
4,095
11,935
2,032
741
1,131
691
835
359
186
3,002
20,912
9,173
1,888
$ 9,057
$ 7,285
$ 1.05
$ 1.05
8,647,020
8,665,253
$ 0.84
$ 0.83
8,723,449
8,755,337
See notes to consolidated financial statements.
5
1 4 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE CENTRIC FINANCIAL CORPORATION
Consolidated Statement of Comprehensive Income
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands)
NET INCOME
Other comprehensive income:
Unrealized holding gains on available-for-sale securities
Accretion of discount on securities transferred to held to maturity
Reclassification adjustment for gains recognized in income
Accretion of non-credit OTTI on held-to-maturity securities
Non-credit portion of OTTI recognized in other comprehensive income
Net unrealized gains
Tax effect
Total other comprehensive income, net of tax
COMPREHENSIVE INCOME
See notes to consolidated financial statements.
December 31,
2020
$ 9,057
2019
$ 7,285
207
2
(209)
45
18
63
(13)
50
118
2
-
10
-
130
(27)
103
$ 9,107
$ 7,388
6
F I N A N C I A L S | 1 5
A FINANCIAL LIFELINE CENTRIC FINANCIAL CORPORATION
Consolidated Statement of Changes in Stockholders’ Equity
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
Balance, January 1, 2019
Net income
Other comprehensive income
Common
Stock
$ 8,715
Additional
Paid-in
Capital
$ 45,921
Retained
Earnings
$ 15,219
Accumulated
Other
Comprehensive
Income (Loss)
$ (82)
Treasury
Stock
$ -
Total
$ 69,773
7,285
103
Stock-based compensation plans:
Issuance of restricted stock (21,260 shares)
Forfeiture of restricted stock (1,968 shares)
Restricted stock - compensation expense
Stock options - compensation expense
Stock options exercised (16,936 shares)
Issuance of Employee Stock Purchase Plan
(7,443 shares)
21
(2)
17
8
(21)
2
123
31
81
68
Balance, December 31, 2019
8,759
46,205
22,504
Net income
Other comprehensive income
Stock-based compensation plans:
Issuance of restricted stock (21,782 shares)
Forfeiture of restricted stock (650 shares)
Restricted stock - compensation expense
Stock options - compensation expense
Stock options exercised (19,379 shares)
Issuance of Employee Stock Purchase Plan
(4,246 shares)
Treasury shares acquired (354,500 shares)
9,057
22
(1)
9
2
(22)
1
136
143
29
13
21
50
7,285
103
-
-
123
31
98
76
-
77,489
9,057
50
-
-
136
143
110
31
(2,513)
72
16
(2,513)
Balance, December 31, 2020
$ 8,791
$ 46,505
$ 31,561
$ 71
$ (2,425)
$ 84,503
See notes to consolidated financial statements.
7
1 6 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE CENTRIC FINANCIAL CORPORATION
Consolidated Statement of Cash Flows
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses
Depreciation and amortization
Amortization of operating lease right-of-use asset
Stock-based compensation
Deferred income tax benefit
Loans originated for sale
Proceeds from sale of loans
Net gain on sale of loans
Increase in accrued interest receivable
Decrease in accrued interest payable
Earnings on cash surrender value of life insurance
Unrealized gain on equity securities
Net gain on sale of securities
Net OTTI losses recognized in earnings
Net gain on sale of other real estate owned
Other, net
Net cash provided by operating activities
Cash flows from investing activities
Net (increase) decrease of investment certificates of deposits
Investment securities available-for-sale
Proceeds from sales, payments and maturities
Purchases
Investment securities held-to-maturity
Proceeds from sales, payments and maturities
Purchases
Equity securities purchases
Regulatory stock
Purchases
Redemption
Net increase in loans
Purchases of bank premises and equipment
Proceeds from disposal of other real estate owned
Net cash used for investing activities
Cash flows from financing activities
Net increase in deposits
Net increase (decrease) in short-term borrowings
Proceeds from long-term debt
Payments on long-term debt
Payments on finance lease obligations
Stock options exercised
Net proceeds from issuance of common stock
Treasury shares acquired
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
See notes to consolidated financial statements.
8
F I N A N C I A L S | 1 7
Years Ended December 31,
2019
2020
$ 9,057
$ 7,285
3,100
2,119
(20)
279
(546)
(38,101)
38,565
(943)
(3,712)
(140)
(103)
(108)
(209)
18
(35)
(404)
8,817
2,129
2,539
15
154
(372)
(31,966)
32,347
(1,220)
(311)
(112)
(108)
-
-
-
(13)
(269)
10,098
2,747
(1,259)
21,742
(4,467)
1,071
(23,701)
(2,010)
(5,812)
4,619
(262,839)
(681)
56
(269,275)
244,415
20,000
29,723
(16,000)
(77)
110
31
(2,513)
275,689
15,231
66,869
17,841
(26,676)
2,254
(250)
-
(2,607)
2,096
(79,397)
(2,516)
24
(90,490)
95,875
(15,500)
35,955
(5,500)
(51)
98
76
-
110,953
30,561
36,308
$ 82,100
$ 66,869
A FINANCIAL LIFELINE CENTRIC FINANCIAL CORPORATION
Consolidated Statement of Cash Flows (Continued)
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(in thousands)
Supplemental information
Cash paid for interest
Cash paid for income taxes
Non-cash investing and financing activities:
Other real estate acquired in settlement of loans
Initial recognition of lease right-of-use assets
Initial recognition of lease liabilities
Securities purchased not settled
Years Ended December 31,
2019
2020
$ 7,676
2,975
$ 11,402
2,250
-
-
-
1,599
31
9,653
9,635
-
See notes to consolidated financial statements.
9
1 8 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 1 | Significant Accounting Policies
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Organization and Nature of Operations
Centric Financial Corporation (“Centric”) or (the “Company”) is a financial holding company which includes its
wholly owned subsidiary, Centric Bank (the “Bank”).
The Bank comprises most of Centric’s ongoing operations. The Bank offers customers a range of deposit, loan, and
other services typical of community banks through seven full-service offices in Dauphin, Cumberland, Lancaster,
Bucks and Chester Counties, as well as a loan production office in Chester County. The Bank also provides online
banking channels. Centric’s principal sources of revenue is interest income generated from the portfolio of real estate
loans, commercial loans and consumer loans, interest income generated from the investment portfolio, as well as
noninterest income from the generation and subsequent sale of loans.
Centric is subject to regulation and supervision of the Pennsylvania Department of Banking and the Federal Deposit
Insurance Corporation (“FDIC”). The Bank is a member of the Federal Reserve System and the Federal Home Loan
Bank System, and its deposits are insured by the FDIC, up to applicable limits, through its Deposit Insurance Fund
(“DIF”).
Basis of Presentation
The financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America. The accounts of Centric and the Bank are consolidated with the elimination of all
significant intercompany transactions and balances.
Estimates
Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities,
income and expense, and the nature and extent of disclosures. Ultimate results could differ from those estimates and
assumptions. Centric’s material estimates that are particularly susceptible to significant change in the near term,
relate to the valuation of impaired loans, allowances for loan and other credit losses, mortgage servicing rights, other-
than-temporary impairment evaluations of securities, evaluation of goodwill impairment, deferred tax valuation, and
fair value of financial instruments.
In the ordinary course of business, Centric and the Bank are parties to legal proceedings that entail uncertainty. In
management’s opinion, Centric’s financial position and results of operations would not be materially impacted by the
outcome of such proceedings individually or in the aggregate.
Cash and Cash Equivalents
Cash and cash equivalents with original maturities of 90 days or less include cash, balances due from banks, interest-
bearing demand deposits in other banks, and federal funds sold. Federal funds sold are generally for one-day periods.
Effective March 26, 2020 the board of Governors of the Federal Reserve System (“FRS Board”) adopted revisions to
reduce report burdens by discontinuing the data collection from the FR 2900Q used to administer reserve
requirements. The FRS Board also set the reserve requirements ratios to zero percent at that time. Accordingly, the
Bank was not required to maintain average balances with the Federal Reserve bank at December 31, 2020. The Bank
maintained an average balance with the Federal Reserve Bank of $1,130,000 for the reserve period ending December
31, 2019. The Bank is engaged in a deposit reclassification program that evaluates the unused balance of transaction
accounts. The unused portion is then reclassified as a non-transaction account for regulatory reporting only. This
allows the Bank to reclaim the balances held at the Federal Reserve Bank for investment or operating use. The Federal
Reserve Bank of Philadelphia approved the use of this program for Centric Bank.
Credit Risk Concentrations
As a community bank, most of Centric’s loan and credit commitments are comprised of customers, primarily
individuals and small to medium-sized businesses, based in Dauphin, Cumberland, Lancaster, Bucks and Chester
counties of Pennsylvania, as well as into New Jersey. Because of the Bank’s concentration of business in these market
areas, the Company’s financial condition and results of operations, depend on the general economic conditions in the
aforementioned immediate geographic regions.
10
F I N A N C I A L S | 1 9
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 1 | Significant Accounting Policies (Continued)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Securities
Investment securities are classified when purchased as either “securities available for sale” or “securities held to
maturity.”
Securities classified as “available for sale” are those debt securities that the Bank intends to hold for an indefinite
period of time but not necessarily to maturity and are carried at fair value. Unrealized gains or losses are included in
other comprehensive income, net of the related deferred tax effect. Realized gains and losses on disposition of
securities are recognized as noninterest income measured on specific identification of the simple difference between
net proceeds and adjusted book value. Premiums and discounts are recognized in interest income using the interest
method over the terms of the securities.
Securities classified as “held to maturity” are those debt securities the Bank has both the intent and ability to hold to
maturity regardless of changes in market conditions, liquidity needs, or changes in general economic conditions.
These securities are carried at cost adjusted for the amortization of premium and accretion of discount, computed by
the interest method over the terms of the securities.
Centric purchased Equity securities during 2020. Equity securities are held at fair value. Unrealized holding gains
and losses are recorded in income. Dividends on equity securities are recognized as income when earned.
Securities are periodically reviewed for other-than-temporary impairment based upon a number of factors, including,
but not limited to, the length of time and extent to which market value has been less than cost, the financial condition
of the underlying issuer, the ability of the issuer to meet contractual obligations, the likelihood of the security’s ability
to recover any decline in its market value, and whether or not management intends to sell the security or whether it is
more likely than not that they would be required to sell the security before its anticipated recovery in market value,
to determine whether the loss in value is other than temporary. A decline in value that is considered to be other-than-
temporary is recorded as a loss within noninterest income in the Consolidated Statement of Income.
Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated
at their outstanding unpaid principal balances, net of any allowance for loan losses and any deferred fees or costs. Interest
income is accrued on the unpaid principal balance.
The Bank engages in lease financing for commercial customers to purchase equipment or vehicles. Leases are stated at
their outstanding unpaid principal balances, net of any deferred costs, residual receivable and unearned income. Lease
contracts are classified as direct finance leases. Lessees guarantee 100 percent of the leases’ residual value at the
conclusion of the lease term.
Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield
(interest income) of the related loans. The Bank is generally amortizing these amounts over the contractual life of the
loan.
