AmeriServ Financial Reports Earnings For The Third Quarter And First Nine Months Of 2012

JOHNSTOWN, Pa., Oct. 16, 2012 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported third quarter 2012 net income available to common shareholders of $1,056,000 or $0.05 per diluted common share.  This performance is consistent with the financial results reported for the third quarter of 2011.  For the nine month period ended September 30, 2012, the Company reported net income available to common shareholders of $3,528,000 or $0.18 per diluted share.  While net income available to common shareholders for the nine month period was down by $120,000 or 3.3%, compared to the same period in 2011, diluted earnings per share increased by $0.01 or 5.9% due to the success of the Company's common stock repurchase program.  The sustained improvements in asset quality continued to result in a negative provision for loan losses in 2012, but at a lesser level than in 2011.  This is the factor causing the reduction in net income for both the third quarter and nine month period of 2012.  The following table highlights the Company's financial performance for both the three and nine month periods ended September 30, 2012:         

    


Third Quarter 2012

Third Quarter 2011


Nine Months Ended
September 30, 2012

Nine Months Ended
September 30, 2011







Net income

$1,307,000

$1,566,000


$4,304,000

$4,767,000

Net income available to

  common shareholders

 

$1,056,000

 

$1,027,000


 

$3,528,000

 

$3,648,000

Diluted earnings per share

$ 0.05

$ 0.05


$ 0.18

$0.17

 

Glenn L. Wilson, President and Chief Executive Officer, commented on the third quarter 2012 financial results: "AmeriServ Financial was able to report a sixth consecutive quarter of loan growth during the third quarter of 2012 and now exceeds $1 billion in total assets.  This loan growth helped us increase our net interest income by over $200,000 and maintain a stable net interest margin on a linked quarter basis, despite the challenging interest rate environment.  I was pleased that our recently opened loan production offices are now contributing to the loan increase we have achieved in 2012.  Additionally, this loan growth has occurred in loan categories that qualify for the Small Business Lending Fund (SBLF).  As a result, we will pay the lowest preferred share dividend rate available under the SBLF program for at least two consecutive quarters beginning in the fourth quarter of 2012.  This will have a positive impact on the key shareholder value metrics of earnings per share and tangible book value per share in future quarters."  

The Company's net interest income has been relatively consistent this year as it increased by $24,000 or 0.3% in the third quarter of 2012 from the prior year's third quarter and for the first nine months of 2012 decreased by only $49,000 or 0.2% when compared to the first nine months of 2011.  The Company's 2012 net interest margin of 3.63% was seven basis points lower than the net interest margin of 3.70% for the first nine months of 2011.  The decreased net interest margin reflects the challenges of a flatter yield curve which has pressured interest revenue in 2012.  The Company has been able to overcome this net interest margin pressure and keep net interest income relatively constant by reducing its cost of funds and growing its earning assets, particularly loans.  Specifically, total loans outstanding have increased for six consecutive quarters and now are $39.2 million or 5.9% higher than they were at September 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 $1.6 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 nine months of 2012 declined by $1.5 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 $22.8 million or 2.8% over the past 12 months.  The Company continues to maintain strong liquidity as evidenced by a loan to deposit ratio of 83.1% at September 30, 2012.   

