AmeriServ Financial Reports Earnings for the Fourth Quarter and Full Year of 2009

Jan 26, 2010, 08:00 ET from AmeriServ Financial, Inc.

JOHNSTOWN, Pa., Jan. 26 /PRNewswire-FirstCall/ -- AmeriServ Financial, Inc. (Nasdaq: ASRV) reported a fourth quarter 2009 net loss of $1.7 million or $0.09 per diluted share.  This represents a decrease of $3.3 million from the fourth quarter 2008 net income of $1.6 million or $0.07 per diluted share.  For the year ended December 31, 2009, the Company reported a net loss of $4.9 million or $0.28 per diluted share.  This also represents a decrease of $10.4 million when compared to net income of $5.5 million or $0.25 per diluted share for the full year of 2008.  The following table highlights the Company's financial performance for both the quarters and years ended December 31, 2009 and 2008:

Fourth Quarter 2009

Fourth Quarter 2008

Year Ended

December 31, 2009

Year Ended

December 31, 2008

Net income (loss)

($1,679,000)

$1,615,000

($4,895,000)

$5,509,000

Diluted earnings per share

         ($ 0.09)

          $ 0.07

                  ($ 0.28)

$0.25

Glenn Wilson, President and Chief Executive Officer, commented on the 2009 financial results, "AmeriServ Financial reported a loss for both the fourth quarter and full year of 2009 due to an increased provision for loan losses.  We performed a comprehensive review of our commercial loan portfolio during the second half of 2009 which included the gathering of the most current financial data we could obtain from our commercial borrowers to determine what impact the recessionary economy had on their financial performance.  This review indicated the need for another strong contribution to our allowance for loan losses in the fourth quarter of 2009; although the amount of the quarterly provision did decline from the third quarter level.  As a result of this loan loss reserve strengthening in 2009, our allowance for loan losses represented 2.72% of total loans outstanding and provided 115% coverage of non-performing loans at December 31, 2009.  This higher loan loss provision unfortunately more than offset some strong fundamentals, such as, a $3.3 million increase in net interest income that resulted from solid deposit and loan growth experienced within our bank during 2009."        

The Company's net interest income in the fourth quarter of 2009 increased modestly by $12,000 from the prior year's fourth quarter, and for the full year of 2009 increased more significantly by $3.3 million or 11.4% when compared to 2008.  The Company's net interest margin of 3.72% for the full year of 2009 is also 8 basis points better than the 3.64% net interest margin achieved during the full year of 2008.  The increased net interest income and margin resulted from a combination of solid loan and deposit growth and the pricing benefits achieved from a steeper yield curve in 2009.  Specifically, total loans averaged $725 million in 2009, an increase of $83 million or 13.0% over 2008.  This growth caused overall loan interest revenue to increase in 2009 despite the lower interest rate environment.  The loan growth was driven by increased commercial loan production as the majority of increased residential mortgage loan production has been sold into the secondary market.  The Company's strong liquidity position has been supported by total deposits that averaged $763 million in 2009, an increase of $68 million or 9.8% over 2008.  The Company believes that uncertainties in the financial markets and 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.  Additionally, the Company also benefited from a favorable $3.7 million decline in interest expense caused by the more rapid downward repricing of both deposits and Federal Home Loan Bank borrowings due to the market decline in short-term interest rates.      

