AmeriServ Financial Reports Earnings for the Second Quarter and First Six Months of 2010

JOHNSTOWN, Pa., July 20 /PRNewswire-FirstCall/ -- 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 (loss)


$    533

$  (939)

$   (406)

Net income (loss) 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 (loss):





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







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

2QTR

YEAR





TO DATE

INTEREST INCOME










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 available for sale


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





1QTR

2QTR

YEAR





TO DATE

INTEREST INCOME










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 available for sale


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.

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



SOURCE AmeriServ Financial, Inc.



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