SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) July 20, 2010
AMERISERV FINANCIAL, Inc.
(exact name of registrant as specified in its charter)
Pennsylvania 0-11204 25-1424278
(State or other (commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
Main and Franklin Streets, Johnstown, Pa. 15901
(address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 814-533-5300
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
( ) Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
( ) Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4c))
Form 8-K
Item 2.02 Results of operation and financial condition.
AMERISERV FINANCIAL Inc. (the "Registrant") announced second quarter and first six months results through June 30, 2010. For a more detailed description of the announcement see the press release attached as Exhibit #99.1.
Exhibits
--------
Exhibit 99.1
Press release dated July 20, 2010, announcing the second quarter and first six months results through June 30, 2010.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERISERV FINANCIAL, Inc.
By /s/Jeffrey A. Stopko
Jeffrey A. Stopko
Executive Vice President
& CFO
Date: July 20, 2010
Exhibit 99.1
AMERISERV FINANCIAL REPORTS EARNINGS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF 2010
JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) returned to profitability in the second quarter of 2010 by reporting net income of $477,000 or $0.01 per diluted common share. This represents an increase of $1.4 million from the second quarter 2009 net loss of $939,000 or $0.06 per diluted common share. For the six month period ended June 30, 2010, the Company reported a net loss of $441,000 or $0.05 per diluted share which is comparable with the net loss of $406,000 reported for the same six month period in 2009. The following table highlights the Company’s financial performance for both the three and six month periods ended June 30, 2010 and 2009:
| Second Quarter 2010 | Second Quarter 2009 |
| Six Months Ended June 30, 2010 | Six Months Ended June 30, 2009 |
|
|
|
|
|
|
Net income (loss) | $477,000 | ($939,000) |
| ($441,000) | ($406,000) |
Diluted earnings per share | $ 0.01 | ( $ 0.06) |
| ($ 0.05) | ($0.04) |
Glenn L. Wilson, President and Chief Executive Officer, commented on the 2010 second quarter financial results, “Stabilization in our asset quality allowed us to record a lower provision for loan losses which was an important factor in our return to profitability in the second quarter of 2010. The benefits of our ongoing disciplined approach to monitoring our loan portfolio were evident this quarter as AmeriServ continued to maintain strong reserve coverage ratios even with the reduced loan loss provision. Specifically, the allowance for loan losses provided 108% coverage of non-performing loans at June 30, 2010 and represented 2.99% of total loans outstanding. I was also pleased with our capital strength and the revenue contribution of our retail bank during this difficult economic period. The continued growth of deposits throughout our community bank network was a positive factor contributing to our strong balance sheet liquidity and good net interest margin performance.”
The Company’s net interest income has been relatively consistent in 2010 increasing by $37,000 in the second quarter and $17,000 for the first six months of 2010 compared to the same periods in 2009. Careful management of funding costs during a period when interest revenues are declining has allowed the Company to increase its net interest margin by 12 basis points to average 3.81% for the first half of 2010. This continued stability in net interest income and improved margin performance is reflective of the Company’s strong liquidity position and its ability to reduce its funding costs during a period of deposit growth. Specifically, total deposits averaged $795 million in the first six months of 2010, an increase of $53 million or 7.1% over the first half of 2009. The Company believes that uncertainties in the economy have contributed to growth in money market accounts, certificates of deposit and demand deposits as consumers and businesses have looked for safety in well capitalized community banks like AmeriServ Financial. The net interest margin also benefitted from approximately $150,000 in loan prepayment penalties in 2010 as the Company has focused on reducing its commercial real estate exposure during this period of economic weaknesses. Overall, total loans outstanding have dropped by $29 million or 4.0% since December 31, 2009.
