2014

AmeriServ Financial Reports Earnings for the Third Quarter and First Nine Months of 2011

JOHNSTOWN, Pa., Oct. 18, 2011 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) continued its positive earnings momentum in the third quarter of 2011 by reporting net income of $1,566,000 or $0.05 per diluted common share.  This represents significant improvement of $957,000 from the third quarter 2010 net income of $609,000 or $0.02 per diluted common share.  For the nine month period ended September 30, 2011, the Company reported net income of $4,767,000 or $0.17 per diluted share, a $4.6 million improvement over the net income of $168,000 or ($0.03) per diluted share reported for the same nine month period in 2010.  The following table highlights the Company's financial performance for both the three and nine month periods ended September 30, 2011 and 2010:    



Third Quarter 2011

Third Quarter 2010


Nine Months Ended

September 30, 2011

Nine Months Ended

September 30, 2010







Net income

$1,566,000

$609,000


$4,767,000

$168,000

Diluted earnings per share

$ 0.05

$ 0.02


$ 0.17

($0.03)




Glenn L. Wilson, President and Chief Executive Officer, commented on the third quarter 2011 financial results: "Continued improvements in asset quality were a key factor contributing to our strong growth in earnings in 2011.  Non-performing assets again declined as a result of our successful problem credit resolution efforts and now total $5.3 million or only 0.80% of total loans.  I was also pleased with the growth in non-interest revenue, particularly within our trust and wealth management business, and our overall expense control.  Our stable net interest margin performance during periods of market volatility reflects the benefit of growth in both loans and deposits this year.  Overall, AmeriServ Financial was able to achieve significantly improved earnings while further strengthening our balance sheet as evidenced by a tier one capital to assets ratio of 11.70% and loan loss reserve coverage of non-performing assets of 301% at September 30, 2011."          

The Company's net interest income has been relatively stable.  It increased in the third quarter of 2011 by $95,000 or 1.2% from the prior year's third quarter and for the first nine months of 2011 it decreased by $182,000 or 0.7% when compared to the first nine months of 2010.  The Company's 2011 net interest margin of 3.70% was seven basis points lower than the net interest margin for the first nine months of 2010 but the net interest margin has now operated near the 3.70% level for the past five 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 $658 million in 2011, a decrease of $47 million or 6.7% from the same nine month period in 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.  However, total loan balances appear to have bottomed in the first quarter of 2011. Loans have increased by $23 million over the past two quarters reflecting the successful results of the Company's more intensive sales calling efforts.  The Company has strengthened its excellent liquidity position by reinvesting excess cash in high quality investment securities and short-term investments whose average balance increased by $47 million in the first nine months of 2011.  Careful management of funding costs allowed the Company to mitigate a significant portion of the drop in interest revenue during the past twelve months.  Specifically, interest expense in the third quarter of 2011 declined by $663,000 from the same prior year quarter due to reduced deposit costs.  This reduction in deposit costs has not negatively impacted deposit balances which have increased by $26 million or 3.3% since December 31, 2010.      

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 the coverage ratio.  During the first nine months of 2011, total non-performing assets decreased by $9.0 million or 62.8% to $5.3 million or 0.80% of total loans as a result of successful resolution efforts.  Classified loans rated substandard or doubtful also dropped by $13.1 million or 33.1% during this same period.  As a result of this improvement, the Company recorded a negative provision for loan losses of $550,000 in the third quarter of 2011 compared to a $1.0 million provision in the third quarter of 2010.  For the nine month period in 2011 the negative provision has amounted to $2,325,000 compared to a $5,250,000 provision in the first nine months of 2010.  Actual credit losses realized through net charge-offs have also declined sharply on both a quarterly and year-to-date basis in 2011.  For the first nine months of 2011, net charge-offs totaled $1.4 million or 0.28% of total loans which represents a decrease from the first nine months of 2010 when net charge-offs totaled $4.2 million or 0.79% 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 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 301% coverage of non-performing loans and was 2.41% of total loans at September 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 third quarter of 2011 increased by $11,000 from the prior year's third quarter and for the first nine months of 2011 decreased by $118,000 or 1.2% when compared to the first nine 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 $214,000 for the third quarter and $602,000 or 12.8% for the nine month period as these wealth management businesses benefited from the implementation of new fee schedules and higher equity values in the first half of 2011.  When compared to the prior year, gains realized on residential mortgage loan sales into the secondary market were down by $92,000 for the third quarter due to less refinance activity but have increased by $35,000 for the nine month period due to increased mortgage loan production in the first quarter of 2011.  The largest item causing the 2011 decline in non-interest income for the nine 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 Company recognized $157,000 of investment security gains in 2010.  Other income in 2011 also decreased by $103,000 in the third quarter and by $42,000 for the nine month period due to fewer letter of credit fees and a $26,000 loss realized on the sale of an OREO property in the third quarter of 2011.      

