AmeriServ Financial Reports Increased Earnings For The Second Quarter And First Six Months Of 2015

Jul 14, 2015, 08:00 ET from AmeriServ Financial, Inc.

JOHNSTOWN, Pa., July 14, 2015 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) continued its positive earnings momentum in the second quarter of 2015 by reporting net income available to common shareholders of $1,369,000, or $0.07 per diluted common share.  This represented a 40% increase in earnings per share from the second quarter of 2014 where net income available to common shareholders totaled $927,000, or $0.05 per diluted common share.  For the six month period ended June 30, 2015, the Company reported net income available to common shareholders of $2,685,000, or $0.14 per diluted share.  This also represented a 40% increase in earnings per share from the first half of 2014 where net income available to common shareholders totaled $1,804,000, or $0.10 per diluted common share.  The following table highlights the Company's financial performance for both the three and six month periods ended June 30, 2015 and 2014:

         

Second Quarter 2015

Second Quarter 2014

Six Months Ended

June 30, 2015

Six Months Ended

June 30, 2014

Net income

$1,421,000

$979,000

$2,790,000

$1,909,000

Net income available to common shareholders

 

$1,369,000

 

$927,000

 

$2,685,000

 

$1,804,000

Diluted earnings per share

$ 0.07

$ 0.05

$ 0.14

$0.10

 

Jeffrey A. Stopko, President and Chief Executive Officer, commented on the period ended June 30, 2015 financial results: "Our disciplined focus on executing our business plans to increase revenues and reduce non-interest expense again resulted in improved profitability in the second quarter of 2015.  The growth in net interest income continues to be driven by solid loan growth and effective cost of funds management while the increase in non-interest income reflects the important and growing contribution of our trust and wealth management business to the Company's total revenue.  Additionally, I am pleased that all areas of the Company continue to understand the importance of improving our efficiency as total non-interest expense declined by $709,000, or 3.3% in the first six months of 2015.  We are well positioned to continue these positive earnings trends in the second half of 2015 with our excellent asset quality and strong capital position." 

The Company's net interest income in the second quarter of 2015 increased by $416,000, or 5.0%, from the prior year's second quarter and for the first six months of 2015 increased by $825,000, or 4.9%, when compared to the first six months of 2014.  The Company's net interest margin of 3.51% for the first six months of 2015 was only one basis point lower than the net interest margin of 3.52% for the first half of 2014.  There was a similar modest net interest margin decline of two basis points when the second quarter of 2015 is compared to the prior year second quarter.  The Company has been able to increase net interest income given the modest decline in its net interest margin by both growing its earning assets and controlling its cost of funds through disciplined deposit pricing.  Specifically, the earning asset growth has occurred in the loan portfolio as total loans averaged $849 million in the first half of 2015 which is $58 million, or 7.4%, higher than the $791 million average for the first half 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.  Interest income in 2015 has also benefitted from an increased dividend from the FHLB of Pittsburgh.  Overall, total interest income has increased by $854,000, or 4.3%, in the first half of 2015.  Total interest expense for the first half of 2015 has been well controlled as it increased by only $29,000, or 0.9%, due to the Company's proactive efforts to reduce deposit costs.  Total deposit interest expense decreased by $106,000, or 4.3%, in the first six months of 2015 from the same timeframe in 2014.  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 $894 million for the first half of 2015 which is $27 million, or 3.2%, higher than the $866 million average for the first half of 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 $135,000 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 $200,000 provision for loan losses in the second quarter of 2015 compared to no provision for loan losses in the second quarter of 2014.  For the six month period in 2015, the Company recorded a $450,000 provision for loan losses compared to no provision for loan losses in the first six months of 2014.  The provision recorded in 2015 was needed to support the continuing growth of the loan portfolio and cover net loan charge-offs.  The Company experienced net loan charge-offs of $172,000, or 0.08%, of total loans in the second quarter of 2015 and recognized a net loan recovery of $40,000 in the second quarter of 2014.  For the six month periods, there were net loan charge-offs of $356,000, or 0.08%, of total loans in first half of 2015 compared to net loan recoveries of $46,000 in 2014.  Overall, the Company continued to maintain outstanding asset quality in the first half of 2015.  At June 30, 2015, non-performing assets totaled $2.6 million, or only 0.30% of total loans, and is $1.9 million lower than the June 30, 2014 level.  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 a strong 399% coverage of non-performing loans, and 1.13% of total loans, at June 30, 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 second quarter of 2015 increased by $54,000, or 1.5%, from the prior year's second quarter and for the first six months of 2015 increased by $234,000, or 3.3%, when compared to the first six months of 2014.  Increased revenue from trust and investment advisory fees and mortgage loan sales were two factors contributing to both the quarterly and six month non-interest income increase.  Specifically, trust and investment advisory fees increased by $187,000, or 9.6%, for the quarter and $211,000, or 5.3%, for the six month period due to increased assets under management which reflects successful new business development activities, as well as due to market forces and effective management of customer accounts.  Gains realized on residential mortgage loan sales into the secondary market increased by $54,000 for the quarter and $144,000 for the six month period due to both increased purchase and refinance activity in 2015.  Revenue from bank owned life insurance also increased by $162,000 for the six month period due to the receipt of a death claim in the first quarter of 2015. These increases were partially offset by a reduction in deposit service charges of $72,000 for the quarter and $131,000 for the six month period due to fewer overdraft fees.  Additionally, gains realized on investment security transactions declined by $92,000 for the quarter and $149,000 for the six month period as the Company executed fewer security sale transactions in the first half of 2015.

