AMERISERV FINANCIAL, INC. 
By JOHNSTOWN, Pa., Jan. 22, 2013 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported fourth quarter 2012 net income available to common shareholders of $683,000 or $0.04 per diluted common share. This represented a 42.9% decrease in earnings per share from the fourth quarter of 2011 where net income available to common shareholders totaled $1,505,000 or $0.07 per diluted common share. For the year ended December 31, 2012, the Company reported net income available to common shareholders of $4,211,000 or $0.21 per diluted share. This represented a 12.5% decline in earnings per share from the full year 2011 where net income available to common shareholders totaled $5,153,000 or $0.24 per diluted share. The largest factor causing the reduction in net income for both the fourth quarter and full year of 2012 was the provision for loan losses. The Company recorded a $550,000 loan loss provision in the fourth quarter of 2012 compared to a negative loan loss provision of $1,250,000 in the fourth quarter of 2011. For the full year 2012, the Company recorded a negative provision of $775,000 but this was at a lesser level than the $3,575,000 negative provision for the 2011 year. The following table highlights the Company's financial performance for both the quarters and years ended December 31, 2012 and 2011:
Fourth Quarter 2012 Fourth Quarter 2011 Year Ended Year Ended
December 31, 2012 December 31, 2011
----------------- -----------------
Net income $735,000 $1,770,000 $5,039,000 $6,537,000
---------- -------- ---------- ---------- ----------
Net income available to
common shareholders $683,000 $1,505,000 $4,211,000 $5,153,000
------------------- -------- ---------- ---------- ----------
Diluted earnings per share $0.04 $0.07 $0.21 $0.24
-------------------------- ----- ----- ----- -----
Glenn L. Wilson, President and Chief Executive Officer, commented on the 2012 financial results: "AmeriServ Financial was able to accomplish several important strategic initiatives during 2012. We have now reported seven consecutive quarters of loan growth which has caused our total loan portfolio to increase by $61 million or 9.1% for the full year 2012. Our new loan production offices contributed to this growth in loan categories that qualify for the Small Business Lending Fund (SBLF) and as a result we will continue to pay the lowest preferred share dividend rate available under the program. I was also pleased with our strong growth in non-interest revenue in 2012 which reflected a record year in residential mortgage related revenues and a second consecutive year of double digit growth in the net income contribution from our wealth management businesses. Finally, we are well positioned for further growth in 2013 which will be supported by our strong and conservative balance sheet. We ended 2012 with our allowance for loan losses providing 210% coverage of non-performing loans and a tier one capital to average assets ratio of 11.44%."
The Company's net interest income has been relatively stable this year as it decreased by $31,000 or 0.4% in the fourth quarter of 2012 from the prior year's fourth quarter and for the full year 2012 decreased by only $80,000 or 0.2% when compared to the full year 2011. The Company's full year 2012 net interest margin of 3.65% was seven basis points lower than the net interest margin of 3.72% for the 2011 year. The decreased net interest margin reflects the challenges of a flatter yield curve which has pressured interest revenue in 2012 and demonstrates the impact of Federal Reserve low interest rate policies. 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 seven consecutive quarters and now are $61 million or 9.1% higher than they were at December 31, 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 $2,047,000 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, total interest expense for the full year of 2012 declined by $1,967,000 from the 2011 year 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 $19 million or 2.4% over the past year. The Company continues to maintain strong liquidity as evidenced by a loan to deposit ratio of 87.6% at December 31, 2012.
The Company recorded a $550,000 provision for loan losses in the fourth quarter of 2012 compared to a $1,250,000 negative provision recorded in the fourth quarter of 2011. The $550,000 provision was needed to address a $1.9 million increase in non-performing assets that occurred during the fourth quarter of 2012. This increase largely relates to one problem commercial real estate loan which had been on our watch list and reflects the Company's consistent practice of quickly identifying and managing problem credits in order to minimize losses during the workout process. Even with this uptick, non-performing assets are still at a very manageable level at December 31, 2012, as they now total $7.2 million or 0.99% of total loans. For the full year 2012, the Company was able to reverse a portion of the allowance for loan losses into earnings while still maintaining strong coverage ratios. For the 2012 year, the negative loan loss provision amounted to $775,000 compared to a $3,575,000 negative provision for the 2011 year. Consequently, there has been $2.8 million less earnings benefit from negative loan loss provisions in 2012. The Company continued to realize overall low levels of net charge-offs during 2012, despite an increase in the fourth quarter. Specifically, net charge-offs for the 2012 year totaled $1.3 million or 0.19% of total loans which represents a decrease from the 2011 year when net charge-offs totaled $1.6 million or 0.24% of total loans. Criticized and classified loans also dropped by $4.2 million or 8.5% during the past 12 months. 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 210% coverage of non-performing loans, and was 1.72% of total loans, at December 31, 2012, compared to 288% of non-performing loans, and 2.18% of total loans, at December 31, 2011.
