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AmeriServ Financial Reports Earnings for the Second Quarter and First Six Months of 2011

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JOHNSTOWN, Pa., July 19, 2011 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) continued its positive earnings momentum in the second quarter of 2011 by reporting net income of $1,938,000 or $0.08 per diluted common share.  This represents a significant improvement of $1.5 million from the second quarter 2010 net income of $477,000 or $0.01 per diluted common share.  For the six month period ended June 30, 2011, the Company reported net income of $3,201,000 or $0.12 per diluted share, a $3.6 million improvement over the net loss of $441,000 or $0.05 per diluted share reported for the same six month period in 2010.  The following table highlights the Company's financial performance for both the three and six month periods ended June 30, 2011 and 2010:    



Second Quarter

2011

Second Quarter

2010


Six Months Ended

June 30, 2011

Six Months Ended

June 30, 2010







Net income (loss)

$1,938,000

$477,000


$3,201,000

($441,000)

Diluted earnings per share

$ 0.08

$ 0.01


$ 0.12

($0.05)




Glenn L. Wilson, President and Chief Executive Officer, commented on the second quarter 2011 financial results: "Our strong increase in earnings reflects continued improvement in asset quality as a result of our diligent focus on promptly identifying and resolving problem credits.  Non-performing assets again declined in the second quarter of 2011 and now total $7.4 million or 1.13% of total loans. Our net income also benefitted from continued stable net interest margin performance and increasing non-interest revenue, particularly within our trust and wealth management business.  With excellent liquidity, strong capital and loan loss reserve coverage of non-performing loans of 235%, AmeriServ Financial has a high quality balance sheet that is well positioned for the second half of 2011."          

The Company's net interest income in the second quarter of 2011 decreased by $122,000 from the prior year's second quarter and for the first six months of 2011 decreased by $277,000 or 1.7% when compared to the first six months of 2010.  The Company's 2011 net interest margin of 3.71% was 10 basis points lower than the net interest margin for the first half of 2010 but the net interest margin has now operated near the 3.70% level for the past four consecutive quarters.  Reduced loan balances were the primary factor causing the drop in both net interest income and net interest margin in 2011. Specifically, total loans averaged $656 million in the first half of 2011, a decrease of $55 million or 7.8% from the first half of 2010.  The lower balances reflect the results of the Company's focus on reducing its commercial real estate exposure and problem loans during this period along with weak commercial loan demand.  However, the Company has recently seen some improvement in loan pipelines and did experience $12 million of net loan growth between the end of the first and second quarters of 2011.  The Company has strengthened its excellent liquidity position by electing to reinvest any net loan paydowns in high quality investment securities and fed funds sold whose balance has increased by $55 million on average in the first half of 2011.  Careful management of funding costs has allowed the Company to mitigate a significant portion of the drop in interest revenue during the past twelve months.  Specifically, interest expense in the second quarter of 2011 has declined by $798,000 from the same prior year quarter due to reduced deposit costs and a lower borrowed funds position.  This reduction in deposit costs has not negatively impacted deposit balances which have increased on average by $19 million or 2.4% since June 30, 2010.  The Company is pleased that $13 million of this deposit growth has occurred in non-interest bearing demand deposit accounts whose balances have grown by 10.7% during the same period.    

The improvements in asset quality evidenced by lower levels of non-performing assets and classified loans allowed the Company to reverse a portion of the allowance for loan losses into earnings in 2011 while still increasing coverage ratios.  During the first six months of 2011, total non-performing assets decreased by $6.9 million or 48.3% to $7.4 million or 1.13% of total loans as a result of successful resolution efforts.  Classified loans rated substandard or doubtful also dropped by $11.2 million or 28.3% during this same period.  As a result of this improvement, the Company recorded a negative provision for loan losses of $1,175,000 in the second quarter of 2011 compared to a $1.2 million provision in the second quarter of 2010.  For the six month period in 2011 the negative provision has amounted to $1,775,000 compared to a $4,250,000 provision in the first six months of 2010.  Actual credit losses realized through net charge-offs have also declined sharply in 2011 with the Company even experiencing net loan recoveries of $108,000 in the second quarter of 2011.  For the first six months of 2011, net charge-offs totaled $1.0 million or 0.32% of total loans which represents a decrease from the first six months of 2010 when net charge-offs totaled $3.2 million or 0.91% of total loans.  When determining the provision for loan losses, the Company considers a number of factors some of which include periodic credit reviews, non-performing assets, loan delinquency and charge-off trends, concentrations of credit, loan volume trends and broader local and national economic trends.  In summary, the allowance for loan losses provided 235% coverage of non-performing loans and was 2.58% of total loans at June 30, 2011, compared to 145% of non-performing loans and 2.91% of total loans at December 31, 2010.