Total non-interest expense in the second quarter of 2015 decreased by $381,000, or 3.6%, from the prior year's second quarter and for the first six months of 2015 decreased by $709,000, or 3.3%, when compared to the first six months of 2014.  Salaries and employee benefits were down by $163,000, or 2.7%, in the second quarter and by $404,000, or 3.3%, in the first half of 2015, due to 27 fewer 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.  Professional fees declined by $189,000 in the second quarter of 2015 and by $286,000 in the first six month period due to lower legal fees, director's fees and recruitment costs in the first half of 2015.  The remainder of the key non-interest expense categories were relatively consistent between years reflecting the Company's focus on reducing and controlling costs.  Finally, the Company recorded an income tax expense of $1,249,000, or an effective tax rate of 30.9%, in the first six months of 2015 which is higher when compared to the income tax expense of $812,000, or an effective tax rate of 29.8%, for the first six months of 2014.  The higher income tax expense and effective tax rate is due to the Company's increased earnings in the first half of 2015.

The Company had total assets of $1.1 billion, shareholders' equity of $117 million, a book value of $5.11 per common share and a tangible book value of $4.47 per common share at June 30, 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 7.66% at June 30, 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 




June 30, 2015




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




(Unaudited)









2015





1QTR

2QTR

YEAR





TO DATE

PERFORMANCE DATA FOR THE PERIOD:





Net income 


1,369

1,421

2,790

Net income available to common shareholders


1,316

1,369

2,685






PERFORMANCE PERCENTAGES (annualized):





Return on average assets


0.51%

0.52%

0.51%

Return on average equity


4.80

4.88

4.84

Net interest margin


3.57

3.45

3.51

Net charge-offs as a percentage of average loans


0.09

0.08

0.08

Loan loss provision as a percentage of average loans


0.12

0.09

0.11

Efficiency ratio


82.29

81.93

82.11






PER COMMON SHARE:





Net income:





Basic


0.07

0.07

0.14

Average number of common shares outstanding


18,851

18,859

18,855

Diluted


0.07

0.07

0.14

Average number of common shares outstanding


18,909

18,941

18,923

Cash dividends declared


0.01

0.01

0.02








2014





1QTR

2QTR

YEAR





TO DATE

PERFORMANCE DATA FOR THE PERIOD:





Net income 


930

979

1,909

Net income available to common shareholders


877

927

1,804






PERFORMANCE PERCENTAGES (annualized):





Return on average assets


0.36%

0.37%

0.37%

Return on average equity


3.30

3.41

3.35

Net interest margin


3.56

3.47

3.52

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

-

(0.02)

(0.01)

Loan loss provision as a percentage of average loans


-

-

-

Efficiency ratio


89.02

88.29

88.66






PER COMMON SHARE:





Net income:





Basic


0.05

0.05

0.10

Average number of common shares outstanding


18,786

18,795

18,790

Diluted


0.05

0.05

0.10

Average number of common shares outstanding


18,904

18,936

18,920

Cash dividends declared


0.01

0.01

0.02

 




AMERISERV FINANCIAL, INC.




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




(Unaudited)











2015






1QTR

2QTR



FINANCIAL CONDITION DATA AT PERIOD END:





Assets


1,103,416

1,112,934



Short-term investments/overnight funds


10,127

9,843



Investment securities


142,010

142,448



Loans and loans held for sale


853,972

866,243



Allowance for loan losses


9,689

9,717



Goodwill 


11,944

11,944



Deposits


892,676

862,902



FHLB borrowings


71,219

109,430



Shareholders' equity


116,328

117,305



Non-performing assets


3,046

2,565



Tangible common equity ratio


7.64

7.66



PER COMMON SHARE:






Book value (A)


5.06

5.11



Tangible book value (A)


4.42

4.47



Market value


2.98

3.33



Trust assets - fair market value (B)


1,932,894

1,909,358









STATISTICAL DATA AT PERIOD END:






Full-time equivalent employees


318

318



Branch locations


17

17



Common shares outstanding


18,855,021

18,861,811

















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)