The Company has appropriately strengthened its allowance for loan losses over the past year in response to ongoing careful monitoring of the commercial loan and commercial real estate portfolios in this weak economic environment. When determining the provision for loan losses, the Company considers a number of factors some of which include periodic credit reviews, non-performing, delinquency and charge-off trends, concentrations of credit, loan volume trends and broader local and national economic trends. Overall, the Company recorded a $1.2 million provision for loan losses in the second quarter of 2010 compared to a $3.3 million provision in the second quarter of 2009, or a decrease of $2.1 million. For the six month period ended June 30, 2010, the Company recorded a $4.3 million provision for loan losses compared to a $5.1 million provision for the first half of 2009, or a decrease of $850,000. Actual credit losses realized through charge-offs in 2010, however, are running below the provision level but are higher than the prior year. For the first six months of 2010, net charge-offs amounted to $3.2 million or 0.91% of total loans compared to net charge-offs of $404,000 or 0.11% of total loans for the first half of 2009. The higher charge-offs in 2010 primarily relate to two non-performing commercial real-estate loans, one of which was completely resolved in the first quarter and the second of which relates to a student housing project which the Company currently expects to resolve through a note sale during the second half of 2010. During the second quarter, total non-performing assets declined modestly to $19.8 million or 2.85% of total loans. In summary, the allowance for loan losses provided 108% coverage of non-performing loans and was 2.99% of total loans at June 30, 2010, compared to 115% of non-performing loans and 2.72% of total loans at December 31, 2009.
The Company’s non-interest income in the second quarter of 2010 decreased by $103,000 from the prior year’s second quarter and for the first six months of 2010 decreased by $364,000 when compared to the first six months of 2009. The largest item responsible for the decline in both periods was a reduced level of deposit service charges which were down $99,000 in the second quarter and $200,000 for the first six months of 2010. Customers have maintained higher balances in their checking accounts which has resulted in fewer overdraft fees in 2010. Non-interest income has also been negatively impacted by a decrease in trust fees as a result of reductions in the market value of certain real estate assets we manage in our specialty real estate funds in 2010. Trust fees were $65,000 lower in the second quarter and $170,000 lower for the six month period. These negative items were partially offset by an increase in investment advisory fees due to overall improved equity values in 2010 and a continued strong level of revenue generated on residential mortgage loan sales into the secondary market.
Total non-interest expense in the second quarter of 2010 increased by $150,000 or 1.6% from the prior year’s second quarter and for the first six months of 2010 increased by $752,000 or 4.0% when compared to the first six months of 2009. Professional fees increased by $241,000 in the second quarter and $423,000 for the six month period due to increased consulting expenses and recruitment costs in the Trust company and higher legal fees and workout costs at the Bank in 2010. Total salaries and benefits were up by $253,000 for the second quarter and $360,000 for the six month period as a result of higher medical insurance costs and increased pension expense in 2010. These negative items were partially offset by a $350,000 FDIC deposit insurance expense decline in the second quarter and a $51,000 drop for the six month period due to the recognition of a special five basis point or $435,000 assessment in the 2009 second quarter.
ASRV had total assets of $962 million and shareholders’ equity of $108 million or a book value of $4.11 per common share at June 30, 2010. The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status with a risk based capital ratio of 15.90%, an asset leverage ratio of 11.08% and a tangible common equity to tangible assets ratio of 7.83% at June 30, 2010.
This news release may contain forward-looking statements that involve risks and uncertainties, as defined in the Private Securities Litigation Reform Act of 1995, including the risks detailed in the Company's Annual Report and Form 10-K to the Securities and Exchange Commission. Actual results may differ materially.