The Bank participated in the Paycheck Protection Program (“PPP”), administered directly by the U.S. SBA. The fees
associated with processing PPP loans were deferred and will be amortized over the life of the loan as an adjustment
to yield, or as determined by the SBA, taken into income upon forgiveness of the loans.
The accrual of interest is discontinued through an analysis by management when there are serious doubts about further
collectability of principal or interest, even if the loan is currently performing. A loan may remain on accrual status if it
is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status,
unpaid interest that was credited to income in the current year is reversed, and unpaid interest accrued in prior years is
charged against the allowance for loan losses. Interest received on nonaccrual loans generally is either applied against
11
2 0 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 1 | Significant Accounting Policies (Continued)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
principal or reported as interest income, according to management’s judgment as to the collectability of principal.
Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with
the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and
interest is no longer in doubt.
Allowance for Loan Losses
The allowance for loan losses is established through provisions for loan losses charged against income as losses are
estimated to have occurred. Loans deemed to be uncollectible are charged against the allowance for loan losses, and
subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably
anticipated. Management’s periodic evaluation of the adequacy of the allowance is based on known and inherent
risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any
underlying collateral, composition of the loan portfolio, current economic conditions, and other relevant factors. This
evaluation is inherently subjective, since it requires material estimates that may be susceptible to significant change.
See Note 5 Allowance for Loan Losses, for additional information.
Unfunded Credit Commitments
In the ordinary course of business, the Bank enters into commitments to extend credit and letters of credit. Such
financial instruments are recorded when funded. A reserve for unfunded lending commitments under contract, lines
and letters of credit, is included in other liabilities.
Regulatory Stock
Under membership agreement, the Bank is required to own stock issued by Atlantic Community Bankers Bank.
Because stock ownership and disposition is restricted, the shares lack a market for measuring fair value and are
recorded at cost.
The Bank is also a member of the Federal Home Loan Bank (“FHLB”) of Pittsburgh and as such is required to
maintain a minimum investment in stock of the FHLB, which varies with the level of advances and letters of credit
outstanding with the FHLB. The stock is bought from and sold to the FHLB based upon its $100 par value. The
stock does not have a readily determinable fair value and as such is classified as restricted stock, carried at cost and
evaluated by management. The stock’s value is determined by the ultimate recoverability of the par value rather than
by recognizing temporary declines. The determination of whether the par value will ultimately be recovered is
influenced by criteria such as the following: (a) the significance of the decline in net assets of the FHLB as compared
to the capital stock amount and the length of time this situation has persisted; (b) commitments by the FHLB to make
payments required by law or regulation and the level of such payments in relation to the operating performance; (c)
the impact of legislative and regulatory changes on the customer base of the FHLB; and (d) the liquidity position of
the FHLB. Management evaluated the stock and concluded that the stock was not impaired for the periods presented
herein.
Goodwill
Goodwill of $492,000 at December 31, 2020 and 2019 is included in Other assets on the balance sheet, and represents
the amount paid to acquire the Bank beyond the fair value of the identifiable net assets acquired. Goodwill is not
amortized but rather is tested for impairment. The Company utilizes a two-step process for testing the impairment of
goodwill on at least an annual basis. For federal tax purposes, goodwill is amortized on a straight-line basis over 15
years. There was no impairment of goodwill as of December 31, 2020 or 2019.
F I N A N C I A L S | 2 1
12
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 1 | Significant Accounting Policies (Continued)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Mortgage Servicing Rights
The Bank sells the guaranteed portion of Small Business Administration (SBA) approved loans. The loans are
serviced by the Bank and generate corresponding mortgage servicing rights. The portfolio balance of SBA loans
generating mortgage servicing rights was $58,058,000 and $69,544,000 at December 31, 2020 and 2019, respectively.
Additionally, MSRs are subject to an impairment analysis based on their fair value in future periods performed by a
third party. In 2019, the Bank recorded an impairment of $27,000 to mortgage servicing assets, no impairment was
recorded in 2020. The mortgage servicing rights balance at December 31, 2020 and 2019 and the activity that occurred
during the year consisted of the following:
(in thousands)
Beginning balance
New mortgage servicing rights
Valuation adjustment to the carrying value of servicing assets
Amortization of mortgage servicing rights
Ending balance
2020
$ 1,337
24
-
(237)
1,124
$
2019
$ 1,719
213
(27)
(568)
$ 1,337
The Bank previously sold residential mortgages to FHLB under the Mortgage Partnership Finance Program (“MPF”).
The Bank is no longer an active participant in the MPF program. Under this program, the Bank continues to service
the portfolio sold to the FHLB. There were no credit enhancement fees receivable, net of an estimated liability, at
December 31, 2020 or 2019.
Transfers of Financial Assets
The Bank sells interests in loans receivable through loan participation sales. The Bank accounts for these transactions
as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be
surrendered when (1) the assets have been isolated from the Bank, (2) the transferee obtains the right (free of
conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3)
the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them
before their maturity.
The Bank retains servicing responsibilities for the loan participation sales. The Bank does not recognize a servicing
asset or liability, since the amount received for servicing the loan participations is a reasonable approximation of
market rates and servicing costs.
Advertising and Marketing Costs
The Bank charges advertising costs to expense as incurred.
13
2 2 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 1 | Significant Accounting Policies (Continued)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings Per Share
Basic earnings per share represents income available to common stockholders divided by the weighted-average
number of shares outstanding during the period. Diluted earnings per share reflects additional common shares that
would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income
that would result from the assumed issuance. Potential common shares that may be issued by Centric relate to
outstanding stock options and warrants and non-vested restricted stock.
Options and warrants to purchase, 149,607 and 20,556 shares of common stock, at a weighted-average price of $6.57
and $10.65, outstanding at December 31, 2020 and 2019, respectively; and unvested restricted shares of 9,652 and
20,178 at December 31, 2020 and 2019, at a weighted-average price of $10.03 and $9.73, respectively, were not
included in dilutive earnings per share as the exercise price exceeded market value at year end.
(in thousands, except shares and per share data)
Net income
Weighted average number of shares outstanding (basic)
Effect of dilutive securities
Weighted average number of shares outstanding (diluted)
Per share information:
Basic earnings per share
Diluted earnings per share
2020
2019
$ 9,057
$ 7,285
8,647,020
18,233
8,665,253
8,723,449
31,888
8,755,337
$ 1.05
$ 1.05
$ 0.84
$ 0.83
Treasury Stock
Repurchases of shares of Centric’s common stock are recorded at cost as a reduction of stockholders’ equity.
Reissuances of shares of treasury stock are recorded at average cost.
Stock-Based Compensation
Centric records the cash flow from the tax benefits resulting from tax deductions in excess of the compensation cost
recognized for stock-based awards (excess tax benefit) as an increase or deduction from income tax expense. During
2020 and 2019, $102,000 and $98,000 in stock options were exercised, with a tax benefit of $6,000 and $9,000,
respectively and $8,000 in warrants were exercised during 2020, with no tax benefit.
Accumulated Other Comprehensive Income
Centric recognizes revenue, expenses, gains, and losses in net income. Certain changes in assets and liabilities, such
as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity
section of the Consolidated Balance Sheet, net of tax.
F I N A N C I A L S | 2 3
14
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Note 1 | Significant Accounting Policies (Continued)
Such items are included as components of accumulated other comprehensive income (loss), as follows, net of taxes:
(in thousands)
2020
Unrealized
Gains and
Losses on
Available-
for-Sale
Securities
$ 49
Unrealized
Gains and
Losses on
Held-to-
Maturity
Securities
$ (28)
Total
$ 21
2019
Unrealized
Gains and
Losses on
Held-to-
Maturity
Securities
$ (38)
Unrealized
Gains and
Losses on
Available-
for-Sale
Securities
$ (44)
Total
$ (82)
164
38
202
(136)
(16)
(152)
93
-
10
103
-
-
28
$ 77
22
$ (6)
50
$ 71
93
$ 49
10
$ (28)
103
$ 21
Beginning balance
Other comprehensive income before
reclassifications
Amounts reclassified from accumulated
other comprehensive income
Net current-period other comprehensive
income
Ending balance
The following illustrates amounts reclassified out of each component of accumulated other comprehensive loss.
(in thousands)
Details about Accumulated Other
Comprehensive Income
Components
Sale of available for sale securities
Tax effect
Sale of held to maturity securities
Tax effect
Other-than-temporary impairment
losses on held to maturity securities
Tax effect
Total reclassification for the period
Amount Reclassified from
Accumulated Other Comprehensive
Income
Affected Line Item in the
Consolidated Statement of
Income
Net gain on sale of securities
Income tax expense
Net gain on sale of securities
Income tax expense
Non-credit portion of OTTI
recognized in other
comprehensive income
Income tax expense
2020
$ 172
(36)
136
$ 37
(7)
30
(18)
4
(14)
$ 152
During 2020, two securities held-to-maturity were sold and their amounts were reclassified out of components of
accumulated other comprehensive income (loss). There were no components reclassified during 2019. The
Consolidated Balance Sheet presents “available-for-sale” securities at fair value. Corresponding unrealized gains and
losses do not affect net income but are recorded in accumulated other comprehensive loss, net of related deferred
income taxes.
Note 2 | Revenue Recognition
NOTE 2 – REVENUE RECOGNITION
Accounting Standards Update ASU 2014-09 Revenue from Contracts with Customers – Topic 606, and all subsequent
ASUs that modified ASC 606, requires management to determine the primary sources of revenue. The Company’s
primary source of revenue emanates from interest income on loans and investments along with noninterest revenue
resulting from net gain on sale of loans, other loan fees and servicing income, and earnings of cash surrender value
15
2 4 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 2 – REVENUE RECOGNITION (CONTINUED)
Note 2 | Revenue Recognition (Continued)
of life insurance are not within the scope of ASC 606. The main types of noninterest income within the scope of the
standard are as follows:
Service charges on deposit accounts
The Company has contracts with its deposit customers where fees are charged if certain parameters are not met. These
agreements can be cancelled at any time by either the Company or the deposit customer. Revenue from these
transactions is recognized on a monthly basis as the Company has an unconditional right to the fee consideration. The
Company also has transaction fees related to specific transactions or activities resulting from a customer request or
activity that include overdraft fees, cycle service fees, online banking fees, interchange fees, ATM fees and other
transaction fees. All of these fees are attributable to specific performance obligations of the Company where the
revenue is recognized at a defined point in time upon the completion of the requested service/transaction.
Gain (loss) on sale of other real estate owned and other assets
Gains and losses are recognized at the completion of the sale when the buyer obtains control of the real estate and all
of the performance obligations of the Company have been satisfied. Evidence of the buyer obtaining control of the
asset include transfer of the property title, physical possession of the asset, and the buyer obtaining control of the risks
and rewards related to the asset. In situations where the Company agrees to provide financing to facilitate the sale,
additional analysis is performed to ensure that the contract for sale identifies the buyer and seller, the asset to be
transferred, payment terms, and that the contract has a true commercial substance and that collection of amounts due
from the buyer are reasonable. In situations where financing terms are not reflective of current market terms, the
transaction price is discounted impacting the gain/loss and the carrying value of the asset.
