AmeriServ Financial Reports Increased Earnings For The Fourth Quarter And Full Year Of 2015

Jan 19, 2016, 08:00 ET from AmeriServ Financial, Inc.

JOHNSTOWN, Pa., Jan. 19, 2016 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported fourth quarter 2015 net income available to common shareholders of $1,321,000, or $0.07 per diluted common share.  This represented a significant increase when compared to net income available to common shareholders of $697,000, or $0.04 per diluted common share, reported for the fourth quarter of 2014.  For the year ended December 31, 2015, the Company reported net income available to common shareholders of $5,787,000, or $0.31 per diluted share.  This represented a 107% increase in earnings per share from the full year 2014 where net income available to common shareholders totaled $2,813,000, or $0.15 per diluted common share.  The following table highlights the Company's financial performance for both quarters and years ended December 31, 2015 and 2014:           

Fourth Quarter 2015

Fourth Quarter 2014

Year Ended

December 31,2015

Year Ended

December 31, 2014

Net income

$1,374,000

$749,000

$5,997,000

$3,023,000

Net income available to common shareholders

 

$1,321,000

 

$697,000

 

$5,787,000

 

$2,813,000

Diluted earnings per share

$ 0.07

$ 0.04

$ 0.31

$ 0.15

Jeffrey A. Stopko, President and Chief Executive Officer, commented on the year ended December 31, 2015 financial results: "We were able to meaningfully improve the earnings power of AmeriServ Financial Inc. in 2015 through a combination of revenue growth and non-interest expense reduction.  Specifically, solid loan and deposit growth in our community banking business contributed to an increase of $1.3 million, or 3.9%, in net interest income while increasing revenue from our trust and wealth management business contributed to 6.6% growth in non-interest income in 2015.  Additionally, operating expenses declined by $1.7 million, or 3.9%, as we improved the ongoing efficiency of the Company by successfully executing several profitability improvement initiatives."

The Company's net interest income in the fourth quarter of 2015 decreased by $140,000 from the prior year's fourth quarter but increased by $1,317,000, or 3.9%, for the full year of 2015 when compared to the full year 2014.  The decrease in net interest income between the fourth quarter of 2015 and the prior year's fourth quarter is due to net interest margin compression as well as the 2015 fourth quarter reversal of previously recognized interest income from a loan that was transferred into non-accrual status.  The impact of the net interest margin compression is evident in the Company's net interest margin ratio which was 3.30% for the fourth quarter of 2015 and was 19 basis points lower than the net interest margin of 3.49% for the fourth quarter of 2014.  Total earning assets averaged $1.028 billion in the fourth quarter of this year, or 3.9% higher than the $990 million average in the prior year's fourth quarter.  On an annual basis, the Company's net interest income increased in 2015 when compared to 2014 as net interest margin compression was more than fully mitigated by earning asset growth, a greater level of prepayment fees on early loan payoffs and an increased dividend from the FHLB of Pittsburgh.  The Company's net interest margin of 3.49% for the full year 2015 was three basis points lower than the net interest margin of 3.52% for the full year 2014.  The earning asset growth occurred in the loan portfolio as total loans averaged $857 million for the full year of 2015 which is $52 million, or 6.5% higher than the $805 million average for the full year of 2014.  This loan growth reflects the successful results of the Company's sales calling efforts, with an emphasis on generating commercial loans and owner occupied commercial real estate loans particularly through its loan production offices in the stronger growth markets of Pittsburgh and Altoona in Pennsylvania, and Hagerstown, Maryland.  Overall, total interest income decreased by $62,000, or 0.6%, in the fourth quarter of 2015 but increased by $1.4 million, or 3.6%, for the full year 2015.

Total interest expense has been well controlled in 2015 as it increased by $78,000 in the fourth quarter and $123,000, or 1.9%, for the full year of 2015 due to tight control of our cost of funds through disciplined deposit pricing.  Total deposit interest expense decreased by $137,000, or 2.8%, in 2015 when compared to last year.  Even with this reduction in deposit costs, the Company continues to have a strong loyal core deposit base and success in cross-selling new loan customers into deposit products.  Specifically, total deposits averaged $893 million for full year of 2015 which is $21 million, or 2.4%, higher than the $872 million average in 2014.  The Company is pleased that a meaningful portion of this deposit growth occurred in non-interest bearing demand deposit accounts.  This decreased interest expense for deposits has been offset by a $260,000 increase in the interest cost for borrowings as the Company has utilized more FHLB term advances to extend borrowings and provide protection against rising interest rates.  

