AmeriServ Financial Reports Earnings for the Second Quarter and First Six Months of 2012

JOHNSTOWN, Pa., July 17, 2012 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported second quarter 2012 net income of $1,432,000 or $0.06 per diluted common share.  This represents a decrease of $506,000, or $0.02 per diluted common share from the second quarter 2011.  The improvements in asset quality continued to result in a negative provision for loan losses in the second quarter of 2012, but at a lesser level than in the second quarter of 2011.  For the six month period ended June 30, 2012, the Company reported net income of $2,997,000 or $0.12 per diluted share.  Net income for the six month period was down by $204,000 or 6.4% while diluted earnings per share did not change due to the success of the Company's common stock repurchase program.  The following table highlights the Company's financial performance for both the three and six month periods ended June 30, 2012:             


Second Quarter 2012

Second Quarter 2011


Six Months Ended

June 30, 2012

Six Months Ended

June 30, 2011







Net income

$1,432,000

$1,938,000


$2,997,000

$3,201,000

Diluted earnings per share

$ 0.06

$ 0.08


$ 0.12

$0.12

Glenn L. Wilson, President and Chief Executive Officer, commented on the second quarter 2012 financial results: "During the second quarter of 2012, we accomplished several important actions that have a positive impact on shareholder value.  First, we repurchased 1,183,000 shares of our common stock below tangible book value at an average price per share of $2.52.  This stock repurchase, combined with our earnings, contributed to a 6.4% increase in tangible book value per share during the first six months of 2012.  Second, our total loan portfolio grew by $19.5 million or 2.9% during the second quarter of 2012 with this loan growth occurring in loan categories that qualify for the Small Business Lending Fund (SBLF).  As a result of this loan growth, the dividend rate that AmeriServ Financial Inc. currently pays on the SBLF preferred stock will drop from 5% to 1% - the lowest rate available under the SBLF program.  This lower preferred dividend will increase the quarterly net income available to common shareholders by $210,000 beginning in the fourth quarter of 2012."                

The Company's net interest income in the second quarter of 2012 decreased by $165,000 or 2.0% from the prior year's second quarter and for the first six months of 2012 decreased by only $73,000 or 0.5% when compared to the first six months of 2011.  The Company's 2012 net interest margin of 3.64% was 7 basis points lower than the net interest margin of 3.71% for the first half of 2011.  The decreased net interest income and net interest margin in 2012 reflects the challenges of a flatter yield curve which has caused interest revenue to decrease to greater extent than interest expense.  Also, the second quarter 2012 net interest margin was negatively impacted by a build-up in short-term liquidity as the Company positioned its balance sheet for strong loan fundings that occurred late in the quarter.  Specifically, total loans outstanding have increased for five consecutive quarters and now are $34.0 million or 5.2% higher than they were at June 30, 2011.   This loan growth reflects the successful results of the Company's more intensive sales calling efforts with an emphasis on generating commercial loans and owner occupied commercial real estate loans which qualify as Small Business Lending Fund loans, particularly through its new loan production offices.  Despite this growth in loans, total interest revenue dropped by $1.1 million between years and reflects the lower interest rate environment and flatter yield curve.  Interest revenue has also been negatively impacted by increased premium amortization on mortgage backed securities due to faster mortgage prepayment speeds.  However, careful management of funding costs has allowed the Company to mitigate a significant portion of this drop in interest revenue during the past year.  Specifically, interest expense in the first six months of 2012 declined by $1.0 million from the same prior year period due to the Company's proactive efforts to reduce deposit and borrowing costs.  Even with this reduction in deposit costs, the Company still experienced solid growth in deposits which increased by $44 million or 5.4% over the past 12 months.     