Total non-interest expense in the third quarter of 2011 increased by $108,000 from the prior year's third quarter and for the first nine months of 2011 increased by $354,000 or 1.2% when compared to the first nine months of 2010.  Salaries and employee benefits increased by $287,000 for the third quarter and $926,000 or 5.8% for the nine month period due to higher medical insurance costs, increased pension expense, and greater incentive compensation expense.  Professional fees dropped by $51,000 in the third quarter and $376,000 or 11.6% for the first nine months of 2011 due to reduced legal fees, recruitment fees, and lower consulting expenses in the Trust Company.  Other expenses also declined by $54,000 for the third quarter and $491,000 for the nine 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 $2.1 million for the first nine months of 2011 compared to an income tax benefit of $189,000 recorded in the first nine months of 2010 due to the sharply higher pre-tax earnings in 2011 compared to a modest pretax loss in the first nine months of last year.

ASRV had total assets of $973 million and shareholders' equity of $114 million or a book value of $4.39 per common share at September 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 17.31%, an asset leverage ratio of 11.70% and a tangible common equity to tangible assets ratio of 8.38% at September 30, 2011.  In the third quarter, the Company also participated in the U.S. Treasury's Small Business Lending Fund by selling $21 million in preferred stock to the Treasury and using all the proceeds to redeem preferred stock issued to the Treasury as part of the TARP program. The initial interest rate on the SBLF funds will be 5% and may be decreased to as low as 1% if growth thresholds are met for increasing small business loans.

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



September 30, 2011



(In thousands, except per share and ratio data)



(Unaudited)









2011






1QTR

2QTR

3QTR

YEAR






TO DATE

PERFORMANCE DATA FOR THE PERIOD:






Net income


$              1,263

$               1,938

$               1,566

$              4,767

Net income available to common shareholders


973

1,648

1,027

3,648







PERFORMANCE PERCENTAGES (annualized):






Return on average assets


0.54%

0.81%

0.64%

0.66%

Return on average equity


4.77

7.11

5.52

5.81

Net interest margin


3.70

3.71

3.68

3.70

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


0.70

(0.07)

0.20

0.28

Loan loss provision as a percentage of average loans


(0.37)

(0.72)

(0.33)

(0.47)

Efficiency ratio


89.53

85.53

84.83

86.59







PER COMMON SHARE:






Net income:






Basic


$                0.05

$                 0.08

$                 0.05

$                0.17

Average number of common shares outstanding


21,208

21,208

21,208

21,208

Diluted


0.05

0.08

0.05

0.17

Average number of common shares outstanding


21,230

21,236

21,227

21,231















2010






1QTR

2QTR

3QTR

YEAR






TO DATE

PERFORMANCE DATA FOR THE PERIOD:






Net income (loss)


$               (918)

$                  477

$                  609

$                 168

Net income (loss) available to common shareholders


(1,209)

187

318

(704)







PERFORMANCE PERCENTAGES (annualized):






Return on average assets


(0.39)%

0.20%

0.25%

0.02%

Return on average equity


(3.47)

1.79

2.24

0.21

Net interest margin


3.78

3.83

3.70

3.77

Net charge-offs as a percentage of average loans


0.69

1.13

0.56

0.79

Loan loss provision as a percentage of average loans


1.72

0.68

0.57

0.99

Efficiency ratio


85.42

84.33

84.67

84.81







PER COMMON SHARE:






Net income (loss):






Basic


$              (0.06)

$                 0.01

$                 0.02

$              (0.03)

Average number of common shares outstanding


21,224

21,224

21,224

21,224

Diluted


(0.06)

0.01

0.02

(0.03)

Average number of common shares outstanding


21,224

21,245

21,225

21,229





AMERISERV FINANCIAL, INC.