1,693,663

1,778,522

1,774,988

1,784,278







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

YEAR





TO DATE

INTEREST INCOME










Interest and fees on loans


9,456

9,480

18,936

Interest on investments


1,067

929

1,996

Total Interest Income


10,523

10,409

20,932






INTEREST EXPENSE





Deposits


1,174

1,171

2,345

All borrowings


415

438

853

Total Interest Expense


1,589

1,609

3,198






NET INTEREST INCOME


8,934

8,800

17,734

Provision for loan losses


250

200

450






NET INTEREST INCOME AFTER PROVISION





FOR LOAN LOSSES


8,684

8,600

17,284






NON-INTEREST INCOME





Trust and investment advisory fees


2,056

2,135

4,191

Service charges on deposit accounts


419

429

848

Net realized gains on loans held for sale


191

225

416

Mortgage related fees


115

109

224

Net realized gains on investment securities 


-

28

28

Bank owned life insurance


363

171

534

Other income


568

595

1,163

Total Non-Interest Income


3,712

3,692

7,404






NON-INTEREST EXPENSE





Salaries and employee benefits


6,073

5,944

12,017

Net occupancy expense


841

718

1,559

Equipment expense


466

480

946

Professional fees


1,211

1,275

2,486

FDIC deposit insurance expense


167

164

331

Other expenses


1,652

1,658

3,310

Total Non-Interest Expense


10,410

10,239

20,649






PRETAX INCOME 


1,986

2,053

4,039

Income tax expense 


617

632

1,249

NET INCOME 


1,369

1,421

2,790

Preferred stock dividends 


53

52

105

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

1,316

1,369

2,685























2014





1QTR

2QTR

YEAR





TO DATE

INTEREST INCOME










Interest and fees on loans


9,032

8,939

17,971

Interest on investments


1,063

1,044

2,107

Total Interest Income


10,095

9,983

20,078






INTEREST EXPENSE





Deposits


1,211

1,240

2,451

All borrowings


359

359

718

Total Interest Expense


1,570

1,599

3,169






NET INTEREST INCOME


8,525

8,384

16,909

Provision for loan losses


-

-

-






NET INTEREST INCOME AFTER PROVISION 





FOR LOAN LOSSES


8,525

8,384

16,909






NON-INTEREST INCOME





Trust and investment advisory fees


2,032

1,948

3,980

Service charges on deposit accounts


478

501

979

Net realized gains on loans held for sale


101

171

272

Mortgage related fees


117

160

277

Net realized gains on investment securities 


57

120

177

Bank owned life insurance


187

185

372

Other income


560

553

1,113

Total Non-Interest Income


3,532

3,638

7,170






NON-INTEREST EXPENSE





Salaries and employee benefits


6,314

6,107

12,421

Net occupancy expense


839

717

1,556

Equipment expense


470

494

964

Professional fees


1,308

1,464

2,772

FDIC deposit insurance expense


160

154

314

Other expenses


1,647

1,684

3,331

Total Non-Interest Expense


10,738

10,620

21,358






PRETAX INCOME 


1,319

1,402

2,721

Income tax expense 


389

423

812

NET INCOME 


930

979

1,909

Preferred stock dividends 


53

52

105

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

877

927

1,804

 



                   AMERISERV FINANCIAL, INC.




                AVERAGE BALANCE SHEET DATA




                                (Dollars in thousands)





        (Unaudited)


























2015



2014





SIX



SIX



2QTR

MONTHS


2QTR

MONTHS








Interest earning assets:







Loans and loans held for sale, net of unearned income

857,294

849,453


795,233

791,270

Deposits with banks


9,108

10,593


7,512

6,749

Short-term investment in money market funds


1,235

1,235


2,296

3,231

Total investment securities


146,434

147,043


157,348

160,069

Total interest earning assets


1,014,071

1,008,324


962,389

961,319








Non-interest earning assets:







Cash and due from banks


18,067

17,680


15,267

15,618

Premises and equipment


12,725

12,839


13,194

13,171

Other assets 


69,880

70,091


69,538

69,689

Allowance for loan losses


(9,744)

(9,709)


(10,122)

(10,132)








Total assets


1,104,999

1,099,225


1,050,266

1,049,665








Interest bearing liabilities:







Interest bearing deposits:







Interest bearing demand


101,586

97,256


100,249

91,433

Savings


96,694

94,592


89,871

89,202

Money market


231,814

232,178


229,626

229,170

Other time


291,270

298,660


304,022

303,583

Total interest bearing deposits


721,364

722,686


723,768

713,388

Borrowings:







Federal funds purchased and other short-term borrowings

27,771

20,628


7,249

18,441

Advances from Federal Home Loan Bank


45,933

44,757


30,378

28,544

Guaranteed junior subordinated deferrable interest debentures

13,085

13,085


13,085

13,085

Total interest bearing liabilities


808,153

801,156


774,480

773,458








Non-interest bearing liabilities:







  Demand deposits


169,250

170,904


152,976

152,894

  Other liabilities 


10,741

10,897


7,582

8,519

Shareholders' equity


116,855

116,268


115,228

114,794

Total liabilities and shareholders' equity


1,104,999

1,099,225


1,050,266

1,049,665








 

SOURCE AmeriServ Financial, Inc.



RELATED LINKS

http://www.ameriservfinancial.com