Nasdaq: ASRV
SUPPLEMENTAL FINANCIAL PERFORMANCE DATA
July 20, 2010
(In thousands, except per share and ratio data)
(All quarterly and 2010 data unaudited)
2010
| 1QTR | 2QTR | YEAR |
|
|
| TO DATE |
PERFORMANCE DATA FOR THE PERIOD: |
|
|
|
Net income (loss) | $(918) | $477 | $(441) |
Net income (loss) available to common shareholders | (1,181) | 215 | (966) |
|
|
|
|
PERFORMANCE PERCENTAGES (annualized): |
|
|
|
Return on average assets | (0.39)% | 0.20% | (0.09)% |
Return on average equity | (3.47) | 1.79 | (0.83) |
Net interest margin | 3.78 | 3.83 | 3.81 |
Net charge-offs as a percentage of average loans | 0.69 | 1.13 | 0.91 |
Loan loss provision as a percentage of average loans | 1.72 | 0.68 | 1.20 |
Efficiency ratio | 85.42 | 84.33 | 84.87 |
|
|
|
|
PER COMMON SHARE: |
|
|
|
Net income (loss): |
|
|
|
Basic | $(0.06) | $0.01 | $(0.05) |
Average number of common shares outstanding | 21,224 | 21,224 | 21,224 |
Diluted | (0.06) | 0.01 | (0.05) |
Average number of common shares outstanding | 21,224 | 21,245 | 21,231 |
|
|
|
|
2009
| 1QTR | 2QTR | YEAR |
|
|
| TO DATE |
PERFORMANCE DATA FOR THE PERIOD: |
|
|
|
Net income | $533 | $(939) | $(406) |
Net income available to common shareholders | 274 | (1,202) | (928) |
|
|
|
|
PERFORMANCE PERCENTAGES (annualized): |
|
|
|
Return on average assets | 0.22% | (0.39)% | (0.08)% |
Return on average equity | 1.90 | (3.29) | (0.72) |
Net interest margin | 3.72 | 3.66 | 3.69 |
Net charge-offs as a percentage of average loans | 0.03 | 0.19 | 0.11 |
Loan loss provision as a percentage of average loans | 1.02 | 1.81 | 1.42 |
Efficiency ratio | 78.22 | 82.56 | 79.93 |
|
|
|
|
PER COMMON SHARE: |
|
|
|
Net income: |
|
|
|
Basic | $0.01 | $(0.06) | $(0.04) |
Average number of common shares outstanding | 21,137 | 21,151 | 21,144 |
Diluted | 0.01 | (0.06) | (0.04) |
Average number of common shares outstanding | 21,137 | 21,152 | 21,144 |
|
|
|
|
AMERISERV FINANCIAL, INC.
(In thousands, except per share, statistical, and ratio data)
(All quarterly and 2010 data unaudited)
2010
| 1QTR | 2QTR |
PERFORMANCE DATA AT PERIOD END |
|
|
Assets | $960,817 | $962,282 |
Short-term investment in money market funds | 2,105 | 4,216 |
Investment securities | 150,073 | 157,057 |
Loans | 712,929 | 693,988 |
Allowance for loan losses | 21,516 | 20,737 |
Goodwill | 12,950 | 12,950 |
Deposits | 802,201 | 809,177 |
FHLB borrowings | 25,296 | 17,777 |
Shareholders’ equity | 106,393 | 108,023 |
Non-performing assets | 20,322 | 19,815 |
Asset leverage ratio | 11.01% | 11.08% |
Tangible common equity ratio | 7.70 | 7.83 |
PER COMMON SHARE: |
|
|
Book value (A) | $4.04 | $4.11 |
Market value | 1.67 | 1.61 |
Trust assets – fair market value (B) | $1,398,215 | $1,329,495 |
|
|
|
STATISTICAL DATA AT PERIOD END: |
|
|
Full-time equivalent employees | 353 | 355 |
Branch locations | 18 | 18 |
Common shares outstanding | 21,223,942 | 21,223,942 |
2009
| 1QTR | 2QTR | 3QTR | 4QTR |
PERFORMANCE DATA AT PERIOD END |
|
|
|
|
Assets | $975,062 | $978,899 | $959,344 | $970,026 |
Short-term investment in money market funds | 10,817 | 7,516 | 6,565 | 3,766 |
Investment securities | 138,853 | 136,119 | 138,715 | 142,883 |
Loans | 726,961 | 739,649 | 722,540 | 722,904 |
Allowance for loan losses | 10,661 | 13,606 | 19,255 | 19,685 |
Goodwill and core deposit intangibles | 13,498 | 13,498 | 12,950 | 12,950 |
Deposits | 746,813 | 783,807 | 779,185 | 786,011 |
FHLB borrowings | 90,346 | 57,702 | 44,451 | 51,579 |
Shareholders’ equity | 114,254 | 112,880 | 110,706 | 107,254 |
Non-performing assets | 5,099 | 14,670 | 23,689 | 18,337 |
Asset leverage ratio | 11.82% | 11.61% | 11.41% | 11.06% |
Tangible common equity ratio | 8.35 | 8.17 | 8.16 | 7.71 |
PER COMMON SHARE: |
|
|
|
|
Book value (A) | $4.44 | $4.37 | $4.25 | $4.09 |
Market value | 1.67 | 1.85 | 1.80 | 1.67 |
Trust assets – fair market value (B) | $1,432,375 | $1,376,272 | $1,340,119 | $1,358,570 |
|
|
|
|
|
STATISTICAL DATA AT PERIOD END: |
|
|
|
|
Full-time equivalent employees | 355 | 352 | 350 | 345 |
Branch locations | 18 | 18 | 18 | 18 |
Common shares outstanding | 21,144,700 | 21,156,801 | 21,215,115 | 21,221,909 |
NOTES:
(A) Preferred stock received through the Capital Purchase Program is excluded from the book value per common share calculation.