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



(Unaudited)









2011






1QTR

2QTR

3QTR


PERFORMANCE DATA AT PERIOD END:






Assets


$           961,067

$           954,893

$           973,439


Short-term investments


4,094

4,338

17,941


Investment securities


195,272

198,770

195,784


Loans


644,836

656,838

667,409


Allowance for loan losses


18,025

16,958

16,069


Goodwill


12,613

12,613

12,613


Deposits


816,528

810,082

827,358


FHLB borrowings


9,736

9,722

9,707


Shareholders' equity


108,170

111,410

114,164


Non-performing assets


9,328

7,433

5,344


Asset leverage ratio


11.40%

11.60%

11.70%


Tangible common equity ratio


7.89

8.29

8.38


PER COMMON SHARE:






Book value (A)


$                 4.12

$       4.28

$                 4.39


Market value


2.37

1.95

1.90


Trust assets - fair market value (B)


$        1,410,755

$       1,390,534

$        1,313,440








STATISTICAL DATA AT PERIOD END:






Full-time equivalent employees


351

352

342


Branch locations


18

18

18


Common shares outstanding


21,207,670

21,208,421

21,208,421
















2010






1QTR

2QTR

3QTR

4QTR

PERFORMANCE DATA AT PERIOD END:






Assets


$          960,817

$          962,282

$          963,169

$         948,974

Short-term investments


3,816

5,929

5,326

5,177

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 of $21 million received through the Small Business Lending Fund 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

3QTR

YEAR






TO DATE

INTEREST INCOME












Interest and fees on loans


$              9,083

$         8,804

$              8,888

$            26,775

Total investment portfolio


1,513

1,726

1,604

4,843

Total Interest Income


10,596

10,530

10,492

31,618







INTEREST EXPENSE






Deposits


2,294

2,106

2,038

6,438

All borrowings


336

338

336

1,010

Total Interest Expense


2,630

2,444

2,374

7,448







NET INTEREST INCOME


7,966

8,086

8,118

24,170

Provision (credit) for loan losses


(600)

(1,175)

(550)

(2,325)







NET INTEREST INCOME AFTER PROVISION (CREDIT)






FOR LOAN LOSSES


8,566

9,261

8,668

26,495







NON-INTEREST INCOME






Trust fees


1,556

1,617

1,570

4,743

Investment advisory fees


198

198

172

568

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

(358)

-

-

(358)