Sustained improvements in asset quality evidenced by low levels of non-performing assets, net charge-offs, and classified loans allowed the Company to again reverse a portion of the allowance for loan losses into earnings in the second quarter of 2012 while still maintaining especially strong coverage ratios.  At June 30, 2012, non-performing assets totaled $5.1 million or 0.74% of total loans.  This represents the fourth consecutive quarter where non-performing assets have been near the $5 million level.  Criticized and classified loans also dropped by $12 million or 21.3% during the past 12 months.  Actual credit losses realized through net charge-offs have also declined in 2012 with the Company even experiencing net loan recoveries of $39,000 in the second quarter of 2012.  For the first six months of 2012, net charge-offs totaled only $181,000 or 0.05% of total loans which represents a decrease from the first six months of 2011 when net charge-offs totaled $1.0 million or 0.32% of total loans.  As a result of this sustained asset quality improvement, the Company recorded a negative provision for loan losses of $500,000 in the second quarter of 2012 compared to a negative provision of $1,175,000 in the second quarter of 2011.  For the six month period in 2012, the negative provision amounted to $1,125,000 compared to a $1,775,000 credit provision in the first six months of 2011.  Overall, there has been $650,000 less earnings benefit from negative loan loss provisions in 2012.  When determining the provision for loan losses, the Company considers a number of factors some of which include periodic credit reviews, non-performing asset, 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 315% coverage of non-performing loans, and was 1.94% of total loans, at June 30, 2012, compared to 288% of non-performing loans, and 2.18% of total loans, at December 31, 2011.

The Company's growth in non-interest revenue has also been a financial performance highlight in 2012.  Total non-interest income in the second quarter of 2012 increased by $279,000 or 8.1% from the prior year's second quarter and for the first six months of 2012 increased by $848,000 or 12.9% when compared to the first six months of 2011.    The second quarter 2012 non-interest income increase was driven by increased revenue from residential mortgage banking activities.  Specifically, gains realized on residential mortgage loan sales into the secondary market increased by $96,000 due to increased mortgage loan production in the second quarter of 2012.  Higher fees related to residential mortgage banking activities along with increased revenue from financial services (annuity and mutual funds sales) were the key factors responsible for the $219,000 increase in other income in the second quarter of 2012.  For the six month period, trust fees increased by $152,000 or 4.8% as our wealth management businesses benefited from the implementation of new fee schedules and improved asset values in 2012.  Also, the Company realized a modest $12,000 investment security gain in 2012 compared to a $358,000 investment security loss in the first quarter of 2011 that resulted from a portfolio repositioning strategy.            

Total non-interest expense in the second quarter of 2012 increased by $190,000 from the prior year's second quarter and for the first six months of 2012 increased by $385,000 or 1.9% when compared to the first six months of 2011.  Salaries and employee benefits increased by $402,000 for the second quarter and $888,000 or 8.0% for the six month period due to higher salaries expense, incentive compensation, and pension expense.  The 2012 personnel expenses also reflect the staffing costs associated with new loan production offices in Altoona, Harrisburg and Hagerstown, Maryland.  Other expenses also increased by $86,000 for the second quarter of 2012 and $191,000 for the six month period due to an increase in the reserve for unfunded loan commitments as result of increased commercial loan origination activity in 2012.  These negative items were partially offset by a $346,000 reduction in FDIC deposit insurance expense for the second quarter of 2012 and a $679,000 reduction for the six month period. This reduction resulted from a change in the calculation methodology which took effect in the second half of 2011 and the Company's improved risk profile which is evidenced by better asset quality and increased profitability.   Finally, the Company recorded an income tax expense of $1.3 million or an effective tax rate of 30.8% for the first half of 2012 which was comparable with the income tax expense of $1.4 million or an effective tax rate of 30.3% for the first half of 2011. 

ASRV had total assets of $997 million and shareholders' equity of $111 million or a book value of $4.66 per common share at June 30, 2012.  During the first half of 2012, the Company repurchased 1,638,000 shares of its common stock at an average price of $2.48 in conjunction with the terms of its previously announced stock buyback program.  The Company continued to maintain strong capital ratios that considerably exceed the regulatory defined well capitalized status with a risk based capital ratio of 16.41%, an asset leverage ratio of 11.60% and a tangible common equity to tangible assets ratio of 7.84% at June 30, 2012. 

