AmeriServ Financial Reports Earnings for the First Quarter of 2010

JOHNSTOWN, Pa., April 20 /PRNewswire-FirstCall/ -- AmeriServ Financial, Inc. (Nasdaq: ASRV) reported a first quarter 2010 net loss of $918,000 or $0.06 per diluted common share.  This represents a decrease of $1.5 million from the first quarter 2009 net income of $533,000 or $0.01 per diluted common share but an improvement from the more recently reported fourth quarter 2009 net loss of $1.7 million or $0.09 per diluted common share.  

Glenn L. Wilson, President and Chief Executive Officer, commented on the 2010 first quarter financial results, "AmeriServ Financial reported a loss for the first quarter of 2010 due to an increased provision for loan losses.  We continue to carefully monitor our commercial loan portfolio during this difficult economic environment to insure that we provide the needed reserves in a consistent and realistic manner.  This review indicated the need for a $3.1 million contribution to our allowance for loan losses in the first quarter of 2010; although the amount of the quarterly provision has now declined for two consecutive quarters.  As a result of our disciplined approach, the allowance for loan losses provided 110% coverage of non-performing loans at March 31, 2010 and represented 3.02% of total loans outstanding.  These sound reserve coverage measures combined with our strong capital position and good core retail banking fundamentals provide AmeriServ with excellent flexibility to work through this challenging period and position us well for the eventual economic recovery."  

The Company's net interest income in the first quarter of 2010 was comparable with the prior year first quarter as it declined by only $20,000.  The Company's first quarter 2010 net interest margin of 3.78% was six basis points better than the 2009 first quarter margin of 3.72% and three basis points better than the more recent fourth quarter 2009 net interest margin of 3.75%.  This relative stability in net interest income and 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 $787 million in the first quarter of 2010, an increase of $72 million or 10.1% over the first quarter 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 have looked for safety in well capitalized community banks like AmeriServ Financial.  Overall, the decline in interest expense has been comparable with the drop in interest revenue which has been impacted by a $10 million or 1.4% decrease in total loans outstanding since December 31, 2009.

The Company appropriately strengthened its allowance for loan losses in the first quarter of 2010 in response to ongoing careful monitoring of the commercial loan and commercial real estate portfolios.  A weak economic environment caused higher levels of nonperforming loans and classified loans.  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 $3.1 million provision for loan losses in the first quarter of 2010 compared to a $1.8 million provision in the first quarter of 2009, or an increase of $1.3 million.  Actual credit losses realized through charge-offs, however, are running well below the provision level but are higher than the prior year.  For the first quarter 2010, net charge-offs amounted to $1.2 million or 0.69% of total loans compared to net charge-offs of $49,000 or 0.03% of total loans for the first quarter 2009.    During the first quarter, non-performing assets increased by $2 million to $20.3 million or 2.85% of total loans at March 31, 2010.  This increase was caused by the transfer of one commercial real estate loan that is secured by newly constructed student housing into non-accrual status as the project has not yet stabilized to support the required principal payments on the loan.  In summary, the allowance for loan losses provided 110% coverage of non-performing loans and was 3.02% of total loans at March 31, 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 first quarter of 2010 decreased by $261,000 or 7.3% from the prior year's first quarter.  The largest item responsible for the quarterly decline was a $105,000 decrease in trust fees as a result of reductions in the market value of assets managed due to lower values in its specialty real estate funds in 2010.  Deposit service charges also dropped by $101,000 due to fewer overdraft fees.  These negative items were partially offset by a $50,000 increase in investment advisory fees due to improved equity values in the first quarter of 2010.      

Total non-interest expense in the first quarter of 2010 increased by $602,000 or 6.6% when compared to the first quarter of 2009.  FDIC deposit insurance expense was the largest factor contributing to the higher non-interest expense as it increased by $299,000 in the first quarter of 2010 due to an increased basic assessment rate.  Professional fees also increased by $182,000 due to increased legal fees, consulting expenses and recruitment costs in the Trust Company during the first quarter of 2010.  Total salaries and benefits expense in the first quarter of 2010 increased by $107,000 or 2.1% as a result of higher medical insurance costs.        