(B) Not recognized on the balance sheet.
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(All quarterly and 2010 data unaudited)
2010
| 1QTR | 2QTR | YEAR |
INTEREST INCOME |
|
| TO DATE |
Interest and fees on loans | $10,020 | $9,984 | $20,004 |
Total investment portfolio | 1,445 | 1,466 | 2,911 |
Total Interest Income | 11,465 | 11,450 | 22,915 |
|
|
|
|
INTEREST EXPENSE |
|
|
|
Deposits | 2,927 | 2,833 | 5,760 |
All borrowings | 417 | 409 | 826 |
Total Interest Expense | 3,344 | 3,242 | 6,586 |
|
|
|
|
NET INTEREST INCOME | 8,121 | 8,208 | 16,329 |
Provision for loan losses | 3,050 | 1,200 | 4,250 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 5,071 | 7,008 | 12,079 |
|
|
|
|
NON-INTEREST INCOME |
|
|
|
Trust fees | 1,454 | 1,373 | 2,827 |
Net realized gains on investment securities | 65 | 42 | 107 |
Net realized gains on loans held for sale | 131 | 159 | 290 |
Service charges on deposit accounts | 572 | 611 | 1,183 |
Investment advisory fees | 187 | 167 | 354 |
Bank owned life insurance | 254 | 258 | 512 |
Other income | 637 | 778 | 1,415 |
Total Non-interest Income | 3,300 | 3,388 | 6,688 |
|
|
|
|
NON-INTEREST EXPENSE |
|
|
|
Salaries and employee benefits | 5,199 | 5,236 | 10,435 |
Net occupancy expense | 736 | 639 | 1,375 |
Equipment expense | 418 | 427 | 845 |
Professional fees | 1,102 | 1,114 | 2,216 |
FDIC deposit insurance expense | 331 | 341 | 672 |
Other expenses | 1,978 | 2,029 | 4,007 |
Total Non-interest Expense | 9,764 | 9,786 | 19,550 |
|
|
|
|
PRETAX INCOME (LOSS) | (1,393) | 610 | (783) |
Income tax expense (benefit) | (475) | 133 | (342) |
NET INCOME (LOSS) | (918) | 477 | (441) |
Preferred stock dividends | 263 | 262 | 525 |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $(1,181) | $215 | $(966) |
2009
|
|
| YEAR |
INTEREST INCOME | 1QTR | 2QTR | TO DATE |
Interest and fees on loans | $10,349 | $10,544 | $20,893 |
Total investment portfolio | 1,586 | 1,511 | 3,097 |
Total Interest Income | 11,935 | 12,055 | 23,990 |
|
|
|
|
INTEREST EXPENSE |
|
|
|
Deposits | 3,255 | 3,405 | 6,660 |
All borrowings | 539 | 479 | 1,018 |
Total Interest Expense | 3,794 | 3,884 | 7,678 |
|
|
|
|
NET INTEREST INCOME | 8,141 | 8,171 | 16,312 |
Provision for loan losses | 1,800 | 3,300 | 5,100 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 6,341 | 4,871 | 11,212 |
|
|
|
|
NON-INTEREST INCOME |
|
|
|
Trust fees | 1,559 | 1,438 | 2,997 |
Net realized gains on investment securities | 101 | 63 | 164 |
Net realized gains on loans held for sale | 118 | 163 | 281 |
Service charges on deposit accounts | 673 | 710 | 1,383 |
Investment advisory fees | 137 | 152 | 289 |
Bank owned life insurance | 250 | 254 | 504 |
Other income | 723 | 711 | 1,434 |
Total Non-interest Income | 3,561 | 3,491 | 7,052 |
|
|
|
|
NON-INTEREST EXPENSE |