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, 2012

(In thousands, except per share and ratio data)

(Unaudited)




2012 1QTR

2QTR

YEAR  

TO DATE 





PERFORMANCE DATA FOR THE PERIOD:




Net income 

$1,565

$1,432

$2,997

Net income available to common shareholders

1,302

1,170

2,472





PERFORMANCE PERCENTAGES (annualized):




Return on average assets

0.65%

0.59%

0.62%

Return on average equity

5.60

5.19

5.40

Net interest margin

3.70

3.59

3.64

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

0.13

(0.02)

0.05

Loan loss provision as a percentage of average loans

(0.38)

(0.30)

(0.34)

Efficiency ratio

86.17

86.34

86.25





PER COMMON SHARE:




Net income:




Basic

$0.06

$0.06

$0.12

Average number of common shares outstanding

20,679

19,584

20,132

Diluted

0.06

0.06

0.12

Average number of common shares outstanding

20,722

19,652

20,186











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 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

  

AMERISERV FINANCIAL, INC.

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

(Unaudited)









2012






1QTR

2QTR



PERFORMANCE DATA AT PERIOD END:





Assets

$967,401

$997,102



Short-term investments/overnight funds

7,398

14,158



Investment securities

190,089

191,791



Loans and loans held for sale

671,328

690,815



Allowance for loan losses

13,778

13,317



Goodwill 

12,613

12,613



Deposits

820,105

854,017



FHLB borrowings

6,390

3,000



Shareholders' equity

112,270

110,810



Non-performing assets

4,801

5,077



Asset leverage ratio

11.83%

11.60%



Tangible common equity ratio

8.24

7.84



PER COMMON SHARE:





Book value (A)

$4.46

$4.66



Tangible book value

3.84

4.00



Market value

2.74

2.82



Trust assets - fair market value (B)

$1,469,789

$1,447,877








STATISTICAL DATA AT PERIOD END:





Full-time equivalent employees

353

353



Branch locations

18

18



Common shares outstanding

20,465,521

19,284,521














2011





1QTR

2QTR

3QTR

4QTR

PERFORMANCE DATA AT PERIOD END:





Assets

$ 961,067

$ 954,893

$ 973,439

$ 979,076

Short-term investments/overnight funds

26,769

4,338

17,941

7,845

Investment securities

195,272

198,770

195,784

195,203

Loans and loans held for sale

644,836

656,838

667,409

670,847

Allowance for loan losses

18,025

16,958

16,069

14,623

Goodwill 

12,613

12,613

12,613

12,613

Deposits

816,528

810,082

827,358

816,420

FHLB borrowings

9,736

9,722

9,707

21,765

Shareholders' equity

108,170

111,410

114,164

112,352

Non-performing assets

9,328

7,433

5,344

5,199

Asset leverage ratio

11.40%

11.60%

11.70%

11.66%

Tangible common equity ratio

7.89

8.29

8.38

8.15

PER COMMON SHARE:





Book value (A)

$ 4.12

$ 4.28

$ 4.39

$ 4.37

Tangible book value

3.53

3.68

3.80

3.76

Market value

2.37

1.95

1.90

1.95

Trust assets - fair market value (B)

$1,410,755

$1,390,534

$1,313,440

$1,382,745






STATISTICAL DATA AT PERIOD END:





Full-time equivalent employees

351

352

342

347

Branch locations

18

18

18

18

Common shares outstanding

21,207,670

21,208,421

21,208,421

20,921,021






Note:





(A)  Preferred stock of $21 million received through the Small Business Lending Fund is excluded from the book value per common share and tangible book value per common share calculations.