Customer swap referral fees
The Bank utilizes Pacific Coast Bankers’ Bank (PCBB) Borrower’s Loan Protection Program (BLP). Centric’s loan
customers may choose to enter the program to create a fixed rate loan swap between PCBB and the customer. Centric
maintains 100% of the floating rate loan with a predefined principal amortization schedule. On the date the customer’s
loan enters the BLP program, Centric may receive a referral fee. Fees received are recognized as other income
immediately and are limited to a maximum of 25 basis points per loan.
The Company determined that the level of disaggregation of revenue as reported on the Consolidated Statement of
Income provided a sufficient level of detail in order to properly analyze the significant revenue streams of the
Company and therefore no further disaggregation of any revenue streams within the scope of ASC 606 was considered
to be necessary.
Note 3 | Investment Securities
NOTE 3 - INVESTMENT SECURITIES
A summary of securities available for sale is as follows:
(in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
December 31, 2020
Estimated
Fair Value
U.S. government agency securities
$ 2,265
$ 31
$ -
$
2,296
Government sponsored mortgage-backed securities
Total
10,237
$ 12,502
104
$ 135
(38)
$ (38)
10,303
$ 12,599
U.S. government agency securities
$ 8,034
$ 23
$ (19)
$ 8,038
Government sponsored mortgage-backed securities
Total
21,766
$ 29,800
161
$ 184
(100)
$ (119)
21,827
$ 29,865
December 31, 2019
16
F I N A N C I A L S | 2 5
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 3 | Investment Securities (Continued)
NOTE 3 - INVESTMENT SECURITIES (CONTINUED)
A summary of securities held to maturity is as follows:
(in thousands)
Municipal securities
Other debt securities
Municipal securities
Other debt securities
Private collateralized mortgage obligations
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
December 31, 2020
Estimated
Fair Value
$ 16,852
11,430
$ 28,282
$ 6
413
$ 419
$ (15)
(1)
$ (16)
$ 16,843
11,842
$ 28,685
December 31, 2019
$ 1,460
2,250
299
$ 4,009
$ 12
2
45
$ 59
$ -
-
-
$ -
$ 1,472
2,252
344
$ 4,068
Unrealized holding gains and losses on equity securities are recorded in noninterest income. At December 31, 2020,
the bank recorded $108,000 in unrealized gains from changes in the fair value of equities held of $2,118,000.
Securities with a fair value of $21,975,000 and $23,353,000 were pledged to collateralize bank deposits by
Pennsylvania local governments and the discount window as of December 31, 2020 and 2019, respectively.
During 2020, the Bank sold twenty-eight securities totaling $7,704,000 resulting in gross gains of $174,000 and gross
losses of $2,000. During 2019, the Bank sold thirteen securities totaling $7,717,000 resulting in gross gains of
$39,000 and gross losses of $39,000. During 2020, Centric was able to sell two held to maturity securities that had
impairments taken several times in previous years, they were sold at a net gain of $37,000, as well as impacting
Comprehensive Income by $18,000.
The amortized cost and fair value of debt securities owned at December 31, 2020, by contractual maturity, are shown
below:
(in thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Total investment securities
Available for Sale
Held to Maturity
Amortized
Cost
$ -
4
2,156
10,342
$ 12,502
Fair Value
$ -
4
2,149
10,446
$ 12,599
Amortized
Cost
$ 240
1,497
10,430
16,115
$ 28,282
Fair Value
$ 241
1,498
10,842
16,104
$ 28,685
17
2 6 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 3 | Investment Securities (Continued)
NOTE 3 - INVESTMENT SECURITIES (CONTINUED)
A summary of securities which were in an unrealized loss position is as follows:
(in thousands)
Government sponsored mortgage-
backed securities
Municipal securities
Other debt securities
Total temporarily impaired securities
Less than 12 Months
Gross
Unrealized
Losses
Fair
Value
12 Months or Greater
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
December 31, 2020
$ 1,676
3,144
249
$ 5,069
$ (18)
(15)
(1)
$ (34)
$ 2,000
-
-
$ 2,000
$ (20)
-
-
$ (20)
$ 3,676
3,144
249
$ 7,069
$ (38)
(15)
(1)
$ (54)
U.S. government agency securities
Government sponsored mortgage-
backed securities
Total temporarily impaired securities
$ 3,731
$ (19)
$ -
$
-
$ 3,731
$ (19)
December 31, 2019
10,417
$ 14,148
$
(66)
(85)
2,459
$ 2,459
(34)
$ (34)
12,876
$ 16,607
(100)
$ (119)
Securities are evaluated on an ongoing basis to determine whether a decline in their value is other-than-temporary.
For debt securities, management considers whether the present value of cash flows expected to be collected is less
than the security’s amortized cost basis (the difference defined as the credit loss), the magnitude and duration of the
decline, the reasons underlying the decline and management’s intent to sell the security or whether it is more likely
than not that they would be required to sell the security before its anticipated recovery in market value, to determine
whether the loss in value is other-than-temporary. Once a decline in value is determined to be other-than-temporary,
if the investor does not intend to sell the security, and it is more likely than not that it will not be required to sell the
security, before recovery of the security’s amortized cost basis, the charge to earnings is limited to the amount of
credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit
portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference
between fair value and amortized cost is charged to earnings.
Centric reviews investment securities on an ongoing basis for potential impairment which would be other-than-
temporary and has adopted the provision which provides for the bifurcation of OTTI into two categories: (a) the
amount of the total OTTI related to a decrease in expected cash flows to be collected (credit loss) which is recognized
through earnings; and (b) the amount of OTTI related to all other factors, which is recognized, net of income taxes,
as a component of other comprehensive income. For the year ended December 31, 2020 and 2019, Centric did not
record any credit-related impairment. There were 13 securities that were temporarily impaired at December 31, 2020.
Changes in credit losses during 2020 and 2019 associated with investment securities for which other-than-temporary
impairment losses have been previously recognized in both earnings and other comprehensive income follows:
(in thousands)
Estimated credit losses - beginning balance
Reduction of credit losses for sold securities
Reductions for increases in cash flows
Reductions for realized payment losses on sold securities
Estimated credit losses - ending balance
Year Ended December 31,
2019
2020
$ 452
(18)
-
(434)
$ -
$ 452
-
-
-
$ 452
F I N A N C I A L S | 2 7
18
A FINANCIAL LIFELINE
Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 4 – LOANS
Note 4 | Loans
The Company’s loan portfolio is grouped into classes to allow management to monitor the performance by the
segments, as well as monitoring the performance of yields on the portfolio. The composition of loans, net of
unamortized loan origination fees of $7,212,000 and $3,299,000 at December 31, 2020 and 2019, respectively, are as
follows:
(in thousands)
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Total loans
Allowance for loan losses
Net loans
December 31,
2020
2019
$ 396,982
52,024
47,963
45,229
420,995
1,021
964,214
(10,487)
$ 953,727
$ 206,207
48,311
51,203
52,350
344,085
987
703,143
(8,293)
$ 694,850
During 2020 the Company participated in the Paycheck Protection Program (“PPP”), administered directly by the
U.S. SBA. The PPP provides loans to small businesses who were affected by economic conditions as a result of
COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain
related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19
emergency. As of December 31, 2020, the Company had outstanding principal balances of $195.4 million. The PPP
loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds
are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the
loan is made as long as certain conditions are met regarding employee retention and compensation levels. PPP loans
deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. PPP loans are included in the
Commercial loan category.
In accordance with the SBA terms and conditions on these PPP loans, the Company received approximately $6.9
million in fees associated with the processing of these loans. Upon funding of the loan, these fees were deferred and
will be amortized over the life of the loan as an adjustment to yield in accordance with FASB ASC 310-20-25-2.
During 2020, the Bank recognized $2.8 million of PPP service fees in Interest and fees on loans.
Note 5 | Allowance for Loan Losses
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses
the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Bank
has grouped certain loans in the portfolio into the following segments: commercial; real estate - construction; real estate
- residential owner occupied; real estate - residential non-owner occupied; real estate - commercial; and consumer.
Historical loss percentages for each risk category are calculated and used as the basis for calculating allowance
allocations. These historical loss percentages are calculated over a three-year period for all portfolio segments. Certain
qualitative factors are then added to the historical allocation percentage to get the adjusted factor to be applied to non-
classified loans.
The following qualitative factors are analyzed for each portfolio segment:
Levels of and trends in delinquencies, nonaccruals and classified loans
Trends in volume and terms of loans
Changes in lending policies, underwriting and procedures
Volatility of losses within each risk category
Trends in underlying collateral values
Economic factors
19
2 8 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Note 5 | Allowance for Loan Losses (Continued)
Concentrations of credit
Experience, depth and ability of management and lending personnel
The allowance consists of specific and general components. The specific component relates to loans that are classified
as Substandard or Special Mention. For such loans that are also classified as impaired, an allowance is established
when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the
carrying value of that loan. The general component covers non-classified loans and is based on historical loss
experience adjusted for qualitative factors.
The total allowance reflects management's estimate of loan losses inherent in the loan portfolio at the balance sheet
date. The Bank considers the allowance for loan losses of approximately $10,487,000 adequate to cover loan losses
inherent in the loan portfolio, as of December 31, 2020.
Allowance for loan losses activity during 2020 is as follows:
(in thousands)
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Unallocated
Total
Balance at
December 31,
2019
$ 3,988
484
445
452
2,907
16
1
$ 8,293
Charged-
off Loans
$ (807)
-
-
(100)
-
-
-
$ (907)
Recoveries
$ -
-
-
-
1
-
-
$ 1
Provision
$ 1,755
68
11
24
1,034
(8)
216
$ 3,100
Balance at
December 31,
2020
$ 4,936
552
456
376
3,942
8
217
$ 10,487
As a result of the issuance of $219 million of PPP loans during 2020, the commercial loan portfolio increased $191
million over last year end, the addition of the PPP loans, secured by the SBA, did not increase provision. The economic
conditions related to the pandemic had a significant impact on the overall reserve. Specific reserves accounted for
$810,000 in additional provision in the commercial portfolio, as well as reduced by loans charged off and increased
due to factor changes in levels and trends of delinquent, nonaccrual and classified loans and also by increases in
economic factors. Real estate – commercial increased by $77 million in regular portfolio loans, increasing the related
reserve for changes in volume as well as increases in the economic factors during 2020. The majority of $39 million
in SBA loans outstanding (not including PPP loans) fall into the commercial and real estate-commercial portfolios.
From the prior year, the unsecured SBA balances decreased $14 million, reducing allowance needed. The unallocated
portion of the provision increased in the second quarter as business closures, due to the pandemic, remained in place
without a clear end to the restrictions.