ASRV had total assets of $961 million and shareholders' equity of $106 million or a book value of $4.04 per common share at March 31, 2010.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status with a risk based capital ratio of 15.52%, an asset leverage ratio of 11.01% and a tangible common equity to tangible assets ratio of 7.70% at March 31, 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

April 20, 2010

(In thousands, except per share and ratio data)

(All quarterly and 2010 data unaudited)








2010






1QTR











PERFORMANCE DATA FOR THE PERIOD:






Net income (loss)

$  (918)





Net income (loss) available to common shareholders

(1,181)











PERFORMANCE PERCENTAGES (annualized):






Return on average assets

(0.39)%





Return on average equity

(3.47)





Net interest margin

3.78





Net charge-offs as a percentage of average loans

0.69





Loan loss provision as a percentage of average loans

1.72





Efficiency ratio

85.42











PER COMMON SHARE:






Net income (loss):






Basic

$ (0.06)





Average number of common shares outstanding

21,224





Diluted

(0.06)





Average number of common shares outstanding

21,224


















2009






1QTR

2QTR

3QTR

4QTR

YEAR






TO DATE

PERFORMANCE DATA FOR THE PERIOD:






Net income (loss)

$    533

$  (939)

$ (2,810)

$ (1,679)

$ (4,895)

Net income (loss) available to common shareholders

274

(1,202)

(3,073)

(1,941)

(5,942)







PERFORMANCE PERCENTAGES (annualized):






Return on average assets

0.22%

(0.39)%

(1.15)%

(0.70)%

(0.51)%

Return on average equity

1.90

(3.29)

(9.83)

(6.01)

(4.33)

Net interest margin

3.72

3.66

3.57

3.75

3.72

Net charge-offs as a percentage of average loans

0.03

0.19

0.35

1.82

0.60

Loan loss provision as a percentage of average loans

1.02

1.81

3.42

2.05

2.09

Efficiency ratio

78.22

82.56

84.00

92.82

84.39







PER COMMON SHARE:






Net income (loss):






Basic

$   0.01

$ (0.06)

$   (0.15)

$   (0.09)

$   (0.28)

Average number of common shares outstanding

21,137

21,151

21,178

21,219

21,172

Diluted

0.01

(0.06)

(0.15)

(0.09)

(0.28)

Average number of common shares outstanding

21,137

21,152

21,182

21,219

21,174



AMERISERV FINANCIAL, INC.

(In thousands, except per share, statistical, and ratio data)

(All quarterly and 2010 data unaudited)







2010





1QTR




PERFORMANCE DATA AT PERIOD END:





Assets

$    960,817




Short-term investment in money market funds

2,105




Investment securities

150,073




Loans

712,929




Allowance for loan losses

21,516




Goodwill

12,950




Deposits

802,201




FHLB borrowings

25,296




Shareholders' equity

106,393




Non-performing assets

20,322




Asset leverage ratio

11.01%




Tangible common equity ratio

7.70




PER COMMON SHARE:





Book value (A)

$          4.04




Market value

1.67




Trust assets - fair market value (B)

$ 1,398,215









STATISTICAL DATA AT PERIOD END:





Full-time equivalent employees

353




Branch locations

18




Common shares outstanding

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






Note:

(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



INTEREST INCOME




Interest and fees on loans

$                10,020

Total investment portfolio

1,445

Total Interest Income

11,465



INTEREST EXPENSE


Deposits

2,927

All borrowings

417

Total Interest Expense

3,344



NET INTEREST INCOME

8,121

Provision for loan losses

3,050



NET INTEREST INCOME AFTER PROVISION


FOR LOAN LOSSES

5,071



NON-INTEREST INCOME


Trust fees

1,454

Net realized gains on investment securities available for sale

65

Net realized gains on loans held for sale

131

Service charges on deposit accounts

572

Investment advisory fees

187

Bank owned life insurance

254

Other income

637

Total Non-Interest Income

3,300



NON-INTEREST EXPENSE


Salaries and employee benefits

5,199

Net occupancy expense

736

Equipment expense

418

Professional fees

1,102

FDIC deposit insurance expense

331

Other expenses

1,978

Total Non-Interest Expense

9,764



PRETAX INCOME (LOSS)