Net realized gains on loans held for sale


262

155

186

603

Service charges on deposit accounts


472

549

640

1,661

Bank owned life insurance


216

218

227

661

Other income


759

717

729

2,205

Total Non-Interest Income


3,105

3,454

3,524

10,083







NON-INTEREST EXPENSE






Salaries and employee benefits


5,500

5,574

5,702

16,776

Net occupancy expense


757

742

680

2,179

Equipment expense


429

411

435

1,275

Professional fees


980

911

983

2,874

FDIC deposit insurance expense


462

460

262

1,184

Other expenses


1,791

1,779

1,820

5,390

Total Non-Interest Expense


9,919

9,877

9,882

29,678







PRETAX INCOME


1,752

2,838

2,310

6,900

Income tax expense


489

900

744

2,133

NET INCOME


1,263

1,938

1,566

4,767

Preferred stock dividends and accretion of preferred stock discount

290

290

539

1,119

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS


$               973

$             1,648

$             1,027

$            3,648















2010






1QTR

2QTR

3QTR

YEAR






TO DATE

INTEREST INCOME












Interest and fees on loans


$           10,020

$             9,984

$             9,592

$           29,596

Total investment portfolio


1,445

1,466

1,468

4,379

Total Interest Income


11,465

11,450

11,060

33,975







INTEREST EXPENSE






Deposits


2,927

2,833

2,668

8,428

All borrowings


417

409

369

1,195

Total Interest Expense


3,344

3,242

3,037

9,623







NET INTEREST INCOME


8,121

8,208

8,023

24,352

Provision for loan losses


3,050

1,200

1,000

5,250







NET INTEREST INCOME AFTER PROVISION






FOR LOAN LOSSES


5,071

7,008

7,023

19,102







NON-INTEREST INCOME






Trust fees


1,454

1,373

1,357

4,184

Investment advisory fees


187

167

171

525

Net realized gains on investment securities available for sale


65

42

50

157

Net realized gains on loans held for sale


131

159

278

568

Service charges on deposit accounts


572

611

565

1,748

Bank owned life insurance


254

258

260

772

Other income


637

778

832

2,247

Total Non-Interest Income


3,300

3,388

3,513

10,201







NON-INTEREST EXPENSE






Salaries and employee benefits


5,199

5,236

5,415

15,850

Net occupancy expense


736

639

620

1,995

Equipment expense


418

427

401

1,246

Professional fees


1,102

1,114

1,034

3,250

FDIC deposit insurance expense


331

341

430

1,102

Other expenses


1,978

2,029

1,874

5,881

Total Non-Interest Expense


9,764

9,786

9,774

29,324







PRETAX INCOME (LOSS)


(1,393)

610

762

(21)

Income tax expense (benefit)


(475)

133

153

(189)

NET INCOME (LOSS)


(918)

477

609

168

Preferred stock dividends and accretion of preferred stock discount

291

290

291

872

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS


$           (1,209)

$                 187

$               318

$               (704)





AMERISERV FINANCIAL, INC.



AVERAGE BALANCE SHEET DATA



(In thousands)



(Unaudited)

















2011



2010





NINE



NINE



3QTR

MONTHS


3QTR

MONTHS








Interest earning assets:







Loans and loans held for sale, net of unearned income


$             663,230

$             658,442


$             694,432

$             705,656

Deposits with banks


9,861

4,546


1,781

1,785

Short-term investment in money market funds


3,547

3,451


5,075

4,301

Federal funds sold


-

7,784


6,184

3,754

Total investment securities


199,228

198,580


167,892

157,894

Total interest earning assets


875,866

872,803


875,364

873,390








Non-interest earning assets:







Cash and due from banks


16,228

15,598


14,889

14,952

Premises and equipment


10,535

10,504


10,645

10,011

Other assets


79,342

79,323


80,888

80,141

Allowance for loan losses


(17,032)

(18,309)


(21,173)

(21,347)








Total assets


964,939

959,919


960,613

957,147








Interest bearing liabilities:







Interest bearing deposits:







Interest bearing demand


59,099

57,143


59,014

58,247

Savings


83,280

81,241


79,038

77,701

Money market


193,921

190,642


187,563

186,229

Other time


346,639

352,643


363,327

357,165

Total interest bearing deposits


682,939

681,669


688,942

679,342

Borrowings:







Federal funds purchased, securities sold under







  agreements to repurchase, and other short-term







  borrowings


227

507


1,258

2,963

Advanced from Federal Home Loan Bank


9,715

9,729


13,434

21,419

Guaranteed junior subordinated deferrable interest debentures

13,085

13,085


13,085

13,085

Total interest bearing liabilities


705,966

704,990


716,719

716,809








Non-interest bearing liabilities:







 Demand deposits


134,767

133,465


125,117

121,712

 Other liabilities


11,634

11,691


10,624

11,290

Shareholders' equity


112,572

109,773


108,153

107,336

Total liabilities and shareholders' equity


$             964,939

$             959,919


$             960,613

$             957,147



SOURCE AmeriServ Financial, Inc.



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