Allowance for loan losses activity during 2019 is as follows:
(in thousands)
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Unallocated
Balance at
December 31,
2018
$ 2,700
479
499
354
2,521
14
346
Charged-
off Loans
$ (761)
(12)
-
(9)
(53)
-
-
Recoveries
86
$
-
-
-
-
-
-
Provision
$ 1,963
17
(54)
107
439
2
(345)
Balance at
December
31, 2019
$ 3,988
484
445
452
2,907
16
1
Total
$ 6,913
$ (835)
$ 86
$ 2,129
$ 8,293
20
F I N A N C I A L S | 2 9
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 5 | Allowance for Loan Losses (Continued)
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
During 2019, the commercial loan portfolio increased $16 million over last year end. Although the historical loss
factor has declined over last year, the overall allocation of provision for commercial loans has the highest percentage
of estimated losses allocated to the portfolio. This is due to a larger volume of SBA loans in this category. The SBA
portfolio also had an increase in the factor for levels of delinquent and nonaccrual loans, as these make up a significant
percentage of balances in those categories, as well as an increase in specific reserves for impaired loans. The real
estate – commercial allowance is also provided for at a higher rate due to volume and growth of $52 million in the
portfolio, as well as an increase in the historical loss factor for multifamily loans. The increase in allowance for real
estate - residential non-owner occupied was due to volume increases of $13 million along with an increase in
substandard loans. The changes in the reserve for the remaining portfolio segments were primarily due to changes in
volume. The decline in the unallocated was a result of growth in the entire loan portfolio.
The following tables present, by portfolio segment, the allowance for loan losses broken down between loans
individually evaluated for impairment and loans collectively evaluated for impairment, as well as the recorded
investment in those loans:
(in thousands)
Allowance for loan losses:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Unallocated
Total
Loans, ending balance:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Total
December 31, 2020
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
$ 2,526
-
71
15
168
-
-
$ 2,780
$ 9,382
-
555
625
849
9
$ 11,420
$
2,410
552
385
361
3,774
8
217
$ 7,707
$ 387,600
52,024
47,408
44,604
420,146
1,012
$ 952,794
Total
$ 4,936
552
456
376
3,942
8
217
$ 10,487
$ 396,982
52,024
47,963
45,229
420,995
1,021
$ 964,214
21
3 0 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Note 5 | Allowance for Loan Losses (Continued)
(in thousands)
Allowance for loan losses:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Unallocated
Total
Loans, ending balance:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Total
Credit Quality and Aging
December 31, 2019
Individually
Evaluated for
Impairment
Collectively
Evaluated for
Impairment
$ 1,716
-
14
50
-
6
-
$ 1,786
$ 5,793
-
576
968
614
6
$ 7,957
$
2,272
484
431
402
2,907
10
1
$ 6,507
$ 200,414
48,311
50,627
51,382
343,471
981
$ 695,186
Total
$ 3,988
484
445
452
2,907
16
1
$ 8,293
$
206,207
48,311
51,203
52,350
344,085
987
$ 703,143
The following tables represent credit exposures for the Bank’s commercial loan classes by internally assigned grades
for the periods ended December 31, 2020 and 2019. The grading analysis estimates the capability of the borrower to
repay the contractual obligations of the loan agreements as scheduled or at all. The Bank's internal credit risk grading
system is based on experiences with similarly graded loans.
The Bank's internally assigned grades are as follows:
Pass – loans which are protected by the current net worth and paying capacity of the obligor or by
the value of the underlying collateral.
Special Mention – loans where a potential weakness or risk exists, which could cause a more serious
problem if not corrected.
Substandard – loans that have a well-defined weakness based on objective evidence and are
characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are
not corrected.
Doubtful – loans classified as “Doubtful” have all the weaknesses inherent in a Substandard asset.
In addition, these weaknesses make collection or liquidation in full highly questionable and
improbable, based on existing circumstances.
Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as
an asset is not warranted.
22
F I N A N C I A L S | 3 1
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Note 5 | Allowance for Loan Losses (Continued)
(in thousands)
December 31, 2020
Commercial
$ 369,532
8,049
19,401
-
-
$ 396,982
Real Estate -
Construction
$ 52,024
-
-
-
-
$ 52,024
Real Estate -
Residential Non-
owner Occupied
$ 44,550
42
637
-
-
$ 45,229
Real Estate -
Commercial
$ 409,051
11,095
849
-
-
$ 420,995
Total
$ 875,157
19,186
20,887
-
-
$ 915,230
Commercial
$ 200,092
227
5,879
9
-
$ 206,207
Real Estate -
Construction
$
48,311
-
-
-
-
$ 48,311
December 31, 2019
Real Estate -
Residential
Non-owner
Occupied
$ 50,840
220
1,290
-
-
$ 52,350
Real Estate -
Commercial
$ 342,006
1,464
615
-
-
$ 344,085
Total
$ 641,249
1,911
7,784
9
-
$ 650,953
Pass
Special mention
Substandard
Doubtful
Loss
Total
(in thousands)
Pass
Special mention
Substandard
Doubtful
Loss
Total
Payment activity for the noncommercial portfolio is reviewed by management on a monthly basis to determine how
loans are performing. Loans are considered nonperforming when they become 90 days past due or the Bank is in
possession of other information that would deem the loan nonperforming.
The following tables present performing and nonperforming loans based on payment activity for the period ended:
(in thousands)
At December 31, 2020
At December 31, 2019
Performing
Nonperforming
Past-Due and Nonaccrual Loans
Real Estate -
Residential
Owner Occupied
$ 47,202
761
$ 47,963
Consumer
$ 1,012
9
$ 1,021
Real Estate -
Residential
Owner Occupied
50,654
$
549
51,203
$
Consumer
$ 981
6
$ 987
Although the Bank may be receiving partial payments of interest and/or partial repayments of principal on loans over
90 days delinquent they are reviewed for downgrades to nonaccrual status. When a loan is placed in nonaccrual
status, previously accrued but unpaid interest is deducted from interest income. Payment activity is reviewed by
management on a monthly basis to determine how loans are performing. Loans are generally considered to be
nonperforming when they become 90 days past due.
23
3 2 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE
Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 5 | Allowance for Loan Losses (Continued)
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
The following table presents an aging analysis of the recorded investment of past-due financing receivables, broken
down by segment and sub-segment, based on payment activity for the years ended December 31, 2020 and 2019.
(in thousands)
December 31, 2020
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner
occupied
Real estate - commercial
Consumer
Total
30-89
Days Past
Due
$ 831
-
631
90 + Days
Past Due
$ 10,303
-
501
Total
Past Due
$ 11,134
-
1,132
Current
$ 385,848
52,024
46,831
Total
Loans
$ 396,982
52,024
47,963
Non-
Accrual
$ 9,113
-
555
-
598
-
$ 2,060
499
684
-
$ 11,987
499
1,282
-
$ 14,047
44,730
419,713
1,021
$ 950,167
45,229
420,995
1,021
$ 964,214
625
510
9
$ 10,812
(in thousands)
December 31, 2019
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner
occupied
Real estate - commercial
Consumer
Total
30-89
Days Past
Due
$ 1,325
121
20
90 + Days
Past Due
$ 7,256
-
564
Total
Past Due
$ 8,581
121
584
Current
$ 197,626
48,190
50,619
Total
Loans
$ 206,207
48,311
51,203
Non-
Accrual
$ 3,346
-
576
208
3,993
11
$ 5,678
776
248
6
$ 8,850
984
4,241
17
$ 14,528
51,366
339,844
970
$ 688,615
52,350
344,085
987
$ 703,143
968
275
6
$ 5,171
There were $1,423,000 and $4,078,000 of loans 90 days past due or greater still accruing interest at December 31,
2020 and 2019, respectively.
F I N A N C I A L S | 3 3
24
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 5 | Allowance for Loan Losses (Continued)
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Impaired Loans
Management analyzes commercial and commercial real estate loans which are 90 days or more past due for
impairment to determine if it is probable that all amounts will not be collected according to the contractual terms of
the loan agreement. Factors considered by management in determining impairment include payment status, collateral
value and the probability of collecting scheduled principal and interest payments when due. Loans that experience
insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines
the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the
circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the
borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.
Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted
at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral-dependent. Additionally,
any loan modified in a troubled debt restructuring is impaired regardless of the loan class. If management determines
that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs,
deferred loan fees or costs, and unamortized premium or discount), impairment is recognized through an allowance
estimate or a charge-off to the allowance.
The following tables include the recorded investment and unpaid principal balances for impaired financing
receivables with the associated allowance amount, if applicable, as of and for the periods ended December 31, 2020
and 2019.
(in thousands)
December 31, 2020
With no related allowance recorded:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner
occupied
Real estate - commercial
Consumer
With an allowance recorded:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner
occupied
Real estate - commercial
Consumer
Total
Recorded
Investment
$ 3,205
-
431
Unpaid
Principal
Balance
$ 3,419
-
431
376
525
9
6,177
-
124
376
525
9
6,518
-
124
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$
-
-
-
-
-
-
2,526
-
71
$
1,724
-
506
584
498
2
5,398
-
127
$ 154
-
22
72
78
1
125
-
9
249
324
-
$ 11,420
249
324
-
$ 11,975
15
168
-
$ 2,780
50
65
3
$ 8,957
14
4
-
$ 479
25
3 4 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Note 5 | Allowance for Loan Losses (Continued)
(in thousands)
December 31, 2019
Recorded
Investment
Unpaid
Principal
Balance
$ 2,280
-
445
$ 2,381
-
445
Related
Allowance
$ -
-
-
868
614
-
3,513
-
131
868
614
-
3,513
-
131
-
-
-
1,716
-
14
100
-
6
$ 7,957
100
-
6
$ 8,058
50
-
6
$ 1,786
Average
Recorded
Investment
Interest
Income
Recognized
$
$
2,467
-
497
671
1,223
-
4,292
-
52
20
-
9
9,231
$ 178
-
46
52
119
-
26
-
3
3
-
-
$ 427
With no related allowance recorded:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner
occupied
Real estate - commercial
Consumer
With an allowance recorded:
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner
occupied
Real estate - commercial
Consumer
Total
Loan Modifications
Situations may arise that would cause the Bank to grant a concession for other-than-temporary purpose to a borrower
experiencing financial difficulty that the Bank would not otherwise consider. The loan receiving the concession would
then be classified as a troubled debt restructuring (“TDR”). The situations leading to the concession may be economic
or legal in nature and affect the borrower’s ability to meet the contractual obligation to the Bank. Management
actively attempts to identify borrowers having financial difficulty early, and work with them to modify terms prior to
the loan becoming nonaccrual. Modifications may include rate reductions, payment forbearance, principal reduction,
or other actions with the intent to minimize the loss and/or avoid foreclosure or repossession of collateral. In cases
where a restructure occurs, management measures impairment based on collateral to support the revised terms of the
loan. If the loan is not collateral dependent, impairment is calculated using the present value of the revised loan terms
compared to the recorded investment in the loan at the measurement date. TDRs are individually evaluated and
provided for in the allowance for loan losses and are therefore excluded from pooled portfolio allocations.
Management continually evaluates loans that are considered TDRs under the modified loan terms, including payment
history and the borrower’s ability to continue to repay the loan based on continued evaluations of their results of
operation and cash flow from operations.
No loan modifications considered TDRs were completed during the twelve-month period ended December 31, 2020.
26
F I N A N C I A L S | 3 5
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 5 | Allowance for Loan Losses (Continued)
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Loan modifications that were considered TDRs completed during the twelve-month period ended December 31, 2019,
are as follows:
(in thousands)
Commercial
Real estate - construction
Real estate - residential owner occupied
Real estate - residential non-owner occupied
Real estate - commercial
Consumer
Total troubled debt restructurings
December 31, 2019
Pre-Modification
Outstanding
Recorded
Investment
$ 2,275
-
-
-
339
-
$ 2,614
Post-Modification
Outstanding
Recorded
Investment
$ 2,275
-
-
-
339
-
$ 2,614
Number of
Contracts
4
-
-
-
2
-
6
Modifications determined to be concessions granted by management were in the form of interest only loan payments
until maturity and re-amortization, and extension of terms with rate adjustments.