The Company's strong growth in non-interest income has also been a financial performance highlight in 2012. Total non-interest income in the fourth quarter of 2012 increased by $401,000 or 11.5% from the prior year's fourth quarter and for the full year 2012 increased by $1.4 million or 10.1% when compared to the 2011 year. The 2012 non-interest income increase was driven by increased revenue from residential mortgage banking activities and our Trust Company's wealth management businesses. Specifically, gains realized on residential mortgage loan sales into the secondary market increased by $134,000 for the fourth quarter and by $320,000 or 39.4% for the full year due to increased mortgage loan production in 2012. The higher residential mortgage loan production reflected both increased purchase and refinance activity. Trust fees also increased by $239,000 for the fourth quarter and by $354,000 for the full year as our wealth management businesses benefited from the implementation of new fee schedules and improved asset values under management 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 $34,000 quarterly increase and $411,000 full year increase in other income 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 fourth quarter of 2012 increased by only $14,000 from the prior year's fourth quarter and for the full year 2012 increased by $604,000 or 1.5% when compared to the 2011 year. Salaries and employee benefits increased by $490,000 for the fourth quarter and $1.8 million or 8.0% for the 2012 year 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. These negative items were partially offset by a $60,000 reduction in FDIC deposit insurance expense for the fourth quarter of 2012 and an $897,000 reduction for the full year. 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. Additionally, the Company incurred a $240,000 prepayment penalty on the early retirement of $5.7 million of FHLB term advances in the fourth quarter of 2011. There was no such prepayment charge in 2012. Finally, the Company recorded an income tax expense for the full year of 2012 of $2.2 million which was lower than the 2011 full year tax expense of $2.9 million due to reduced pre-tax earnings in 2012. The 2012 effective tax rate of 30.8% was comparable with the 2011 effective tax rate of 30.4%.
ASRV had total assets of $1.0 billion and shareholders' equity of $110 million or a book value of $4.67 per common share and a tangible book value of $4.01 per common share at December 31, 2012. During the full year 2012, the Company repurchased 1,758,000 shares or 8.4% of its outstanding common stock at an average price of $2.51 in conjunction with the terms of its recently completed common stock repurchase program. This was a key factor contributing to a 6.6% 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 15.92%, an asset leverage ratio of 11.44% and a tangible common equity to tangible assets ratio of 7.74% at December 31, 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
December 31, 2012
(In thousands, except per share and ratio data)
(Unaudited)
2012
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE PERIOD:
Net income $1,565 $1,432 $1,307 $735 $5,039
Net income available to common shareholders 1,302 1,170 1,056 683 4,211
PERFORMANCE PERCENTAGES (annualized):
Return on average assets 0.65% 0.59% 0.52% 0.29% 0.51%
Return on average equity 5.60 5.19 4.66 2.60 4.51
Net interest margin 3.70 3.59 3.59 3.55 3.65
Net charge-offs (recoveries) as a percentage of average loans 0.13 (0.02) 0.16 0.45 0.19
Loan loss provision (credit) as a percentage of average loans (0.38) (0.30) (0.11) 0.30 (0.11)
Efficiency ratio 86.17 86.34 85.50 86.61 86.16
PER COMMON SHARE:
Net income:
Basic $0.06 $0.06 $0.05 $0.04 $0.21
Average number of common shares outstanding 20,679 19,584 19,275 19,209 19,685
Diluted 0.06 0.06 0.05 0.04 0.21
Average number of common shares outstanding 20,722 19,652 19,351 19,289 19,747
2011
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE PERIOD:
Net income $1,263 $1,938 $1,566 $1,770 $6,537
Net income available to common shareholders 973 1,648 1,027 1,505 5,153
PERFORMANCE PERCENTAGES (annualized):
Return on average assets 0.54% 0.81% 0.64% 0.72% 0.68%
Return on average equity 4.77 7.11 5.52 6.19 5.90
Net interest margin 3.70 3.71 3.68 3.64 3.72
Net charge-offs as a percentage of average loans 0.70 (0.07) 0.20 0.12 0.24
Loan loss provision (credit) as a percentage of average loans (0.37) (0.72) (0.33) (0.73) (0.54)
Efficiency ratio 89.53 85.53 84.83 89.26 87.26
PER COMMON SHARE:
Net income:
Basic $0.05 $0.08 $0.05 $0.07 $0.24
Average number of common shares outstanding 21,208 21,208 21,208 21,114 21,184
Diluted 0.05 0.08 0.05 0.07 0.24
Average number of common shares outstanding 21,230 21,236 21,227 21,128 21,205
AMERISERV FINANCIAL, INC.