The Company appropriately strengthened its allowance for loan losses in the fourth quarter and full year of 2009 in response to deterioration in asset quality.  This deterioration in asset quality in 2009 was evidenced by higher levels of nonperforming loans and classified loans than in 2008 and reflects the results of a comprehensive review of loans in the commercial loan and commercial real estate portfolio in the second half of 2009.  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 $3.8 million provision for loan losses in the fourth quarter of 2009 compared to a $625,000 provision in the fourth quarter of 2008, or an increase of $3.1 million.  For the full year 2009, the Company recorded a $15.2 million provision for loan losses compared to a $2.9 million provision for 2008, or an increase of $12.2 million.  Actual credit losses realized through charge-off, however, are running well below the provision level but are higher than the prior year.  For the full year 2009, net charge-offs have amounted to $4.4 million or 0.60% of total loans compared to net charge-offs of $1.3 million or 0.20% of total loans for the full year 2008.  Of the 2009 net charge-offs, $3.3 million was realized in the fourth quarter and reflected the resolution of one of the Company's larger non-performing loans.  This was a factor contributing to a $5.4 million decline in non-performing assets from $23.7 million at September 30, 2009 to $18.3 million or 2.54% of total loans at December 31, 2009.  Non-performing assets in 2009, however, are well above the year end 2008 level of $4.6 million or 0.64% of total loans.  In summary, the allowance for loan losses provided 115% coverage of non-performing loans and was 2.72% of total loans at December 31, 2009, compared to 264% of non-performing loans and 1.26% of total loans at December 31, 2008.  

The Company's non-interest income in the fourth quarter of 2009 decreased by $54,000 from the prior year's fourth quarter and for the full year 2009 decreased by $2.5 million when compared to all of 2008.  The largest item responsible for the quarterly decline was a $206,000 decrease in trust and investment advisory fees as a result of reductions in the market value of assets managed due to lower real estate and equity values in 2009.  The largest item causing the full year decline was related to bank owned life insurance.  Bank owned life insurance revenue dropped by $1.5 million in 2009 as there were more payments for death claims in 2008.  Trust and investment advisory fees also declined by $1.2 million for the full year 2009 while deposit service charges dropped by $300,000 due to fewer overdraft fees.  These negative items were partially offset by increased gains on asset sales.  Specifically, gains realized on residential mortgage sales into the secondary market in 2009 increased by $174,000 for the full year due to increased mortgage purchase and refinance activity in the Company's primary market.  The Company also took advantage of market opportunities and generated $164,000 of gains on the sale of investment securities in 2009 compared to a net $95,000 loss on a portfolio repositioning strategy executed in 2008.    

Total non-interest expense in the fourth quarter of 2009 increased by $1.7 million from the prior year's fourth quarter and for the full year 2009 increased by $3.5 million or 9.9% when compared to the full year 2008.  Higher FDIC deposit insurance expense due to an increased basic rate and special assessment is a key factor responsible for both the quarterly ($595,000) and full year ($1.6 million) increase in non-interest expense in 2009.  Total salaries and benefits expense in 2009 increased by $520,000 in the fourth quarter and $1.3 million for the full year due to greater salary costs as a result of normal merit increases and higher sales related incentive compensation along with greater pension expense.  The fourth quarter 2009 salaries expense was also impacted by $130,000 of severance related costs.  Professional fees increased by $208,000 for the fourth quarter and $450,000 for the full year due to increased legal fees and recruitment costs in 2009.  Fourth quarter 2009 professional fees also included $120,000 of consulting costs related to a comprehensive review of the Company's trust subsidiary which focused on strategic issues along with day-to-day operating and compliance activities.  Other expenses in both periods also increased due to credit related costs.  Specifically, other real estate owned expense increased by $715,000 due to the write-down and operating costs associated with an increased number of other real-estate owned properties while the Company also had to fund its reserve for unfunded commitments by an additional $118,000 in 2009.   These negative items were partially offset by a reduction in core deposit amortization expense of $216,000 for the fourth quarter and $757,000 for the full year as a branch core deposit intangible was fully amortized in the first quarter of 2009.      

ASRV had total assets of $970 million and shareholders' equity of $107 million or a book value of $4.09 per common share at December 31, 2009.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status with a risk based capital ratio of 15.33%, an asset leverage ratio of 11.06% and a tangible common equity to tangible assets ratio of 7.71% at December 31, 2009.    