(1,393)

Income tax expense (benefit)

(475)

NET INCOME (LOSS)

(918)

Preferred stock dividends

263

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

$                 (1,181)










2009






1QTR

2QTR

3QTR

4QTR

YEAR






TO DATE

INTEREST INCOME












Interest and fees on loans

$    10,349

$ 10,544

$ 10,247

$ 10,310

$ 41,450

Total investment portfolio

1,586

1,511

1,451

1,457

6,005

Total Interest Income

11,935

12,055

11,698

11,767

47,455







INTEREST EXPENSE






Deposits

3,255

3,405

3,316

3,134

13,110

All borrowings

539

479

457

436

1,911

Total Interest Expense

3,794

3,884

3,773

3,570

15,021







NET INTEREST INCOME

8,141

8,171

7,925

8,197

32,434

Provision for loan losses

1,800

3,300

6,300

3,750

15,150







NET INTEREST INCOME AFTER PROVISION






FOR LOAN LOSSES

6,341

4,871

1,625

4,447

17,284







NON-INTEREST INCOME






Trust fees

1,559

1,438

1,377

1,274

5,648

Net realized gains on investment securities available for sale

101

63

-

-

164

Net realized gains on loans held for sale

118

163

213

157

651

Service charges on deposit accounts

673

710

712

674

2,769

Investment advisory fees

137

152

176

183

648

Bank owned life insurance

250

254

258

446

1,208

Other income

723

711

718

688

2,840

Total Non-Interest Income

3,561

3,491

3,454

3,422

13,928







NON-INTEREST EXPENSE






Salaries and employee benefits

5,092

4,983

5,114

5,337

20,526

Net occupancy expense

722

641

602

667

2,632

Equipment expense

415

442

398

437

1,692

Professional fees

920

873

1,050

1,189

4,032

FDIC deposit insurance expense

32

691

311

636

1,670

Amortization of core deposit intangibles

108

-

-

-

108

Other expenses

1,873

2,006

2,091

2,527

8,497

Total Non-Interest Expense

9,162

9,636

9,566

10,793

39,157







PRETAX INCOME (LOSS)

740

(1,274)

(4,487)

(2,924)

(7,945)

Income tax expense (benefit)

207

(335)

(1,677)

(1,245)

(3,050)

NET INCOME (LOSS)

533

(939)

(2,810)

(1,679)

(4,895)

Preferred stock dividends

259

263

263

262

1,047

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

$         274

$ (1,202)

$ (3,073)

$ (1,941)

$ (5,942)



AMERISERV FINANCIAL, INC.

AVERAGE BALANCE SHEET DATA

(In thousands)

(All quarterly and 2010 data unaudited)














2010


2009






1QTR


1QTR





Interest earning assets:




Loans and loans held for sale, net of unearned income

$ 717,247


$ 714,253

Deposits with banks

1,711


3,158

Short-term investment in money market funds

4,545


10,112

Federal funds

2,394


55

Total investment securities

148,399


148,465

Total interest earning assets

874,296


876,043





Non-interest earning assets:




Cash and due from banks

15,433


15,488

Premises and equipment

9,449


9,446

Other assets

79,643


71,004

Allowance for loan losses

(20,793)


(9,144)





Total assets

958,028


962,837





Interest bearing liabilities:




Interest bearing deposits:




Interest bearing demand

57,365


62,355

Savings

75,287


71,759

Money market

151,162


141,442

Other time

386,343


326,221

Total interest bearing deposits

670,157


601,777

Borrowings:




Federal funds purchased, securities sold under




  agreements to repurchase, and other short-term




  borrowings

5,490


94,901

Advanced from Federal Home Loan Bank

32,494


13,853

Guaranteed junior subordinated deferrable interest debentures

13,085


13,085

Total interest bearing liabilities

721,226


723,616





Non-interest bearing liabilities:




Demand deposits

116,954


113,298

Other liabilities

12,620


12,265

Shareholders' equity

107,228


113,658

Total liabilities and shareholders' equity

$ 958,028


$ 962,837



SOURCE AmeriServ Financial, Inc.



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http://www.ameriservfinancial.com

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