Amounts within the allowance for loan losses allocated to TDRs are $691,000 and $206,000 at December 31, 2020
and 2019, respectively.
Loan Forbearance Program Under the CARES Act
Section 4013 of the CARES Act provides that banks may elect not to categorize a loan modification as a TDR if the
loan modification is (1) related to COVID-19; (2) executed on a loan that was not more than 30 days past due as of
December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date on which
the national emergency concerning COVID–19 declared on March 13, 2020 terminates, or (B) December 31, 2020.
Short-term loan modifications, not otherwise eligible under Section 4013, that are made on a good faith basis in
response to COVID-19 to borrowers who were current prior to any relief, are not TDRs. This includes short-term
(e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other
delays in payment that are insignificant.
During 2020, Centric’s loan customers requested deferrals on 428 loans with outstanding principal balances of $240
million. Loan deferrals were in the form of interest only payments, full principle and interest payments or temporary
line increases. During the year, some borrowers requested and were granted extensions on their deferrals. As of
December 31, 2020, 37 loans remained in a deferral position with outstanding balances of $21 million. In accordance
with Section 4013 of the CARES Act and the interagency guidance issued on April 7, 2020. These short-term
deferrals are not considered troubled debt restructurings.
In addition, the risk-rating on COVID-19 modified loans did not change, and these loans will not be considered past
due until after the deferral period is over and scheduled payments resume. The credit quality of these loans will be
reevaluated after the deferral period ends.
27
3 6 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 5 | Allowance for Loan Losses (Continued)
NOTE 5 - ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Foreclosed Assets
Foreclosed assets acquired in settlement of loans, or received via a deed in lieu transaction, prior to the period end,
are carried at fair value, less estimated costs to sell, and are included in other assets on the Consolidated Balance
Sheet. There were no foreclosed assets remaining as of December 31, 2020. Foreclosed assets were $21,000 at
December 31, 2019. As of December 31, 2020, the Company has initiated formal foreclosure proceedings on
$374,000 of consumer residential mortgages, which have not yet been transferred into foreclosed assets.
Note 6 | Premises and Equipment
NOTE 6 - PREMISES AND EQUIPMENT
Ongoing additions to premises and equipment are recorded at cost. Occupancy and equipment expense includes
depreciation expense of $590,000 and $389,000 for the years ended December 31, 2020 and 2019, respectively.
Depreciation expense is calculated on the straight-line method over estimated economic lives: buildings and
improvements, 15 to 40 years; leasehold improvements, 10 years; furniture, fixtures, and equipment, 3 to 10 years.
No fixed assets were disposed during 2020. Disposals made during 2019 amounted to $49,000 and resulted in a net
gain on disposal of $15,000.
Premises and equipment were comprised of the following:
(in thousands)
Land
Buildings and improvements
Leasehold improvements
Furniture, fixtures, and equipment
Finance lease right-of-use asset
Construction in process
Subtotal
Less: accumulated depreciation
Premises and equipment - net
Note 7 | Leases
NOTE 7 - LEASES
2020
$ 3,256
4,215
1,765
4,193
5,208
12
18,649
(4,769)
$ 13,880
2019
$ 3,256
2,723
1,765
3,485
5,472
1,531
18,232
(4,179)
$ 14,053
A lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or
equipment for a period of time in exchange for consideration. Substantially all of the leases in which the Company is
the lessee are comprised of real estate property for branch buildings, land, an operations building, and loan production
offices with terms extending through 2044. With the adoption of Topic 842, operating lease agreements are required
to be recognized on the Consolidated Balance Sheet as a right-of-use (“ROU”) asset and a corresponding lease
liability. The Company has two finance leases, a branch building and a land lease on which the Bank just completed
building a branch.
F I N A N C I A L S | 3 7
28
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 7 | Leases (Continued)
NOTE 7 – LEASES (CONTINUED)
The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or
equipment leases (deemed immaterial) on the Consolidated Balance Sheet. The following table represents the
Consolidated Balance Sheet classification of the Company’s ROU assets and lease liabilities at December 31, 2020
and 2019.
(in thousands)
Lease right-of-use assets
Operating lease right-of-use assets
Finance lease right-of-use assets
Total lease right-of-use assets
Lease liabilities
Operating lease liabilities
Finance lease liabilities
Total lease liabilities
Classification
2020
2019
Other assets
Premises and equipment, net
$ 3,229
5,208
$ 8,437
$ 3,834
5,472
$ 9,306
Long-term debt
Long-term debt
$ 3,224
5,519
$ 8,743
$ 3,849
5,631
$ 9,480
The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the
lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements
often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers
the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the
calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate
implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company
utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating
leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was used. For the
Company’s finance leases, the Company utilized its incremental borrowing rate at lease inception.
Weighted-average remaining lease term
Operating lease
Finance lease
Weighted-average discount rate
Operating lease
Finance lease
2020
2019
5.9 years
20.2 years
6.6 years
21.2 years
5.22%
5.84%
5.21%
5.84%
The following table represents lease costs and other lease information for the periods ended:
(in thousands)
Lease costs
Finance lease cost
Amortization of right-of-use asset
Interest expense
Operating lease cost
Short-term lease cost
Variable lease cost
2020
2019
$
264
327
791
15
6
$ 1,403
$ 219
264
660
13
4
$ 1,160
The variable lease cost primarily represents variable payments such as common area maintenance and utilities.
29
3 8 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 7 | Leases (Continued)
NOTE 7 – LEASES (CONTINUED)
Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more
as of December 31, 2020 are as follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total future minimum lease payments
Amounts representing interest
Present value of net future minimum lease payments
Note 8 | Deposits
NOTE 8 - DEPOSITS
Centric’s deposits were comprised of the following:
(in thousands)
Demand, non-interest-bearing
Demand, interest-bearing
Savings
Money market
Time deposits
Total deposits
Scheduled maturities of time deposits are as follows:
(in thousands)
2021
2022
2023
2024
2025
Total time deposits
Finance Leases
$ 373
413
420
431
442
7,691
$ 9,770
(4,251)
$ 5,519
Operating Leases
$ 710
778
739
701
131
734
3,793
(569)
3,224
$
$
2020
2019
$ 196,367
$ 109,799
269,182
9,777
155,621
295,528
172,538
7,058
147,130
245,535
$ 926,475
$ 682,060
2020
$ 282,545
12,240
425
286
32
$ 295,528
Time deposits in denominations greater than $250,000 totaled $92,441,000 and $115,251,000 for December 31, 2020
and 2019, respectively.
F I N A N C I A L S | 3 9
30
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 9 | Short-Term Borrowing
NOTE 9 - SHORT-TERM BORROWINGS
Short-term borrowings, which consist of federal funds purchased and other short-term borrowings are summarized as
follows:
(in thousands)
Balance
Maximum indebtedness at any month end
Average balance during year
Average rate paid for the year
Interest rate on year-end balance
At December 31,
2020
2019
$
$
20,000
30,000
21,328
0.69%
0.61%
-
18,000
3,516
2.41%
0.00%
Average amounts outstanding during the year represent daily averages. Average interest rates represent interest
expense divided by the related average balances. These borrowing transactions can range from overnight to one year
in maturity. The average maturity was 59 and 174 days for the years ended December 31, 2020 and 2019, respectively.
Note 10 | Long-Term Debt
NOTE 10 - LONG-TERM DEBT
As one avenue for funding, the Bank is approved by the FHLB for borrowings of up to $316,135,000 of which
$73,956,000 was outstanding in the form of advances and $34,000,000 was outstanding in the form of letters of credit
at December 31, 2020. Advances from the FHLB are secured by qualifying assets of the Bank.
During 2015, the Company issued $6,000,000 in junior subordinated debentures held by a financial institution
maturing in December 2025. The debt bears interest at a fixed rate of 4.85 percent until December 2020, at which
time the interest rate converts to a floating rate equal to Prime Rate plus one percent with a floor of 4.25 percent.
During 2017, the Company issued $4,000,000 in additional subordinated debentures to four institutions all with the
following terms: fixed rate of 5.50 percent for five years, then converts to a floating rate of WSJ prime + 1.00 percent,
each maturing in June 2027. The Company maintains the ability to redeem these debentures on or after June 2022.
Subordinated debentures issued by the company are unsecured.
A $6,000,000 borrowing, issued by the Company, was outstanding at December 31, 2020 and 2019, with a rate of
4.85 percent, maturing in April 2022.
During December 2020, the Company entered into the Federal Reserve Banks’ Paycheck Protection Program
Liquidity Facility (“PPPLF”) with advances secured by pledges of loans originated or purchased by the SBA 7(a)
program titled the Paycheck Protection Program (“PPP”). Collateral is equal to the principal amount of the PPP loan
or loan pool outstanding at the time it is pledged as PPPLF collateral. Centric borrowed $4,723,000 at 35 basis points
using three loan pools that mature in 2025. Payments are made on the borrowing as loan balances are paid or as SBA
forgiveness reimbursement is made.
The following table presents borrowings that mature at various dates through 2027 with weighted-average rates as
follows:
(in thousands)
FHLB advances - fixed
Subordinated debt
Other borrowings
Paycheck Protection Program Liquidity Facility
Total Long-term debt
Principal Amount
Weighted Average Rate
2020
$
53,955
10,000
6,000
4,723
$ 74,678
2019
$ 44,955
10,000
6,000
-
$ 60,955
2020
2019
1.55%
5.11%
4.85%
0.35%
2.22%
2.21%
5.11%
4.85%
-
2.94%
31
4 0 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 10 | Long-Term Debt (Continued)
NOTE 10 - LONG-TERM DEBT (CONTINUED)
The aggregate amount of future principal payments required on these borrowings at December 31, 2020, is as follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
$
18,000
41,955
-
-
10,723
4,000
$ 74,678
Note 11 | Stock Plans and Other Employee Benefits
NOTE 11 - STOCK PLANS AND OTHER EMPLOYEE BENEFITS
401(k) Plan
The Bank has a 401(k) plan whereby all employees are eligible to participate after 90 days of employment. Employees
may make contributions to the plan, subject to certain limitations based on federal tax laws. The Bank makes
matching contributions of 50 percent of employees’ contributions, subject to a maximum contribution of 6 percent of
an employee’s compensation. Matching contributions vest to the employee on a graded percentage and are fully
vested in five years. For the years ended December 31, 2020 and 2019, expense attributable to the plan amounted to
$196,000 and $166,000, respectively. These expenses are included in salaries and employee benefits on the
Consolidated Statement of Income.
Supplemental Executive Retirement Plan
The Company maintains deferred compensation agreements with certain members of executive management which
provide benefits payable beginning at age sixty-seven, or upon subsequent retirement from the Company, or if the
executive(s) becomes totally disabled. Under certain circumstances, benefits are payable to designated beneficiaries.
The present value of the estimated liability under the agreement is being accrued using a discount rate of 4.0% ratably
over the remaining years to the date when the executives are first eligible for benefits. The deferred compensation
charged to expense totaled $128,000 and $123,000 for the year ended December 31, 2020 and 2019, respectively. As
of December 31, 2020 and 2019, the total accrued liability is $321,000 and $193,000, respectively.