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

January 26, 2009

(In thousands, except per share and ratio data)

(All quarterly and 2009 data unaudited)

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

2008

1QTR

2QTR

3QTR

4QTR

YEAR

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

Net income

$ 1,229

$ 1,516

$  1,149

$  1,615

$  5,509

Net income available to common shareholders

   1,229

   1,516

    1,149

    1,580

    5,474

PERFORMANCE PERCENTAGES (annualized):

Return on average assets

0.55%

0.71%

0.52%

0.69%

0.62%

Return on average equity

     5.43

     6.64

      4.93

      6.68

      5.93

Net interest margin

     3.32

     3.58

      3.59

      3.84

      3.64

Net charge-offs as a percentage of average loans

     0.06

     0.46

      0.04

      0.23

      0.20

Loan loss provision as a percentage of average loans

     0.10

     0.89

      0.48

      0.36

      0.45

Efficiency ratio

   82.87

   73.20

    79.72

    77.46

    78.11

PER COMMON SHARE:

Net income:

Basic

$   0.06

$   0.07

$    0.05

$    0.07

$    0.25

Average number of common shares outstanding

 22,060

 21,847

  21,855

  21,571

  21,833

Diluted

     0.06

     0.07

      0.05

      0.07

      0.25

Average number of common shares outstanding

 22,062

 21,848

  21,856

  21,571

  21,975

AMERISERV FINANCIAL, INC.

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

(All quarterly and 2009 data unaudited)

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

2008

1QTR

2QTR

3QTR

4QTR

PERFORMANCE DATA AT PERIOD END:

Assets

$    902,349

$    877,230

$    911,306

$    966,929

Short-term investment in money market funds

          5,682

          6,952

          7,147

        15,578

Investment securities

      146,285

      141,867

      141,630

      142,675

Loans

      632,934

      623,798

      663,996

      707,108

Allowance for loan losses

          7,309

          7,963

          8,677

          8,910

Goodwill and core deposit intangibles

        14,254

        14,038

        13,821

        13,605

Deposits

      682,459

      722,913

      688,998

      694,956

FHLB borrowings

      106,579

        40,214

      106,897

      133,778

Shareholders' equity

        91,558

        92,248

        93,671

      113,252

Non-performing assets

          3,050

          3,717

          4,390

          4,572

Asset leverage ratio

9.78%

10.47%

10.37%

12.15%

Tangible common equity ratio

            8.70

            9.06

            8.90

            8.31

PER COMMON SHARE:

Book value (A)

$          4.19

$          4.22

$          4.29

$          4.39

Market value

            2.79

            2.98

            2.51

            1.99

Trust assets - fair market value (B)

$ 1,838,029

$ 1,813,231

$ 1,678,398

$ 1,554,351

STATISTICAL DATA AT PERIOD END:

Full-time equivalent employees

             350

             353

             352

             353

Branch locations

               19

               18

               18

               18

Common shares outstanding

 21,842,691

 21,850,773

 21,859,409

 21,128,831

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 2009 data unaudited)

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)

2008

1QTR

2QTR

3QTR

4QTR

YEAR

TO DATE

INTEREST INCOME

Interest and fees on loans

$ 10,462

$   9,862

$ 10,015

$ 10,680

$ 41,019

Total investment portfolio

     1,820

     1,588

     1,717

     1,675

     6,800

Total Interest Income

   12,282

   11,450

   11,732

   12,355

   47,819

INTEREST EXPENSE

Deposits

     4,499

     3,861

     3,774

     3,546

   15,680

All borrowings

     1,048

        623

        727

        624

     3,022

Total Interest Expense

     5,547

     4,484

     4,501

     4,170

   18,702

NET INTEREST INCOME

     6,735

     6,966

     7,231

     8,185

   29,117

Provision for loan losses

        150

     1,375

        775

        625

     2,925

NET INTEREST INCOME AFTER PROVISION

FOR LOAN LOSSES

     6,585

     5,591

     6,456

     7,560

   26,192

NON-INTEREST INCOME

Trust fees

     1,790

     1,737

     1,691

     1,513

     6,731

Net realized gains (losses) on investment securities available for sale

           -  

      (137)

          20

          22

        (95)