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 third quarter of 2012 while still maintaining strong coverage ratios.  At September 30, 2012, non-performing assets totaled $5.4 million or 0.77% of total loans.  This represents the fifth consecutive quarter where non-performing assets have been near the $5 million level.  Criticized and classified loans also dropped by $11 million or 20.7% during the past 12 months.  Actual credit losses realized through net charge-offs have also declined in 2012 for both the third quarter and nine month periods.  For the first nine months of 2012, net charge-offs totaled $470,000 or 0.09% of total loans which represents a decrease from the first nine months of 2011 when net charge-offs totaled $1.4 million or 0.28% of total loans.  As a result of this sustained asset quality improvement, the Company recorded a negative provision for loan losses of $200,000 in the third quarter of 2012 compared to a negative provision of $550,000 in the third quarter of 2011.  For the nine month period in 2012, the negative provision amounted to $1,325,000 compared to a $2,325,000 credit provision in the first nine months of 2011.  Overall, there has been $1.0 million 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 282% coverage of non-performing loans, and was 1.83% of total loans, at September 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 income has also been a financial performance highlight in 2012.  Total non-interest income in the third quarter of 2012 increased by $125,000 or 3.5% from the prior year's third quarter and for the first nine months of 2012 increased by $973,000 or 9.6% when compared to the first nine months of 2011.  The 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 $76,000 for the third quarter and by $186,000 for the nine month period due to increased mortgage loan production in 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 $159,000 quarterly increase and $377,000 nine month increase in other income in 2012.  Also for the nine month period, our Trust Company continued its positive momentum with trust fees increasing by $115,000 or 2.4% as our wealth management businesses benefited from the implementation of new fee schedules and improved asset values under management in 2012.  Finally, 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 third quarter of 2012 increased by $205,000 from the prior year's third quarter and for the first nine months of 2012 increased by $590,000 or 2.0% when compared to the first nine months of 2011.  Salaries and employee benefits increased by $430,000 for the third quarter and $1.3 million or 7.9% for the nine 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 $152,000 for the nine month period due to an increase in the reserve for unfunded loan commitments as result of increased commercial loan origination activity in 2012 and higher business development related expenses.  These negative items were partially offset by a $158,000 reduction in FDIC deposit insurance expense for the third quarter of 2012 and an $837,000 reduction for the nine 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 resulting primarily from better asset quality.  Finally, the Company recorded an income tax expense of $1.9 million or an effective tax rate of 31.0% for the first nine months of 2012 which was comparable with the income tax expense of $2.1 million or an effective tax rate of 30.9% for the first nine months of 2011.  The quarterly effective tax rates were also comparable with the nine month average.

ASRV had total assets of $1.0 billion and shareholders' equity of $112 million or a book value of $4.74 per common share and a tangible book value of $4.09 per common share at September 30, 2012.  During the first nine months of 2012, the Company repurchased 1,667,000 shares or 8.0% of its outstanding common stock at an average price of $2.49 in conjunction with the terms of its previously announced common stock repurchase program.  This was a key factor contributing to an 8.8% growth in tangible book value per share since the end of 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 16.26%, an asset leverage ratio of 11.45% and a tangible common equity to tangible assets ratio of 7.95% at September 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 



September 30, 2012



(In thousands, except per share and ratio data)



(Unaudited)










2012
1QTR






2QTR

3QTR

YEAR






TO DATE

PERFORMANCE DATA FOR THE PERIOD:






Net income 


$           1,565

$            1,432

$            1,307

$           4,304

Net income available to common shareholders


1,302

1,170

1,056

3,528







PERFORMANCE PERCENTAGES (annualized):






Return on average assets


0.65%

0.59%

0.52%

0.59%

Return on average equity


5.60

5.19

4.66

5.15

Net interest margin


3.70

3.59

3.59

3.63

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

0.13

(0.02)

0.16

0.09

Loan loss provision as a percentage of average loans


(0.38)

(0.30)

(0.11)

(0.26)

Efficiency ratio


86.17

86.34

85.50

86.00







PER COMMON SHARE:






Net income:






Basic


$             0.06

$              0.06

$              0.05

$             0.18

Average number of common shares outstanding


20,679

19,584

19,275

19,844

Diluted


0.06

0.06

0.05

0.18

Average number of common shares outstanding


20,722

19,652

19,351

19,904















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 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

 



AMERISERV FINANCIAL, INC.





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





(Unaudited)













2012
1QTR

2QTR

3QTR




PERFORMANCE DATA AT PERIOD END:








Assets


$        967,401

$        997,102

$      1,002,281




Short-term investments/overnight funds


7,398

14,158

14,210




Investment securities


190,089

191,791

181,319




Loans and loans held for sale


671,328

690,815

706,624




Allowance for loan losses


13,778

13,317

12,829




Goodwill 


12,613

12,613

12,613




Deposits


820,105

854,017

850,125




FHLB borrowings


6,390

3,000

12,000




Shareholders' equity


112,270

110,810

112,311




Non-performing assets


4,801

5,077

5,372




Asset leverage ratio


11.83%

11.60%

11.45%




Tangible common equity ratio


8.24

7.84

7.95




PER COMMON SHARE:








Book value (A)


$               4.46

$               4.66

$               4.74




Tangible book value


3.84

4.00

4.09




Market value


2.74

2.82

2.97




Trust assets - fair market value (B)