Stock Incentive Plans
The Company’s Stock Incentive Plan of 2007 (the “2007 Plan”) enabled the Company to grant stock options, warrants,
or restricted stock awards to directors and other designated employees. Grants under the 2007 Plan were issued from
2007 through 2017. The Stock Incentive Plan of 2017 (the “2017 Plan”) expires in 2027 and covers up to 250,000
shares of common stock of which 102,959 remain available for grant at year end. Under both the 2007 and 2017
plans, issuances have a grant price at least equal to the fair market value of the common stock on the date of the grant
and expire not more than ten years after the date of the grant. Exercise and vesting dates and terms may vary and are
specified at the date of the grant.
F I N A N C I A L S | 4 1
32
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 11 - STOCK PLANS AND OTHER EMPLOYEE BENEFITS (CONTINUED)
Note 11 | Stock Plans and Other Employee Benefits (Continued)
Options of the Plans outstanding at December 31, 2020, and the activity that occurred during the year consisted of
the following:
Outstanding at the beginning of the year
Granted
Exercised
Forfeited
Outstanding at the end of the year
Exercisable at December 31, 2020
Stock Incentive Plan
Weighted-
Average Exercise
Price
$
7.19
6.91
5.72
6.69
$ 7.29
Options
120,018
53,859
(17,879)
(7,066)
148,932
109,072
$ 7.33
At December 31, 2020, the aggregate intrinsic value of all outstanding and exercisable options is $231,000 and
$174,000, respectively. The weighted-average remaining life of outstanding options is 6.88 years and exercisable
options is 5.95 years. Stock options of 17,879 and 16,936 were exercised at a weighted average price of $5.72 and
$5.76 during 2020 and 2019, respectively.
For the years ended December 31, 2020 and 2019, stock option compensation expense of $58,000 and $31,000 was
recognized in connection with the option plan, respectively. A tax benefit of $8,000 and $6,000 was recognized
relative to these stock options at December 31, 2020 and 2019, respectively. As of December 31, 2020, related future
compensation expense is approximately $89,000 expensed over 2.45 years.
The fair value of the options granted for the years ended December 31, 2020 and 2019, was calculated using the
Black-Scholes option pricing model with the following weighted-average assumptions:
Nonemployee director stock options
2020
2019
Employee stock options
2020
Restricted Stock
Exercise
Price
Dividend
Yield
Expected
Volatility
Expected
Risk Free
Value
Life (Yrs)
Interest Rate
Black-Scholes
$7.08
10.40
0.00%
0.00%
32.89%
9.86%
5
5
0.33%
2.26%
$2.07
1.53
$6.84
0.00%
39.96%
6.5
0.38%
$2.72
Under the 2007 Plan, all awards have been fully vested and no restricted award shares remain outstanding in that plan.
As of December 31, 2020, over the life of the 2017 Plan, the Company has awarded 59,239 restricted shares to the
Bank’s employees subject to vesting and other provisions.
The following table summarizes transactions regarding restricted stock under the Plan:
Non-vested shares at the beginning of the year
Granted
Vested
Forfeited
Non-vested shares at the end of the year
Number of
Restricted Shares
41,989
21,782
(12,574)
(650)
50,547
Weighted-
Average Grant
Date Price Per
Share
$ 8.95
7.03
6.25
7.93
$ 8.80
33
4 2 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
NOTE 11 - STOCK PLANS AND OTHER EMPLOYEE BENEFITS (CONTINUED)
Note 11 | Stock Plans and Other Employee Benefits (Continued)
For the years ended December 31, 2020 and 2019, compensation expense of $136,000 and $123,000 was recognized
in connection with the vesting of restricted stock, with corresponding tax benefits of $28,000 and $26,000,
respectively. Future compensation expense related to non-vested restricted stock at December 31, 2020 is expected
to total $209,000 expensed over 1.89 years.
Warrants
During 2010, the Company granted one warrant to each founding director with continuing service. Each of these ten
warrants, which are not part of the 2007 or 2017 plans, were granted with terms including: the right to purchase 31,500
shares; an exercise price of $5.44; vesting upon a change in control; and, expiration in 2025. In 2013, a warrant was
granted to the President and CEO with the same terms, other than an exercise price of $5.50.
During 2020, five of these warrants were exchanged for warrants with all the original terms other than an expiration
date in 2035.
Another five of these warrants were amended in 2020 with all of the original terms other than vesting over two years.
During 2020, rights to purchase 45,940 shares vested with a corresponding expense of $85,000 and tax benefit of
$14,000. Rights to purchase 78,750 shares will vest in 2021 and vesting ends in 2022 with the rights to purchase
32,810 shares with corresponding expense fixed at $193,000 in total for the two years, to be amortized ratably.
The total of all outstanding warrants, vested and unvested, decreased to 345,000 at year end due to the exercised
purchase of 1,500 shares at $5.50 during 2020. The average exercise price for both vested and unvested warrants
outstanding is $5.45.
Employee Stock Purchase Plan
The Company implemented an Employee Stock Purchase Plan (ESPP) in 2015 that provides employees an
opportunity to acquire common stock in the Company at fair market value. The Company reserved 200,000 shares
of its common stock for the ESPP, of which 26,912 shares have been issued. The number of shares issued during
2020 and 2019 was 4,246 and 7,443, respectively.
Note 12 | Federal Income Taxes
NOTE 12 - FEDERAL INCOME TAXES
The provision for income taxes consists of the following for the period ended:
(in thousands)
Currently payable
Deferred taxes
Total income tax expense
2020
$ 2,917
(546)
$ 2,371
2019
$ 2,260
(372)
$ 1,888
34
F I N A N C I A L S | 4 3
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 12 | Federal Income Taxes (Continued)
NOTE 12 - FEDERAL INCOME TAXES (CONTINUED)
The following temporary differences gave rise to the net deferred tax assets at December 31:
(in thousands)
Deferred tax assets:
Allowance for loan losses
Stock incentive expense
Uncollected interest
Unrealized losses on securities held-to-maturity
Loan origination fees, net
Lease liability
Supplemental retirement
Other
Total deferred tax assets
Deferred tax liabilities:
Goodwill and core deposit intangible
Prepaid expenses
Unrealized gains on securities available-for-sale
Premises and equipment
Right-of-use asset
Other
Total deferred tax liabilities
Net deferred tax assets
2020
2019
$ 2,202
84
52
2
350
1,836
67
111
4,704
94
22
20
230
1,772
28
2,166
$ 2,538
$ 1,742
52
25
8
318
1,990
40
97
4,272
86
44
13
163
1,954
7
2,267
$ 2,005
The total provision for income taxes is different from that computed at the statutory rates due to the following items
for the years ended December 31:
(in thousands)
Computed statutory tax expense
Other, net
2020
$ 2,400
(29)
$ 2,371
2019
$ 1,926
(38)
$ 1,888
The Company utilizes a recognition threshold and a measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be
recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon
examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax
position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is
greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet
the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period
in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not
recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold
is no longer met.
There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company
recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income
taxes in the Consolidated Statement of Income. With few exceptions, the Company is no longer subject to U.S.
federal, state, or local income tax examination by tax authorities for years before 2017.
35
4 4 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 13 | Related-Party Transactions
NOTE 13 - RELATED-PARTY TRANSACTIONS
Centric has transactions in the ordinary course of business with its directors, their immediate families, and affiliated
companies (commonly referred to as related parties).
In management’s opinion, all loans and deposits with related parties are on the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with other customers. At December 31,
2020, loans to related parties were $3,073,000 and deposits by related parties totaled $5,844,000. At December 31,
2019, loans to related parties were $2,680,000 and deposits by related parties totaled $5,429,000.
Related-party loan activity is summarized as follows:
(in thousands)
Balance at the beginning of the period
Additions
Reductions
Balance at the end of the period
December 31,
2020
2019
$ 2,680
1,009
(616)
$ 3,073
$ 3,182
282
(784)
$ 2,680
None of the loans to related parties are past due, on nonaccrual status or have been restructured, nor were there any
loans to a related party that were considered classified loans at December 31, 2020 or 2019.
All of Centric’s directors are customers of the Bank. Conversely, the Bank is a customer of some stockholder-related
entities in the ordinary course of business. For the years ended December 31, 2020 and 2019, related-party transactions
include $252,000 and $45,000 of expense, respectively, for payments made to an insurance firm and law firm.
Note 14 | Unfunded Credit Commitments
NOTE 14 - UNFUNDED CREDIT COMMITMENTS
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet
the financing needs of its customers. These financial instruments include commitments to extend credit and letters
of credit by the Bank. Such instruments involve, to varying degrees, elements of credit risk in excess of the amount
recognized in the balance sheet.
The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument is
represented by the contractual amount of those instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet instruments.
Unfunded lending commitments at year-end:
(In thousands)
Commitment to grant loans
Unfunded commitments under lines of credit
Standby letters of credit
Total unfunded lending commitments
2020
$ 5,337
142,281
14,196
$ 161,814
2019
$
4,185
123,947
10,769
$ 138,901
F I N A N C I A L S | 4 5
36
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 14 | Unfunded Credit Commitments (Continued)
NOTE 14 - UNFUNDED CREDIT COMMITMENTS (CONTINUED)
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Since many of the commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee. The Bank evaluates each customer’s
creditworthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit
evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory,
and equipment. Commitments under lines of credit presented above include lines that will be funded only to the
extent that the Bank receives corresponding augmentation of satisfactory collateral.
Outstanding letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer
to a third-party and are reviewed annually. The credit risk involved in issuing letters of credit is essentially the same
as in extending comparable loans to customers. The Bank requires collateral supporting these letters of credit as
deemed necessary. Management believes that the proceeds through liquidation of such collateral would be sufficient
to cover the maximum potential amount of future payments required under the corresponding guarantees.
Note 15 | Regulatory Matters
NOTE 15 - REGULATORY MATTERS
The Company and the Bank are subject to the Basel III Capital Rules. These rules introduced the “capital conservation
buffer”. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain
off-balance-sheet items as calculated under U.S. GAAP, regulatory reporting requirements, and regulatory capital
standards. Failure to meet minimum capital requirements can initiate certain mandatory-and possible additional
discretionary-actions by regulators that, if undertaken, could have a direct material effect on the Company's financial
statements. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.
Quantitative measures established by regulatory capital standards to ensure capital adequacy require that the Bank
maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital to risk-weighted
assets, common equity Tier 1 capital to total risk-weighted assets, and of Tier 1 capital to average assets. Management
believes, as of December 31, 2020 and 2019, that the Bank met all capital adequacy requirements to which it was
subject.
As of December 31, 2020, the Bank is categorized as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based capital,
Tier 1 risk-based capital, common equity Tier 1 risk-based capital, and Tier 1 leverage ratios as set forth in the table.
There are no conditions or events since that notification that management believes have changed the Bank’s category.