(B)  Not recognized on the balance sheet

  

AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENT OF INCOME

(In thousands)

(Unaudited)













 2012

 1QTR

2QTR

YEAR

TO DATE






INTEREST INCOME










Interest and fees on loans


$8,729

$8,552

$17,281

Total investment portfolio


1,395

1,333

2,728

Total Interest Income


10,124

9,885

20,009






INTEREST EXPENSE





Deposits


1,762

1,668

3,430

All borrowings


304

296

600

Total Interest Expense


2,066

1,964

4,030






NET INTEREST INCOME


8,058

7,921

15,979

Provision (credit) for loan losses


(625)

(500)

(1,125)






NET INTEREST INCOME AFTER PROVISION (CREDIT)





FOR LOAN LOSSES


8,683

8,421

17,104






NON-INTEREST INCOME





Trust fees


1,697

1,628

3,325

Investment advisory fees


193

177

370

Net realized gains on investment securities available for sale


-

12

12

Net realized gains on loans held for sale


276

251

527

Service charges on deposit accounts


535

517

1,052

Bank owned life insurance


215

212

427

Other income


758

936

1,694

Total Non-Interest Income


3,674

3,733

7,407






NON-INTEREST EXPENSE





Salaries and employee benefits


5,986

5,976

11,962

Net occupancy expense


729

702

1,431

Equipment expense


451

473

924

Professional fees


923

937

1,860

FDIC deposit insurance expense


129

114

243

Other expenses


1,896

1,865

3,761

Total Non-Interest Expense


10,114

10,067

20,181






PRETAX INCOME 


2,243

2,087

4,330

Income tax expense 


678

655

1,333

NET INCOME 


1,565

1,432

2,997

Preferred stock dividends 


263

262

525

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS


$1,302

$1,170

$2,472













  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

Investment advisory fees


198

198

396

Net realized 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

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

 

AMERISERV FINANCIAL, INC.

AVERAGE BALANCE SHEET DATA

(In thousands)

(Unaudited)








2012


2011




SIX



SIX



2QTR

MONTHS


2QTR

MONTHS








Interest earning assets:







Loans and loans held for sale, net of unearned income


$669,307

$667,941


$651,036

$656,048

Deposits with banks


7,359

10,691


1,701

1,616

Short-term investment in money market funds


13,775

4,473


3,243

3,676

Federal funds sold


-

-


9,173

11,676

Total investment securities


189,934

192,255


207,975

198,256

Total interest earning assets


880,375

875,360


873,128

871,272








Non-interest earning assets:







Cash and due from banks


16,072

16,618


15,012

15,283

Premises and equipment


10,928

10,877


10,494

10,489

Other assets 


81,557

81,929


79,008

79,313

Allowance for loan losses


(13,839)

(14,162)


(18,061)

(18,948)








Total assets


975,093

970,622


959,581

957,409








Interest bearing liabilities:







Interest bearing deposits:







Interest bearing demand


59,441

57,894


57,237

56,164

Savings


85,406

84,541


81,898

80,221

Money market


206,443

204,300


192,072

189,003

Other time


334,128

330,904


351,153

355,646

Total interest bearing deposits


685,418

677,639


682,360

681,034

Borrowings:







Federal funds purchased and other short-term borrowings


440

2,337


869

646

Advanced from Federal Home Loan Bank


4,140

6,316


9,729

9,736

Guaranteed junior subordinated deferrable interest debentures


13,085

13,085


13,085

13,085

Total interest bearing liabilities


703,083

699,377


706,043

704,501








Non-interest bearing liabilities:







  Demand deposits


145,738

143,922


132,578

132,814

  Other liabilities 


15,375

15,721


11,583

11,721

Shareholders' equity


110,897

111,602


109,377

108,373

Total liabilities and shareholders' equity


$975,093

$970,622


$959,581

$957,409

 

 

SOURCE AmeriServ Financial, Inc.



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