The Company recorded a $500,000 provision for loan losses in the fourth quarter of 2015 compared to a $375,000 provision in the fourth quarter of 2014.  The higher provision that was needed this year was largely due to the transfer into non-accrual status of a $4.1 million loan to a customer in the fracking industry that filed for bankruptcy protection in the fourth quarter.  This is the Company's only meaningful direct loan exposure to the energy industry.  For the full year 2015, the Company recorded a $1,250,000 provision for loan losses which represented an increase of $875,000 when compared to the 2014 full year provision of $375,000.  The higher provision recorded in 2015 was also needed to support the continuing growth of the loan portfolio and cover net loan charge-offs.  The Company experienced net loan charge-offs of $351,000, or 0.16% of total loans, in the fourth quarter of 2015 which was comparable to net loan charge-offs of $334,000, or 0.16% of total loans, in the fourth quarter of 2014.  For the full years, there were net loan charge-offs of $952,000, or 0.11% of total loans, in 2015 compared to net loan charge-offs of $856,000, or 0.11% of total loans, in 2014.  Overall, even with the fourth quarter increase in non-performing assets, the Company continued to maintain strong asset quality in 2015.  At December 31, 2015, non-performing assets totaled $6.3 million, or 0.71% 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 159% coverage of non-performing loans, and 1.13% of total loans, at December 31, 2015, compared to 400% coverage of non-performing loans, and 1.16% of total loans, at December 31, 2014.

Total non-interest income in the fourth quarter of 2015 increased by $288,000 from the prior year's fourth quarter and for the full year of 2015 increased by $944,000, or 6.6%, when compared to the full year of 2014.  Increased revenue from trust and investment advisory fees and bank owned life insurance were two factors contributing to both the quarterly and annual non-interest income increase.  Specifically, trust and investment advisory fees increased by $90,000, or 4.6%, for the quarter and $579,000, or 7.5%, annually due to increased assets under management which reflects successful new business development activities as well as effective management of existing customer accounts in this volatile market environment.  Trust assets under administration totaled $1.97 billion as of December 31, 2015.  Revenue from bank owned life insurance increased by $210,000 for the quarter and $868,000 for the full year due to the receipt of four death claims in 2015.  These increases were partially offset by a reduction in deposit service charges in 2015 of $10,000 for the quarter and $207,000 for the full year due to fewer overdraft fees.  Mortgage related fees also dropped by $43,000 in the fourth quarter and $199,000 for the full year due to less mortgage refinance activity in 2015.  Finally, for the full year 2015 there was a decrease of $106,000 in revenue from investment security sale transactions as the Company recognized a lower level of gains on the sale of securities with low balances in 2015 compared to gains realized on the sale of rapidly pre-paying mortgage backed securities in 2014.

Total non-interest expense in the fourth quarter of 2015 decreased by $600,000, or 5.6%, from the prior year's fourth quarter and for the full year of 2015 decreased by $2,333,000, or 5.4%, when compared to the full year of 2014.  Salaries and employee benefits were down by $454,000 in the fourth quarter and by $918,000, or 3.7%, for the full year of 2015, due to 21 fewer average full time equivalent employees as certain employees who elected to participate in an early retirement program in late 2014 were not replaced in order to achieve efficiencies identified as part of a profitability improvement program.  As part of this early retirement program, the Company recognized a $400,000 pension charge in the fourth quarter of 2014.  Professional fees increased modestly by $34,000 in the fourth quarter of 2015 but were $406,000, or 7.5% lower for the year.  The annual decrease results from lower legal fees, director's fees and consulting costs in 2015.  Additionally, the Company recognized a $669,000 goodwill impairment charge related to its investment advisory subsidiary in the third quarter of 2014.  There was no such charge in 2015.  The remainder of the key non-interest expense categories were relatively consistent or down between years reflecting the Company's continuing focus on reducing and controlling costs.  Finally, the Company recorded an income tax expense of $2,343,000, or an effective tax rate of 28.1%, in 2015 compared to the income tax expense of $1,598,000, or an effective tax rate of 34.6%, for 2014.  The higher income tax expense is due to the Company's increased earnings in 2015 as the Company's effective tax rate is lower than 2014 due to an increase in tax free revenue from bank owned life insurance.  The higher effective tax rate in 2014 was also due to the non-deductibility of the goodwill impairment charge for tax purposes.