4 6 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
37
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 15 | Regulatory Matters (Continued)
NOTE 15 - REGULATORY MATTERS (CONTINUED)
The Company and the Bank’s capital ratios as of December 31, 2020 and 2019, are presented below:
(in thousands)
December 31, 2020
For Capital Adequacy
Purposes (including
capital conservation
buffers)
Actual
Amount
Ratio
Amount
Ratio
Minimum to be
Well Capitalized
Ratio
Amount
Total capital (to risk-weighted assets)
Company
Bank
$ 103,485
109,539
12.01%
12.72%
$ 90,474
90,421
10.50%
10.50%
$ N/A
86,116
N/A
10.00%
Tier 1 capital (to risk-weighted assets)
Company
Bank
Common equity tier 1 capital (to risk-
weighted assets)
Company
Bank
Tier 1 capital (to average assets)
Company
Bank
(in thousands)
84,036
98,890
9.76%
11.48%
73,187
73,220
8.50%
8.50%
N/A
68,913
N/A
8.00%
84,036
98,890
84,036
98,890
9.76%
11.48%
7.91%
9.31%
60,272
60,299
42,496
42,488
7.00%
7.00%
4.00%
4.00%
N/A
55,992
N/A
53,110
N/A
6.50%
N/A
5.00%
Total capital (to risk-weighted assets)
Company
Bank
Tier 1 capital (to risk-weighted assets)
Company
Bank
Common equity tier 1 capital (to risk-
weighted assets)
Company
Bank
Tier 1 capital (to average assets)
Company
Bank
Actual
Amount
Ratio
$ 95,539
98,902
77,064
90,427
77,064
90,427
77,064
90,427
13.17%
13.63%
10.62%
12.47%
10.62%
12.47%
9.71%
11.41%
December 31, 2019
For Capital Adequacy
Purposes (including
capital conservation
buffers)
Amount
Ratio
Minimum to be
Well Capitalized
Ratio
Amount
$
76,170
76,190
10.50%
10.50%
$ N/A
72,562
N/A
10.00%
61,680
61,638
8.50%
8.50%
N/A
58,013
N/A
8.00%
50,795
50,761
31,746
31,701
7.00%
7.00%
4.00%
4.00%
N/A
47,135
N/A
39,626
N/A
6.50%
N/A
5.00%
Dividends are generally restricted by federal banking laws based upon regulatory defined profit. The Company does
not intend to declare cash dividends for the foreseeable future.
F I N A N C I A L S | 4 7
38
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 16 | Fair Value Measurements
NOTE 16 - FAIR VALUE MEASUREMENTS
The following shows the hierarchal disclosure framework associated with the level of pricing observations utilized in
measuring assets and liabilities at fair value. The three broad levels are defined as follows:
Level I: Quoted prices are available in active markets for identical assets or liabilities as of the reported
date.
Level II: Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly
observable as of the reported date. The nature of these assets and liabilities includes items for which
quoted prices are available but traded less frequently and items that are fair-valued using other financial
instruments, the parameters of which can be directly observed.
Level III: Valuations derived from valuation techniques in which one or more significant inputs or significant value
drivers are unobservable.
This hierarchy requires the use of observable market data when available.
The following tables present the assets reported on the Consolidated Balance Sheet at their fair value as of December
31, 2020 and 2019, by level within the fair value hierarchy. Financial assets and liabilities are classified in their
entirety based on the lowest level of input that is significant to the fair value measurement.
(in thousands)
Fair value measured on a recurring basis:
U.S. government agency securities
Government sponsored mortgage-backed securities
Equity securities
Fair value measured on a non-recurring basis:
Impaired loans
(in thousands)
Fair value measured on a recurring basis:
U.S. government agency securities
Government sponsored mortgage-backed securities
Fair value measured on a non-recurring basis:
Other real estate owned
Impaired loans
Level I
Level II
Level III
Total
December 31, 2020
$ -
-
2,118
$ 2,296
10,303
-
$ -
-
-
$ 2,296
10,303
2,118
-
-
3,699
3,699
Level I
Level II
Level III
Total
December 31, 2019
$ -
-
$ 8,038
21,827
$ -
-
$ 8,038
21,827
-
-
-
-
21
1,882
21
1,882
Investment Securities
The fair market value of investment securities is equal to the available quoted market price. If no quoted market price
is available, fair value is estimated using the quoted market price for similar securities. Fair value for certain held-
to-maturity securities were determined utilizing discounted cash flow models, due to the absence of a current market
to provide reliable market quotes for the instruments.
Equity Securities
These investments are with actively traded equity securities and, therefore, have been classified as Level 1 valuations.
39
4 8 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 16 | Fair Value Measurements (Continued)
NOTE 16 - FAIR VALUE MEASUREMENTS (CONTINUED)
Impaired Loans
The Company has measured impairment on loans generally based on the fair value of the loan’s collateral. Fair value
is generally determined based upon independent third-party appraisals of the properties. In some cases, management
may adjust the appraised value due to the age of the appraisal, changes in market conditions, or observable
deterioration of the property since the appraisal was completed. Additionally, management makes estimates about
expected costs to sell the property which are also included in the net realizable value. If the fair value of the collateral
dependent loan is less than the carrying amount of the loan, a specific reserve for the loan is made in the allowance
for loan losses, or a charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling
costs) and the loan is included in the table above as a level III measurement. If the fair value of the collateral exceeds
the carrying amount of the loan, then the loan is not included in the table above as it is not currently being carried at
its fair value. At December 31, 2020 and 2019, the fair values shown above exclude estimated selling costs of $49,000
for each year listed.
Other Real Estate Owned
OREO is carried at the lower of cost or fair value measured at the date of foreclosure. If the fair value of the collateral
exceeds the carrying amount of the loan, no charge-off or adjustment is necessary, the loan is not considered to be
carried at fair value, and is, therefore, not included in the table above. If the fair value of the collateral is less than the
carrying amount of the loan, management will charge the loan down to its estimated realizable value. The fair value
of OREO is based on the appraised value of the property, which is generally unadjusted by management and is based
on comparable sales for similar properties in the same geographic region as the subject property, and is included in
the above table as a Level II measurement. In some cases, management may adjust the appraised value due to the
age of the appraisal, changes in market conditions, or observable deterioration of the property since the appraisal was
completed. In this case, the property is categorized in the above table as level III measurement, because the adjustment
is considered to be an “unobservable” input. Income and expenses from operations and further declines in the fair
value of the collateral subsequent to foreclosure are included in net expenses from OREO. At December 31, 2020 no
properties remained in OREO. For the year ended December 31, 2019, one property was included in OREO and was
written down at the time of foreclosure, therefore, it is considered to be carried at fair value.
The following tables presents quantitative information about the Level III significant unobservable inputs for assets
and liabilities measured at fair value on a non-recurring basis at December 31, 2020 and 2019.
(in thousands)
Quantitative Information about Level 3 Fair Value Measurements
Fair Value
Estimate
Valuation Technique
Unobservable Input
Range
December 31, 2020
Impaired loans
$ 3,699 Appraisal of collateral
Appraisal adjustments
Liquidation expenses
December 31, 2019
0% - 100%
0% - 15%
(in thousands)
Quantitative Information about Level 3 Fair Value Measurements
Fair Value
Estimate
Valuation Technique
Unobservable Input
Range
Impaired loans
$ 1,882 Appraisal of collateral
Appraisal adjustments
Liquidation expenses
0% - 60%
0% - 20%
Other real estate owned
21 Appraisal of collateral
Appraisal adjustments
Liquidation expenses
Weighted
Average
9.97%
0.97%
Weighted
Average
13.44%
3.74%
20.00%
15.15%
F I N A N C I A L S | 4 9
40
A FINANCIAL LIFELINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 17 | Fair Value of Financial Instruments
NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company’s financial instruments that are not carried at fair value on the Consolidated Balance
Sheet is as follows:
Securities held to maturity
Net loans
Loans held for sale
Mortgage servicing rights
and credit enhancement fees
Time deposits
Finance lease liability
Long-term debt
(in thousands)
Financial assets:
Securities held to maturity
Net loans
Loans held for sale
Mortgage servicing rights
and credit enhancement fees
Financial liabilities:
Time deposits
Finance lease liability
Long-term debt
December 31, 2020
Carrying
Value
Fair
Value
Level I
Level II
Level III
$ 28,282
953,727
2,166
$
28,685
957,470
2,166
$ -
-
2,166
$ 28,685
-
-
$
-
957,470
-
1,124
1,055
-
-
1,055
$ 295,528
5,519
74,678
$ 296,472
6,935
75,393
$ -
-
-
$ -
-
-
$ 296,472
6,935
75,393
December 31, 2019
Carrying
Value
Fair
Value
Level I
Level II
Level III
$ 4,009
694,850
1,687
$
4,068
694,989
1,687
$ -
-
1,687
$ 3,724
-
-
$ 344
694,989
-
1,337
1,346
-
$ 245,535
5,631
60,955
$ 246,227
7,030
61,152
$ -
-
-
$
-
-
-
-
1,346
$ 246,227
7,030
61,152
Cash and Cash Equivalents, Investments in Certificates of Deposits, Regulatory Stock, Cash Surrender Value
Life Insurance, Accrued Interest Receivable, Non-maturity deposits, Short-term borrowings, and Accrued
Interest Payable
The fair value is equal to the current carrying value.
41
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A LOCAL STORYLINE Notes to Consolidated Financial Statements
CENTRIC FINANCIAL CORPORATION
Note 18 | Adoption of Accounting Policies
NOTE 18 – ADOPTION OF ACCOUNTING POLICIES
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses
on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to
improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments
held by financial institutions and other organizations. The underlying premise of the Update is that financial assets
measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for
credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect
management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset.
The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as
well as the expected increases or decreases of expected credit losses that have taken place during the period. With
certain exceptions, transition to the new requirements will be through a cumulative-effect adjustment to opening
retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This Update is
effective for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies,
to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We expect to
recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of the beginning of the first
reporting period in which the new standard is effective but cannot yet determine the magnitude of any such one-time
adjustment or the overall impact of the new guidance on the consolidated financial statements.
In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and
exceptions on contract modifications and hedge accounting to ease the financial reporting burdens of the expected
market transition from LIBOR and other interbank offered rates to alternative reference rates. Entities can elect not
to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate
reform” if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the
modification date or reassess a previous accounting determination. Entities could make a onetime election to sell
and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform.
Adoption of the ASU is expected to have an immaterial impact on the Company’s financial statements.
Note 19 | Risk Factors
NOTE 19 – RISK FACTORS
Centric and its subsidiary could be adversely impacted by a number of risks and uncertainties that are difficult to
predict. As a financial institution certain risk elements are inherent in the ordinary course of the Company’s business
activities and adverse experience with those risks could have a material impact on the Company’s business, financial
condition and results of operations, as well as on the value of the Company’s common stock. The Company strives
to identify, understand, and mitigate its exposure to significant risks. The following risk factors set forth some of the
risks that could materially and adversely impact the Company, although there may be additional risks that are not
presently material or known that may adversely affect the Company.
Changes in current or future market conditions; the effects of the Covid-19 pandemic limitations on business and how
it will impact the economy: liquidity risks; 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 changes to economic
conditions; and other risks and uncertainties.
Note 20 | Subsequent Events
NOTE 20 – SUBSEQUENT EVENTS
Management has reviewed events occurring through March 16, 2021, the date the financial statements were
issued, and no subsequent events have occurred requiring accrual or disclosure.