(In thousands, except per share, statistical, and ratio data)
(Unaudited)
2012
1QTR 2QTR 3QTR 4QTR
FINANCIAL CONDITION DATA AT PERIOD END:
Assets $967,401 $997,102 $1,002,281 $1,005,828
Short-term investments/overnight funds 7,398 14,158 14,210 9,012
Investment securities 190,089 191,791 181,319 165,261
Loans and loans held for sale 671,328 690,815 706,624 731,741
Allowance for loan losses 13,778 13,317 12,829 12,571
Goodwill 12,613 12,613 12,613 12,613
Deposits 820,105 854,017 850,125 835,734
FHLB borrowings 6,390 3,000 12,000 28,660
Shareholders' equity 112,270 110,810 112,311 110,468
Non-performing assets 4,801 5,077 5,372 7,224
Asset leverage ratio 11.83% 11.60% 11.45% 11.44%
Tangible common equity ratio 8.24 7.84 7.95 7.74
PER COMMON SHARE:
Book value (A) $4.46 $4.66 $4.74 $4.67
Tangible book value 3.84 4.00 4.09 4.01
Market value 2.74 2.82 2.97 3.01
Trust assets - fair market value (B) $1,469,789 $1,447,877 $1,511,012 $1,512,387
STATISTICAL DATA AT PERIOD END:
Full-time equivalent employees 353 353 355 350
Branch locations 18 18 18 18
Common shares outstanding 20,465,521 19,284,521 19,255,221 19,164,721
2011
1QTR 2QTR 3QTR 4QTR
FINANCIAL CONDITION 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 consolidated balance sheets.
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(Unaudited)
2012
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on
loans $8,729 $8,552 $8,807 $8,727 $34,815
Total investment
portfolio 1,395 1,333 1,223 1,151 5,102
----- ----- ----- ----- -----
Total Interest Income 10,124 9,885 10,030 9,878 39,917
INTEREST EXPENSE
Deposits 1,762 1,668 1,587 1,485 6,502
All borrowings 304 296 301 311 1,212
--- --- --- --- -----
Total Interest Expense 2,066 1,964 1,888 1,796 7,714
----- ----- ----- ----- -----
NET INTEREST INCOME 8,058 7,921 8,142 8,082 32,203
Provision (credit) for
loan losses (625) (500) (200) 550 (775)
---- ---- ---- --- ----
NET INTEREST INCOME AFTER
PROVISION (CREDIT)
FOR LOAN LOSSES 8,683 8,421 8,342 7,532 32,978
NON-INTEREST INCOME
Trust fees 1,697 1,628 1,533 1,669 6,527
Investment advisory fees 193 177 182 189 741
Net realized gains on
investment securities
available for sale - 12 - - 12
Net realized gains on
loans held for sale 276 251 262 343 1,132
Service charges on
deposit accounts 535 517 567 576 2,195
Bank owned life insurance 215 212 217 219 863
Other income 758 936 888 891 3,473
--- --- --- --- -----
Total Non-Interest Income 3,674 3,733 3,649 3,887 14,943
NON-INTEREST EXPENSE
Salaries and employee
benefits 5,986 5,976 6,132 6,330 24,424
Net occupancy expense 729 702 698 671 2,800
Equipment expense 451 473 395 445 1,764
Professional fees 923 937 977 1,033 3,870
FDIC deposit insurance
expense 129 114 104 94 441
Other expenses 1,896 1,865 1,781 1,800 7,342
----- ----- ----- ----- -----
Total Non-Interest
Expense 10,114 10,067 10,087 10,373 40,641
PRETAX INCOME 2,243 2,087 1,904 1,046 7,280
Income tax expense 678 655 597 311 2,241
--- --- --- --- -----
NET INCOME 1,565 1,432 1,307 735 5,039
Preferred stock dividends 263 262 251 52 828
--- --- --- --- ---
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $1,302 $1,170 $1,056 $683 $4,211
------ ------ ------ ---- ------
2011
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on
loans $9,083 $8,804 $8,888 $8,924 $35,699
Total investment
portfolio 1,513 1,726 1,604 1,422 6,265
----- ----- ----- ----- -----
Total Interest Income 10,596 10,530 10,492 10,346 41,964
INTEREST EXPENSE
Deposits 2,294 2,106 2,038 1,897 8,335
All borrowings 336 338 336 336 1,346
--- --- --- --- -----