The Company's non-interest income in the second quarter of 2011 increased by $66,000 from the prior year's second quarter and for the first six months of 2011 decreased by $129,000 when compared to the first six months of 2010.  The largest positive item in 2011 has been increased trust and investment advisory fees.  Specifically, trust and investment advisory fees increased by $275,000 for the second quarter and $388,000 or 12.2% for the six month period as these wealth management businesses benefited from the implementation of new fee schedules and higher equity values in 2011.  When compared to the prior year, gains realized on residential mortgage loan sales into the secondary market were relatively consistent for the second quarter but have increased by $127,000 for the six month period due to increased mortgage loan production in the first quarter of 2011.  The largest negative item in 2011 causing the decline for the six month period was a $358,000 loss realized on the sale of $17 million of investment securities in the first quarter of 2011.  The Company took advantage of a steeper yield curve to position the investment portfolio for better future earnings by selling some of the lower yielding, longer duration securities in the portfolio and replacing them with higher yielding securities with a shorter duration.  The other item contributing to lower non-interest income was a reduced level of deposit service charges which were down by $62,000 for the second quarter and $162,000 for the first six months of 2011.  Deposit service charges were negatively impacted by provisions of the Dodd-Frank legislation which took effect in mid-2010 and were designed to limit customer overdraft fees on debit card transactions.  Also, customers have maintained higher balances in their checking accounts which have contributed to fewer overdraft fees in 2011.      

Total non-interest expense in the second quarter of 2011 increased by $91,000 or less than 1% from the prior year's second quarter and for the first six months of 2011 increased by $246,000 or 1.3% when compared to the first six months of 2010.  Salaries and employee benefits increased by $338,000  for the second quarter and $639,000 for the six month period due to higher medical insurance costs, increased pension expense, and greater incentive compensation expense.  Professional fees dropped by $203,000 in the second quarter and $325,000 for the first six months of 2011 due to reduced legal fees and lower consulting expenses in the Trust Company.  Other expenses also declined by $250,000 for the second quarter and $437,000 for the six month period due to a reduction in costs associated with the reserve for unfunded loan commitments and lower telephone expense resulting from the implementation of technology enhancements.  Finally, the Company recorded an income tax expense of $1.4 million for the first six months of 2011 compared to an income tax benefit of $342,000 recorded in the first half of 2010 due to the pretax loss in the first six months of last year.

ASRV had total assets of $955 million and shareholders' equity of $111 million or a book value of $4.28 per common share at June 30, 2011.  The Company continued to maintain strong capital ratios that considerably exceed the regulatory defined well capitalized status with a risk based capital ratio of 17.04%, an asset leverage ratio of 11.60% and a tangible common equity to tangible assets ratio of 8.29% at June 30, 2011.    

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


June 30, 2011


(In thousands, except per share and ratio data)


(Unaudited)






2011




1QTR

2QTR

YEAR




TO DATE

PERFORMANCE DATA FOR THE PERIOD:




Net income

$ 1,263

$ 1,938

$  3,201

Net income available to common shareholders

973

1,648

2,621





PERFORMANCE PERCENTAGES (annualized):




Return on average assets

0.54%

0.81%

0.67%

Return on average equity

4.77

7.11

5.96

Net interest margin

3.70

3.71

3.71

Net charge-offs (recoveries) as a percentage of average loans

0.70

(0.07)

0.32

Loan loss provision as a percentage of average loans

(0.37)

(0.72)

(0.55)

Efficiency ratio

89.53

85.53

87.49





PER COMMON SHARE:




Net income:




Basic

$   0.05

$   0.08

$    0.12

Average number of common shares outstanding

21,208

21,208

21,208

Diluted

0.05

0.08

0.12

Average number of common shares outstanding

21,230

21,236

21,233










2010




1QTR

2QTR

YEAR




TO DATE

PERFORMANCE DATA FOR THE PERIOD:




Net income (loss)

$  (918)

$    477

$   (441)

Net income (loss) available to common shareholders

(1,209)

187

(1,022)





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




AMERISERV FINANCIAL, INC.


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



(Unaudited)









2011





1QTR

2QTR



PERFORMANCE DATA AT PERIOD END:





Assets

$    961,067

$    954,893



Short-term investment in money market funds

2,379

2,617



Investment securities

195,272

198,770



Loans

644,836

656,838



Allowance for loan losses

18,025

16,958



Goodwill

12,613

12,613



Deposits

816,528

810,082



FHLB borrowings

9,736

9,722



Shareholders' equity

108,170

111,410



Non-performing assets

9,328

7,433



Asset leverage ratio

11.40%

11.60%



Tangible common equity ratio

7.89

8.29



PER COMMON SHARE:





Book value (A)

$          4.12

$          4.28



Market value

2.37

1.95



Trust assets - fair market value (B)

$ 1,410,755

$ 1,390,534








STATISTICAL DATA AT PERIOD END:





Full-time equivalent employees

351

352



Branch locations

18

18



Common shares outstanding

21,207,670

21,208,421
















2010





1QTR

2QTR

3QTR

4QTR

PERFORMANCE DATA AT PERIOD END:





Assets

$    960,817

$    962,282

$    963,169

$    948,974

Short-term investment in money market funds

2,105

4,216

3,611

3,461

Investment securities

150,073

157,057

165,291

172,635

Loans

712,929

693,988

699,394

678,181

Allowance for loan losses

21,516

20,737

20,753

19,765

Goodwill and core deposit intangibles

12,950

12,950

12,950

12,950

Deposits

802,201

809,177

818,150

801,216

FHLB borrowings

25,296

17,777

13,119

14,300

Shareholders' equity

106,393

108,023

108,391

107,058

Non-performing assets

20,322

19,815

25,267

14,364

Asset leverage ratio

11.01%

11.08%

11.07%

11.20%

Tangible common equity ratio

7.70

7.83

7.86

7.85

PER COMMON SHARE:





Book value (A)

$          4.04

$          4.11

$          4.13

$          4.07

Market value

1.67

1.61

1.81

1.58

Trust assets - fair market value (B)

$ 1,398,215

$ 1,329,495

$ 1,341,699

$ 1,366,929






STATISTICAL DATA AT PERIOD END:





Full-time equivalent employees

353

355

355

348

Branch locations

18

18

19

18

Common shares outstanding

21,223,942

21,223,942

21,223,942

21,207,670






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)


(Unaudited)








2011






1QTR

2QTR

YEAR






TO DATE



INTEREST INCOME












Interest and fees on loans

$                 9,083

$                 8,804

$               17,887



Total investment portfolio

1,513

1,726

3,239



Total Interest Income

10,596

10,530

21,126









INTEREST EXPENSE






Deposits

2,294

2,106

4,400



All borrowings

336

338

674



Total Interest Expense

2,630

2,444

5,074









NET INTEREST INCOME

7,966

8,086

16,052



Provision (credit) for loan losses

(600)

(1,175)

(1,775)









NET INTEREST INCOME AFTER PROVISION (CREDIT)






FOR LOAN LOSSES

8,566

9,261

17,827









NON-INTEREST INCOME






Trust fees

1,556

1,617

3,173



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

(358)

-

(358)



Net realized gains on loans held for sale

262

155

417



Service charges on deposit accounts

472

549

1,021



Investment advisory fees

198

198

396



Bank owned life insurance

216

218

434



Other income

759

717

1,476



Total Non-Interest Income

3,105

3,454

6,559









NON-INTEREST EXPENSE






Salaries and employee benefits

5,500

5,574

11,074



Net occupancy expense

757

742

1,499



Equipment expense

429

411

840



Professional fees

980

911

1,891



FDIC deposit insurance expense

462

460

922



Other expenses

1,791

1,779

3,570



Total Non-Interest Expense

9,919

9,877

19,796









PRETAX INCOME

1,752

2,838

4,590



Income tax expense

489

900

1,389



NET INCOME

1,263

1,938

3,201



Preferred stock dividends and accretion of preferred stock discount

290

290

580



NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$  973

$  1,648

$  2,621




























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 and accretion of preferred stock discount

291

290

581



NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS

$  (1,209)

$  187

$  (1,022)






AMERISERV FINANCIAL, INC.


AVERAGE BALANCE SHEET DATA


(In thousands)


(Unaudited)




















2011



2010




SIX



SIX


2QTR

MONTHS


2QTR

MONTHS







Interest earning assets:






Loans and loans held for sale, net of unearned income

$ 651,036

$ 656,048


$ 705,288

$ 711,267

Deposits with banks

1,701

1,616


1,743

1,776

Short-term investment in money market funds

3,243

3,676


3,403

3,925

Federal funds sold

9,173

11,676


2,683

2,539

Total investment securities

207,975

198,256


157,390

152,894

Total interest earning assets

873,128

871,272


870,507

872,401







Non-interest earning assets:






Cash and due from banks

15,012

15,283


14,534

14,984

Premises and equipment

10,494

10,489


9,940

9,694

Other assets

79,008

79,313


79,894

79,769

Allowance for loan losses

(18,061)

(18,948)


(22,075)

(21,434)







Total assets

959,581

957,409


952,800

955,414







Interest bearing liabilities:






Interest bearing deposits:






Interest bearing demand

57,237

56,164


58,361

57,863

Savings

81,898

80,221


78,778

77,032

Money market

192,072

189,003


183,850

185,563

Other time

351,153

355,646


357,938

354,084

Total interest bearing deposits

682,360

681,034


678,927

674,542

Borrowings:






Federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings

869

646


2,140

3,815

Advanced from Federal Home Loan Bank

9,729

9,736


18,332

25,413

Guaranteed junior subordinated deferrable interest debentures

13,085

13,085


13,085

13,085

Total interest bearing liabilities

706,043

704,501


712,484

716,855







Non-interest bearing liabilities:






 Demand deposits

132,578

132,814


123,064

120,009

 Other liabilities

11,583

11,721


10,625

11,623

Shareholders' equity

109,377

108,373


106,627

106,927

Total liabilities and shareholders' equity

$ 959,581

$ 957,409


$ 952,800

$ 955,414



SOURCE AmeriServ Financial, Inc.



RELATED LINKS
http://www.ameriservfinancial.com

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