$      1,469,789

$      1,447,877

$      1,511,012












STATISTICAL DATA AT PERIOD END:








Full-time equivalent employees


353

353

355




Branch locations


18

18

18




Common shares outstanding


20,465,521

19,284,521

19,255,221






















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

3QTR

YEAR






TO DATE

INTEREST INCOME












Interest and fees on loans


$           8,729

$           8,552

$          8,807

$         26,088

Total investment portfolio


1,395

1,333

1,223

3,951

Total Interest Income


10,124

9,885

10,030

30,039







INTEREST EXPENSE






Deposits


1,762

1,668

1,587

5,017

All borrowings


304

296

301

901

Total Interest Expense


2,066

1,964

1,888

5,918







NET INTEREST INCOME


8,058

7,921

8,142

24,121

Provision (credit) for loan losses


(625)

(500)

(200)

(1,325)







NET INTEREST INCOME AFTER PROVISION (CREDIT)





FOR LOAN LOSSES


8,683

8,421

8,342

25,446







NON-INTEREST INCOME






Trust fees


1,697

1,628

1,533

4,858

Investment advisory fees


193

177

182

552

Net realized gains on investment securities available for sale

-

12

-

12

Net realized gains on loans held for sale


276

251

262

789

Service charges on deposit accounts


535

517

567

1,619

Bank owned life insurance


215

212

217

644

Other income


758

936

888

2,582

Total Non-Interest Income


3,674

3,733

3,649

11,056







NON-INTEREST EXPENSE






Salaries and employee benefits


5,986

5,976

6,132

18,094

Net occupancy expense


729

702

698

2,129

Equipment expense


451

473

395

1,319

Professional fees


923

937

977

2,837

FDIC deposit insurance expense


129

114

104

347

Other expenses


1,896

1,865

1,781

5,542

Total Non-Interest Expense


10,114

10,067

10,087

30,268







PRETAX INCOME 


2,243

2,087

1,904

6,234

Income tax expense 


678

655

597

1,930

NET INCOME 


1,565

1,432

1,307

4,304

Preferred stock dividends 


263

262

251

776

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

$           1,302

$           1,170

$          1,056

$           3,528



























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 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

 



                   AMERISERV FINANCIAL, INC.




                AVERAGE BALANCE SHEET DATA




                                (In thousands)




        (Unaudited)

























2012



2011





NINE



NINE



3QTR

MONTHS


3QTR

MONTHS








Interest earning assets:







Loans and loans held for sale, net of unearned income

$       701,104

$       678,995


$       663,230

$       658,442

Deposits with banks


5,265

8,870


9,861

4,546

Short-term investment in money market funds


4,717

4,567


3,547

3,451

Federal funds sold


-

-


-

7,784

Total investment securities


187,474

190,662


199,228

198,580

Total interest earning assets


898,560

883,094


875,866

872,803








Non-interest earning assets:







Cash and due from banks


17,090

16,775


16,228

15,598

Premises and equipment


11,019

10,925


10,535

10,504

Other assets 


81,526

81,793


79,342

79,323

Allowance for loan losses


(13,167)

(13,830)


(17,032)

(18,309)








Total assets


995,028

978,757


964,939

959,919








Interest bearing liabilities:







Interest bearing deposits:







Interest bearing demand


63,321

59,703


59,099

57,143

Savings


86,373

85,152


83,280

81,241

Money market


216,644

208,414


193,921

190,642

Other time


328,410

330,073


346,639

352,643

Total interest bearing deposits


694,748

683,342


682,939

681,669

Borrowings:







Federal funds purchased and other short-term borrowings

3,808

2,827


227

507

Advances from Federal Home Loan Bank


4,417

5,683


9,715

9,729

Guaranteed junior subordinated deferrable interest debentures

13,085

13,085


13,085

13,085

Total interest bearing liabilities


716,058

704,937


705,966

704,990








Non-interest bearing liabilities:







  Demand deposits


150,844

146,229


134,767

133,465

  Other liabilities 


16,467

15,970


11,634

11,691

Shareholders' equity


111,659

111,621


112,572

109,773

Total liabilities and shareholders' equity


$       995,028

$       978,757


$       964,939

$       959,919








SOURCE AmeriServ Financial, Inc.



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