The Company had total assets of $1.15 billion, shareholders' equity of $119 million, a book value of $5.19 per common share and a tangible book value of $4.56 per common share at December 31, 2015.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status and had a tangible common equity to tangible assets ratio of 7.57% at December 31, 2015.

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

December 31, 2015

(Dollars in thousands, except per share and ratio data)

(Unaudited)










2015







1QTR

2QTR

3QTR

4QTR

YEAR







TO DATE

PERFORMANCE DATA FOR THE PERIOD:







Net income


1,369

1,421

1,833

1,374

5,997

Net income available to common shareholders

1,316

1,369

1,781

1,321

5,787








PERFORMANCE PERCENTAGES (annualized):







Return on average assets


0.51%

0.52%

0.66%

0.49%

0.54%

Return on average equity


4.80

4.88

6.15

4.56

5.10

Net interest margin


3.57

3.45

3.52

3.30

3.49

Net charge-offs as a percentage of average loans

0.09

0.08

0.11

0.16

0.11

Loan loss provision as a percentage of average loans

0.12

0.09

0.14

0.23

0.15

Efficiency ratio


82.29

81.93

78.25

81.69

81.01








PER COMMON SHARE:







Net income:







Basic


0.07

0.07

0.09

0.07

0.31

Average number of common shares outstanding

18,851

18,859

18,869

18,871

18,863

Diluted


0.07

0.07

0.09

0.07

0.31

Average number of common shares outstanding

18,909

18,941

18,951

18,950

18,933

Cash dividends declared


0.01

0.01

0.01

0.01

0.04










2014







1QTR

2QTR

3QTR

4QTR

YEAR







TO DATE

PERFORMANCE DATA FOR THE PERIOD:







Net income


930

979

365

749

3,023

Net income available to common shareholders

877

927

312

697

2,813








PERFORMANCE PERCENTAGES (annualized):






Return on average assets


0.36%

0.37%

0.14%

0.28%

0.29%

Return on average equity


3.30

3.41

1.25

2.54

2.61

Net interest margin


3.56

3.47

3.42

3.49

3.52

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

-

(0.02)

0.28

0.16

0.11

Loan loss provision as a percentage of average loans

-

-

-

0.18

0.05

Efficiency ratio


89.02

88.29

93.68

87.58

89.63








PER COMMON SHARE:







Net income:







Basic


0.05

0.05

0.02

0.04

0.15

Average number of common shares outstanding

18,786

18,795

18,795

18,795

18,793

Diluted


0.05

0.05

0.02

0.04

0.15

Average number of common shares outstanding

18,904

18,936

18,908

18,887

18,908

Cash dividends declared


0.01

0.01

0.01

0.01

0.04

 

                     








AMERISERV FINANCIAL, INC.

(Dollars in thousands, except per share, statistical, and ratio data)

(Unaudited)









2015






1QTR

2QTR

3QTR

4QTR

FINANCIAL CONDITION DATA AT PERIOD END:





Assets

1,103,416

1,112,934

1,110,843

1,148,922

Short-term investments/overnight funds

10,127

9,843

14,966

25,067

Investment securities


142,010

142,448

135,013

140,886

Loans and loans held for sale


853,972

866,243

868,213

883,987

Allowance for loan losses


9,689

9,717

9,772

9,921

Goodwill


11,944

11,944

11,944

11,944

Deposits


892,676

862,902

869,899

903,294

FHLB borrowings


71,219

109,430

100,988

96,748

Shareholders' equity


116,328

117,305

119,408

118,973

Non-performing assets


3,046

2,565

2,294

6,297

Tangible common equity ratio


7.64

7.66

7.87

7.57

PER COMMON SHARE:






Book value (A)


5.06

5.11

5.21

5.19

Tangible book value (A)


4.42

4.47

4.58

4.56

Market value


2.98

3.33

3.24

3.20

Trust assets - fair market value (B)


2,033,573

2,012,358

1,935,495

1,974,882







STATISTICAL DATA AT PERIOD END:





Full-time equivalent employees


318

318

318

318

Branch locations


17

17

17

17

Common shares outstanding


18,855,021

18,861,811

18,870,811

18,870,811















2014






1QTR

2QTR

3QTR

4QTR

FINANCIAL CONDITION DATA AT PERIOD END:





Assets


1,051,108

1,063,717

1,070,431

1,089,263

Short-term investments/overnight funds

9,019

8,013

6,662

9,092

Investment securities


154,754

153,603

150,471

146,950

Loans and loans held for sale


789,620

804,675

817,887

832,131

Allowance for loan losses


10,109

10,150

9,582

9,623

Goodwill


12,613

12,613

11,944

11,944

Deposits


875,333

873,908

872,170

869,881

FHLB borrowings


40,483

52,677

63,438

80,880

Shareholders' equity


114,590

115,946

116,146

114,407

Non-performing assets


3,274

4,469

3,897

2,917

Tangible common equity ratio


7.80

7.83

7.86

7.56

PER COMMON SHARE:






Book value (A)


4.97

5.05

5.06

4.97

Tangible book value (A)


4.31

4.38

4.43

4.33

Market value


3.85

3.48

3.30

3.13

Trust assets - fair market value (B)

1,692,663

1,873,996

1,872,088

1,883,937







STATISTICAL DATA AT PERIOD END:





Full-time equivalent employees


347

345

341

314

Branch locations


18

17

17

17

Common shares outstanding


18,793,388

18,794,888

18,794,888

18,794,888







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 consolidated balance sheets.


 

AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENT OF INCOME

(Dollars in thousands)

(Unaudited)














2015











1QTR


2QTR


3QTR


4QTR


YEAR











TO DATE

INTEREST INCOME






















Interest and fees on loans


9,456


9,480


9,718


9,341


37,995

Interest on investments


1,067


929


949


941


3,886

Total Interest Income


10,523


10,409


10,667


10,282


41,881












INTEREST EXPENSE











Deposits


1,174


1,171


1,174


1,233


4,752

All borrowings


415


438


458


457


1,768

Total Interest Expense


1,589


1,609


1,632


1,690


6,520












NET INTEREST INCOME


8,934


8,800


9,035


8,592


35,361

Provision for loan losses


250


200


300


500


1,250












NET INTEREST INCOME AFTER PROVISION











FOR LOAN LOSSES


8,684


8,600


8,735


8,092


34,111












NON-INTEREST INCOME











Trust and investment advisory fees

2,056


2,135


2,085


2,068


8,344

Service charges on deposit accounts

419


429


441


461


1,750

Net realized gains on loans held for sale

191


225


178


173


767

Mortgage related fees


115


109


87


80


391

Net realized gains(losses) on investment securities

-


28


(36)