|
|
|
Salaries and employee benefits | 5,092 | 4,983 | 10,075 |
Net occupancy expense | 722 | 641 | 1,363 |
Equipment expense | 415 | 442 | 857 |
Professional fees | 920 | 873 | 1,793 |
FDIC deposit insurance expense | 32 | 691 | 723 |
Amortization of core deposit intangibles | 108 | - | 108 |
Other expenses | 1,873 | 2,006 | 3,879 |
Total Non-interest Expense | 9,162 | 9,636 | 18,798 |
|
|
|
|
PRETAX INCOME (LOSS) | 740 | (1,274) | (534) |
Income tax expense (benefit) | 207 | (335) | (128) |
NET INCOME (LOSS) | 533 | (939) | (406) |
Preferred stock dividends | 259 | 263 | 522 |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $274 | $(1,202) | $(928) |
AMERISERV FINANCIAL, INC.
Nasdaq: ASRV
Average Balance Sheet Data (In thousands)
(All quarterly and 2010 data unaudited)
2010
2009
|
| SIX |
| SIX |
| 2QTR | MONTHS | 2QTR | MONTHS |
Interest earning assets: |
|
|
|
|
Loans and loans held for sale, net of unearned income | $705,288 | $711,267 | $732,568 | $723,410 |
Deposits with banks | 1,743 | 1,776 | 1,715 | 1,731 |
Short-term investment in money market funds | 3,403 | 3,925 | 10,579 | 11,051 |
Federal funds sold | 2,683 | 2,539 | - | 28 |
Total investment securities | 157,390 | 152,894 | 144,863 | 146,664 |
|
|
|
|
|
Total interest earning assets | 870,507 | 872,401 | 889,725 | 882,884 |
|
|
|
|
|
Non-interest earning assets: |
|
|
|
|
Cash and due from banks | 14,534 | 14,984 | 14,005 | 14,747 |
Premises and equipment | 9,940 | 9,694 | 9,122 | 9,284 |
Other assets | 79,894 | 79,769 | 72,074 | 71,539 |
Allowance for loan losses | (22,075) | (21,434) | (11,101) | (10,123) |
|
|
|
|
|
Total assets | $952,800 | $955,414 | $973,825 | $968,331 |
|
|
|
|
|
Interest bearing liabilities: |
|
|
|
|
Interest bearing deposits: |
|
|
|
|
Interest bearing demand | $58,361 | $57,863 | $61,316 | $61,836 |
Savings | 78,778 | 77,032 | 72,988 | 72,373 |
Money market | 183,850 | 185,563 | 171,019 | 156,231 |
Other time | 357,938 | 354,084 | 347,422 | 336,821 |
Total interest bearing deposits | 678,927 | 674,542 | 652,745 | 627,261 |
Borrowings: |
|
|
|
|
Federal funds purchased, securities sold under agreements to repurchase, and other short- term borrowings | 2,140 | 3,815 | 52,358 | 73,629 |
Advanced from Federal Home Loan Bank | 18,332 | 25,413 | 13,840 | 13,847 |
Guaranteed junior subordinated deferrable interest debentures | 13,085 | 13,085 | 13,085 | 13,085 |
Total interest bearing liabilities | 712,484 | 716,855 | 732,028 | 727,822 |
|
|
|
|
|
Non-interest bearing liabilities: |
|
|
|
|
Demand deposits | 123,064 | 120,009 | 115,248 | 114,273 |
Other liabilities | 10,625 | 11,623 | 11,914 | 12,090 |
Shareholders’ equity | 106,627 | 106,927 | 114,635 | 114,146 |
Total liabilities and shareholders’ equity | $952,800 | $955,414 | $973,825 | $968,331 |