Net realized gains on loans held for sale

          89

        121

        138

        129

        477

Service charges on deposit accounts

        734

        807

        771

        757

     3,069

Investment advisory fees

        226

        218

        185

        150

        779

Bank owned life insurance

        249

     1,923

        260

        263

     2,695

Other income

        750

        674

        702

        642

     2,768

Total Non-Interest Income

     3,838

     5,343

     3,767

     3,476

   16,424

NON-INTEREST EXPENSE

Salaries and employee benefits

     4,830

     4,812

     4,758

     4,817

   19,217

Net occupancy expense

        661

        653

        586

        661

     2,561

Equipment expense

        431

        414

        402

        430

     1,677

Professional fees

        769

        910

        922

        981

     3,582

FHLB prepayment penalty

           -  

          91

           -  

           -  

          91

FDIC deposit insurance expense

          22

          20

          30

          41

        113

Amortization of core deposit intangibles

        216

        216

        217

        216

        865

Other expenses

     1,850

     1,909

     1,869

     1,903

     7,531

Total Non-Interest Expense

     8,779

     9,025

     8,784

     9,049

   35,637

PRETAX INCOME

     1,644

     1,909

     1,439

     1,987

     6,979

Income tax expense

        415

        393

        290

        372

     1,470

NET INCOME

     1,229

     1,516

     1,149

     1,615

     5,509

Preferred stock dividends

-

-

-

          35

          35

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$   1,229

$   1,516

$   1,149

$   1,580

$   5,474

                  AMERISERV FINANCIAL, INC.

               AVERAGE BALANCE SHEET DATA

                               (In thousands)

                      (All quarterly and 2009 data unaudited)

2009

2008

TWELVE

TWELVE

4QTR

MONTHS

4QTR

MONTHS

Interest earning assets:

Loans and loans held for sale, net of unearned income

$             723,992

$             725,241

$             683,739

$             641,766

Deposits with banks

                   1,772

                   1,782

                      493

                      583

Short-term investment in money market funds

                   6,745

                   9,022

                   8,405

                   7,136

Federal funds

                   1,491

                      490

                         -  

                      114

Total investment securities

               146,164

               146,150

               151,521

               153,636

Total interest earning assets

               880,164

               882,685

               844,158

               803,235

Non-interest earning assets:

Cash and due from banks

                 14,363

                 14,498

                 15,581

                 16,786

Premises and equipment

                   9,230

                   9,213

                   9,751

                   9,333

Other assets

                 73,927

                 72,574

                 68,625

                 72,249

Allowance for loan losses

               (19,626)

               (13,382)

                 (8,602)

                 (7,837)

Total assets

               958,058

               965,588

               929,513

               893,766

Interest bearing liabilities:

Interest bearing deposits:

Interest bearing demand

                 63,828

                 62,494

                 63,225

                 64,683

Savings

                 71,789

                 72,350

                 69,856

                 70,255

Money market

               184,096

               169,823

               113,703

               107,843

Other time

               349,133

               343,841

               325,920

               341,185

Total interest bearing deposits

               668,846

               648,508

               572,704

               583,966

Borrowings:

Federal funds purchased, securities sold under

  agreements to repurchase, and other short-term

  borrowings

                 11,329

                 21,028

               113,093

                 71,636

Advanced from Federal Home Loan Bank

                 29,892

                 43,934

                 13,101

                 11,725

Guaranteed junior subordinated deferrable interest debentures

                 13,085

                 13,085

                 13,085

                 13,085

Total interest bearing liabilities

               723,152

               726,555

               711,983

               680,412

Non-interest bearing liabilities:

Demand deposits

               114,797

               114,473

               111,306

               110,601

Other liabilities

                   9,298

                 11,428

                   9,751

                   9,816

Shareholders' equity

               110,811

               113,132

                 96,173

                 92,937

Total liabilities and shareholders' equity

$             958,058

$             965,588

$             929,213

$             893,766

SOURCE AmeriServ Financial, Inc.



RELATED LINKS

http://www.ameriservfinancial.com