79


71

Bank owned life insurance


363


171


684


399


1,617

Other income


568


595


576


588


2,327

Total Non-Interest Income


3,712


3,692


4,015


3,848


15,267












NON-INTEREST EXPENSE











Salaries and employee benefits


6,073


5,944


6,079


5,946


24,042

Net occupancy expense


841


718


692


690


2,941

Equipment expense


466


480


409


418


1,773

Professional fees


1,211


1,275


1,206


1,311


5,003

FDIC deposit insurance expense

167


164


174


164


669

Other expenses


1,652


1,658


1,659


1,641


6,610

Total Non-Interest Expense


10,410


10,239


10,219


10,170


41,038












PRETAX INCOME


1,986


2,053


2,531


1,770


8,340

Income tax expense


617


632


698


396


2,343

NET INCOME


1,369


1,421


1,833


1,374


5,997

Preferred stock dividends


53


52


52


53


210

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

1,316


1,369


1,781


1,321


5,787

























2014











1QTR


2QTR


3QTR


4QTR


YEAR











TO DATE

INTEREST INCOME






















Interest and fees on loans


9,032


8,939


9,019


9,352


36,342

Interest on investments


1,063


1,044


1,000


992


4,099

Total Interest Income


10,095


9,983


10,019


10,344


40,441












INTEREST EXPENSE











Deposits


1,211


1,240


1,237


1,201


4,889

All borrowings


359


359


379


411


1,508

Total Interest Expense


1,570


1,599


1,616


1,612


6,397












NET INTEREST INCOME


8,525


8,384


8,403


8,732


34,044

Provision for loan losses


-


-


-


375


375












NET INTEREST INCOME AFTER PROVISION










FOR LOAN LOSSES


8,525


8,384


8,403


8,357


33,669












NON-INTEREST INCOME











Trust and investment advisory fees

2,032


1,948


1,807


1,978


7,765

Service charges on deposit accounts

478


501


507


471


1,957

Net realized gains on loans held for sale

101


171


275


201


748

Mortgage related fees


117


160


190


123


590

Net realized gains on investment securities

57


120


-


-


177

Bank owned life insurance


187


185


188


189


749

Other income


560


553


626


598


2,337

Total Non-Interest Income


3,532


3,638


3,593


3,560


14,323












NON-INTEREST EXPENSE











Salaries and employee benefits


6,314


6,107


6,139


6,400


24,960

Net occupancy expense


839


717


709


699


2,964

Equipment expense


470


494


468


460


1,892

Professional fees


1,308


1,464


1,360


1,277


5,409

FDIC deposit insurance expense


160


154


159


163


636

Goodwill impairment charge


-


-


669


-


669

Other expenses


1,647


1,684


1,739


1,771


6,841

Total Non-Interest Expense


10,738


10,620


11,243


10,770


43,371












PRETAX INCOME


1,319


1,402


753


1,147


4,621

Income tax expense


389


423


388


398


1,598

NET INCOME


930


979


365


749


3,023

Preferred stock dividends


53


52


53


52


210

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

877


927


312


697


2,813












 

 

AMERISERV FINANCIAL, INC.

AVERAGE BALANCE SHEET DATA

(Dollars in thousands)

(Unaudited)






























2015




2014







TWELVE




TWELVE



4QTR


MONTHS


4QTR


MONTHS










Interest earning assets:









Loans and loans held for sale, net of unearned income

870,400


857,015


827,613


804,721

Short-term investment in money market funds

12,116


10,700


8,186


7,227

Deposits with banks


5,086


2,198


1,235


1,243

Total investment securities


140,794


144,959


153,000


157,238

Total interest earning assets


1,028,396


1,014,872


990,034


970,429










Non-interest earning assets:









Cash and due from banks


17,525


17,312


16,254


16,919

Premises and equipment


12,282


12,617


13,310


13,282

Other assets


67,605


69,201


68,787


69,423

Allowance for loan losses


(9,808)


(9,766)


(9,501)


(9,951)










Total assets


1,116,000


1,104,236


1,078,884


1,060,102










Interest bearing liabilities:









Interest bearing deposits:









Interest bearing demand


92,800


97,201


103,500


97,641

Savings


92,550


94,425


89,274


89,554

Money market


269,251


242,298


225,907


228,150

Other time


276,134


287,783


297,783


300,915

Total interest bearing deposits


730,735


721,707


716,464


716,260

Borrowings:









Federal funds purchased and other short-term borrowings

16,650


24,582


25,316


18,783

Advances from Federal Home Loan Bank

48,763


46,166


39,723


32,885

Guaranteed junior subordinated deferrable interest debentures

13,085


13,085


13,085


13,085

Subordinated debt


247


62


-


-

Total interest bearing liabilities


809,480


805,602


794,588


781,013










Non-interest bearing liabilities:









  Demand deposits


178,801


171,175


160,515


155,365

  Other liabilities


8,157


9,871


6,694


7,969

Shareholders' equity


119,562


117,588


117,087


115,755

Total liabilities and shareholders' equity

1,116,000


1,104,236


1,078,884


1,060,102










 

SOURCE AmeriServ Financial, Inc.



RELATED LINKS

http://www.ameriservfinancial.com