Total Interest Expense 2,630 2,444 2,374 2,233 9,681
----- ----- ----- ----- -----
NET INTEREST INCOME 7,966 8,086 8,118 8,113 32,283
Provision (credit) for
loan losses (600) (1,175) (550) (1,250) (3,575)
---- ------ ---- ------ ------
NET INTEREST INCOME AFTER
PROVISION (CREDIT)
FOR LOAN LOSSES 8,566 9,261 8,668 9,363 35,858
NON-INTEREST INCOME
Trust fees 1,556 1,617 1,570 1,430 6,173
Investment advisory fees 198 198 172 186 754
Net realized losses on
investment securities
available for sale (358) - - - (358)
Net realized gains on
loans held for sale 262 155 186 209 812
Service charges on
deposit accounts 472 549 640 580 2,241
Bank owned life insurance 216 218 227 224 885
Other income 759 717 729 857 3,062
--- --- --- --- -----
Total Non-Interest Income 3,105 3,454 3,524 3,486 13,569
NON-INTEREST EXPENSE
Salaries and employee
benefits 5,500 5,574 5,702 5,840 22,616
Net occupancy expense 757 742 680 721 2,900
Equipment expense 429 411 435 411 1,686
Professional fees 980 911 983 1,001 3,875
FDIC deposit insurance
expense 462 460 262 154 1,338
FHLB prepayment penalty - - - 240 240
Other expenses 1,791 1,779 1,820 1,992 7,382
----- ----- ----- ----- -----
Total Non-Interest
Expense 9,919 9,877 9,882 10,359 40,037
PRETAX INCOME 1,752 2,838 2,310 2,490 9,390
Income tax expense 489 900 744 720 2,853
--- --- --- --- -----
NET INCOME 1,263 1,938 1,566 1,770 6,537
Preferred stock dividends
and accretion of
preferred stock discount 290 290 539 265 1,384
--- --- --- --- -----
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS $973 $1,648 $1,027 $1,505 $5,153
---- ------ ------ ------ ------
AMERISERV FINANCIAL, INC.
AVERAGE BALANCE SHEET DATA
(In thousands)
(Unaudited)
2012 2011
TWELVE TWELVE
4QTR MONTHS 4QTR MONTHS
Interest
earning
assets:
Loans and
loans
held for
sale, net
of
unearned
income $717,959 $688,736 $675,657 $662,746
Deposits
with
banks 5,064 10,634 9,961 6,853
Short-
term
investment
in money
market
funds 4,716 1,889 2,355 2,224
Federal
funds
sold - - - 5,838
Total
investment
securities 175,114 186,775 195,925 197,916
------- ------- ------- -------
Total
interest
earning
assets 902,853 888,034 883,898 875,577
Non-
interest
earning
assets:
Cash and
due from
banks 18,219 17,136 16,779 15,893
Premises
and
equipment 11,446 11,055 10,539 10,513
Other
assets 81,804 81,796 79,201 79,293
Allowance
for loan
losses (12,511) (13,500) (16,155) (17,771)
------- ------- ------- -------
Total
assets 1,001,811 984,521 974,262 963,505
========= ======= ======= =======
Interest
bearing
liabilities:
Interest
bearing
deposits:
Interest
bearing
demand 64,131 60,810 59,707 57,784
Savings 84,995 85,112 82,238 81,490
Money
market 221,732 211,744 202,220 193,536
Other time 320,007 327,557 337,730 348,915
------- ------- ------- -------
Total
interest
bearing
deposits 690,865 685,223 681,895 681,725
Borrowings:
Federal
funds
purchased
and other
short-
term
borrowings 7,005 5,342 3,343 1,216
Advances
from
Federal
Home Loan
Bank 11,478 5,661 9,888 9,769
Guaranteed
junior
subordinated
deferrable
interest
debentures 13,085 13,085 13,085 13,085
------ ------ ------ ------
Total
interest
bearing
liabilities 722,433 709,311 708,211 705,795
Non-
interest
bearing
liabilities:
Demand
deposits 152,861 147,887 140,797 135,298
Other
liabilities 14,156 15,517 11,721 11,699
Shareholders'
equity 112,361 111,806 113,533 110,713
------- ------- ------- -------
Total
liabilities
and
shareholders'
equity $1,001,811 $984,521 $974,262 $963,505
========== ======== ======== ========
SOURCE AmeriServ Financial, Inc.