F I N A N C I A L S | 5 1
42
A FINANCIAL LIFELINE Board of Directors
Front row (left to right): Nicole S. Kaylor, Member, McNees Wallace & Nurick, LLC; Patricia A. Husic,
President & CEO, Centric Financial Corporation and Centric Bank; Donald E. Enders, Jr., Chairman of
the Board, President & CEO, Colonial Park Realty Company, t/a Enders Insurance Associates; and
Jeffrey W. Keiser, DDS, Dental Consultant.
Back row (left to right): Kerry A. Pae, Secretary, Centric Financial Corporation, President & Owner,
Kerry Pae Auctioneers, Inc.; John A. Maher, CPA, Vice Chairman of the Board, Fellow, Cambridge
University; Thomas H. Flowers, CPA, Managing Partner, Flowers & Flowers CPAs; Frank A. Conte, CLU,
ChFC, Founding Partner, Conte Wealth Advisors, LLC; and Steven P. Dayton, Business Development, RVG
Management & Development Company, P.C.
A crisis reveals the true character of people, and our executive
leadership continues to be inspired by the selflessness, collaboration,
innovation, compassion, and commitment of our team.
PAT TI HUSIC, President and CEO
Centric Bank
5 2 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINE Executive Leadership Team
Patricia A. Husic
President and CEO
Jeffrey W. Myers, SEVP
Chief Lending Officer
Sandra J. Schultz, SEVP
Chief Financial Officer
Clair M. Finkenbinder, III, EVP
Chief Information Officer and
Director of Operations
Leslie A. Meck, EVP
Chief Retail Officer
William T. McGrath, EVP
Chief Credit Officer
Kimberly L. Turner, EVP
Chief Risk Officer
Christine Pavlakovich, EVP
Chief Human Resources Officer
Senior Lending Team
Left to right: Jacqueline
M. Fahey, SVP, Bucks
County Market Leader;
Kevin M. Boland, SVP,
Lancaster Market Leader;
Christopher J. Bickel, SVP,
Main Line Market Leader;
Donald J. Bonafede,
SVP, Senior Commercial
Lending Officer; and
Michael J. Watson, SVP,
Senior Commercial
Lending Officer.
E X E C U T I V E L E A D E R S H I P T E A M | 5 3
A FINANCIAL LIFELINE Branch Management, Treasury Management, Lending,
and Business Development
BRANCH MANAGEMENT
Mary Anne E. Bayer, VP
Silver Spring Financial Center Manager
TREASURY MANAGEMENT
Timothy J. Merrell, SVP
Director of Cash Management and
Treasury Services
Greg S. Carter, VP
Lower Paxton Financial Center Manager
Julie M. Conway, VP
Doylestown Financial Center Manager
Martin L. Haenn, VP
Devon Financial Center Manager
Timothy C. Mayersky, VP
Derry Township Financial Center
Senior Manager
Joseph M. Rebarchak, VP
Capital Region Retail Market Manager
Paulette M. Rovito, VP
Camp Hill Financial Center Manager
Joanne F. Cicino
Devon Financial Center
Assistant Manager
Mark A. Holst, AVP
Cash Management Customer
Care Officer
COMMERCIAL LENDING
Capital Region
Donald J. Bonafede, SVP
Commercial Lending Team Leader
Michael J. Watson, SVP
Commercial Lending Team Leader
Cory G. Bishop, VP
Commercial Lending Officer
Sean P. Burns, VP
Commercial Lending Officer
Cheryl C. Sakalosky, VP
Commercial Lending Officer
Silvia L. Foley
Derry Township Financial Center
Assistant Manager
Lancaster
Kevin M. Boland, SVP
Commercial Lending Team Leader
Patricia A. Kuhn
Silver Spring Financial Center
Assistant Manager
Lori L. Moyer
Lower Paxton Financial Center
Assistant Manager
Nicole M. Thompson
Camp Hill Financial Center
Assistant Manager
Spencer T. Beck, VP
Commercial Lending Officer
Doylestown
Jacqueline A. Fahey, SVP
Bucks County Market Leader
Christopher E. McDermott, SVP
Commercial Lending Officer
Kim L. Arnold, VP
Commercial Lending Officer
John H. Dean, VP
Portfolio Manager
Devon
Christopher J. Bickel, SVP
Main Line Market Leader
Joseph N. Desiderio, VP
Commercial Lending Officer
William J. Farina, VP
Commercial Lending Officer
Kevin P. Guns, VP
Commercial Lending Officer
MORTGAGE LENDING
Paul B. Zwally, SVP
Director of Mortgage Services &
Commercial Lender
Gethan (Getty) K. Wilson, VP
Mortgage Department Team Leader
Brian S. Connor
Mortgage Lending Officer
Robert J. Ryan
Mortgage Lending Officer
BUSINESS DEVELOPMENT
Patrick N. Snyder, VP
Senior Business Development Officer
Molly R. O’Keefe, VP
Business Development Officer
Bruce E. Straub
Business Development Officer
5 4 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
A LOCAL STORYLINECFCX Centric Bank Financial Centers and Commercial Lending Offices
HEADQUARTERS AND LOWER
DERRY TOWNSHIP
DOYLESTOWN COMMERCIAL
PAXTON FINANCIAL CENTER
4320 Linglestown Road
Harrisburg, PA 17112
717.657.7727 | ATM Open 24/7
FINANCIAL CENTER
1201 West Governor Road
Hummelstown, PA 17036
717.533.7626 | ATM Open 24/7
CORPORATE, EXECUTIVE,
SILVER SPRING
LENDING OFFICE AND
CONCIERGE FINANCIAL CENTER
2003 S. Easton Road, Suite 205
Doylestown, PA 18901
267.880.4333
OPERATIONS, AND MORTGAGE
CENTER
1826 Good Hope Road
Enola, PA 17025
717.657.7727
CAMP HILL FINANCIAL CENTER
1625 Market Street
Camp Hill, PA 17011
717.730.2816 | ATM Open 24/7
FINANCIAL CENTER
6480 Carlisle Pike
Mechanicsburg, PA 17050
717.591.1360 | ATM Open 24/7
DEVON FINANCIAL CENTER
105 Lancaster Avenue
Devon, PA 19333
610.710.4222 | ATM Open 24/7
LANCASTER COMMERCIAL
DEVON COMMERCIAL
LENDING OFFICE AND
CONCIERGE FINANCIAL CENTER
22 E. Roseville Road, Unit D
Lancaster, PA 17601
717.614.6855
LENDING OFFICE
80 W. Lancaster Avenue, Suite 200
Devon, PA 19333
610.710.4800
Banking recognizes Patti Husic
Team Victories in 2020
3 x
• American Banker Best Banks to Work For 2020
6 x
• American Banker Most Powerful Women in
3 x
• American Banker Most Powerful Women in
• American Banker Top 200 Community Banks
2 x
• Central Penn Business Journal Top 50 Fastest
7 x
Banking Top Team
Growing Companies
• Independent Banker’s Top Lenders
2 x
• Opened New Devon Financial Center in
Chester County
• Transitioned Lancaster Lending Office into a
full-service Lancaster Concierge Financial Center
• Launched The Centric Globe newsletter for
Centric employees
C E N T R I C B A N K F I N A N C I A L C E N T E R S A N D C O M M E R C I A L L E N D I N G O F F I C E S | 5 5
A FINANCIAL LIFELINE A L O C A L S T O R Y L I N E | A F I N A N C I A L L I F E L I N E
Our Mission
Centric Bank is a locally owned, locally loaned community bank that provides a variety
of core financial services to businesses, professionals, and individuals. We promise our
customers immediate, direct access to our bank decision makers and deliver the finest
personalized service in the industry. Centric has committed people and resources to
enrich the communities where we live and work. Because trust is our most important
commodity, we are focused on building and sustaining long-term generational
relationships with our customers, our community, our employees, and our shareholders.
In every transaction, We Revolve Around You.
Our Vision
We aspire to become the locally owned, independent community bank of choice for
small and medium-sized businesses, professionals, and individuals in Pennsylvania.
We will combine steady growth, consistent earnings, and firm control of risk factors
to provide safety for our depositors. Our people will be the difference in establishing
consistency in earnings and enhanced shareholder value.
Core Values
We trust our principles are clear to every customer from the moment you enter our
facilities or speak to a Centric Bank representative:
• We value an uncompromising dedication to understanding and meeting our clients’
financial needs.
• We recognize and reward the contributions of our team members and believe that
qualified, loyal, and committed professionals are our most valuable asset.
• We practice prudent business planning and cost management strategies to ensure
financial viability and responsible growth.
• We embrace change and continually seek ways to provide quality, cost-effective
services that meet or exceed our clients’ expectations.
• We seek to establish a relationship of trust and respect with our clients and value
integrity as an organization and as individuals.
• We are committed to providing the best possible service to our clients. We will
go above and beyond what is required to attract and retain cherished business
relationships. Our goal is to build relationships. We Revolve Around You.
INVESTOR RELATIONS
Common Stock Transactions
Centric Financial Corporation’s
Common Stock is traded for
investors as OTC Pink: CFCX.
Centric Financial Corporation
uses the following registered
market makers for their Common
Stock.
• Boenning & Scattergood, Inc.
4 Tower Bridge
200 Barr Harbor Dr., Suite 300
West Conshohocken, PA 19428
• Janney Montgomery Scott LLC
1475 Peachtree St. NE
Suite 800
Atlanta, GA 30309
• Keefe, Bruyette & Woods
787 Seventh Avenue
New York, NY 10019
• Raymond James &
Associates, Inc.
222 South Riverside Plaza
Seventh Floor
Chicago, IL 60606
• JWTT, Inc.
1231 NW Hoyt Street
Suite 206 Portland, OR 97209
Registrar and Transfer Agent
AST Financial
ATTN: Centric Financial
Corporation
6201 15th Ave.
Brooklyn, NY 11219
800.937.5449
info@amstock.com
5 6 | C E N T R I C F I N A N C I A L C O R P O R AT I O N A N N U A L R E P O R T 2 0 2 0
CFCX The
26
Centric Bank Way
Fundamentals
capture the
spirit of
our team:
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Be a brand ambassador.
Do the right thing, always.
Deliver legendary service.
Do whatever it takes.
Listen generously.
Speak straight.
Be a fanatic about response time.
Honor commitments.
Show grit.
Invest in relationships.
Focus on solutions.
Make quality personal.
Be positive.
Pay attention to the details.
Create a great impression.
Do what’s best for the client.
Be relentless about improvement.
Collaborate.
“Bring It” every day.
Make healthy choices.
Show meaningful appreciation.
Fix the problem–not the blame.
Assume positive intent.
Embrace change.
Keep things fun.
Contribute to the community.
Personal relationships are our business.
We Revolve Around You means
more than technology, transactions, or
data! When you need a bank that values
the moments as much as the milestones,
and Main Street as much as Wall Street,
Centric Bank is your champion.
C E N T R I C F I N A N C I A L C O R P O R AT I O N
Corporate Headquarters: 4320 Linglestown Road, Harrisburg, PA 17112
717.657.7727 | Fax 717.657.7748 | www.CentricBank.com | www.DrCentricBank.com
NMLS #690920
CFCX