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| ASRV > SEC Filings for ASRV > Form 8-K on 16-Oct-2012 | All Recent SEC Filings |
16-Oct-2012
Results of Operations and Financial Condition
AMERISERV FINANCIAL Inc. (the "Registrant") announced third quarter and first nine month results through September 30, 2012. For a more detailed description of the announcement see the press release attached as Exhibit #99.1.
Exhibits
Exhibit 99.1
Press release dated October 16, 2012, announcing the third quarter and first nine month results through September 30, 2012.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERISERV FINANCIAL, Inc.
By /s/Jeffrey A. Stopko
Jeffrey A. Stopko
Executive Vice President
& CFO
Date: October 16, 2012
Exhibit 99.1
AMERISERV FINANCIAL REPORTS EARNINGS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2012
JOHNSTOWN, PA - 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 Nine Months Ended
September 30, 2012 September 30, 2011
Net income $1,307,000 $1,566,000 $4,304,000 $4,767,000
Net income available $1,056,000 $1,027,000 $3,528,000 $3,648,000
to
common shareholders
Diluted earnings per $ 0.05 $ 0.05 $ 0.18 $0.17
share
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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 1,302 1,170 1,056 3,528
shareholders
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 0.13 (0.02) 0.16 0.09
of average loans
Loan loss provision as a percentage of (0.38) (0.30) (0.11) (0.26)
average loans
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 20,679 19,584 19,275 19,844
outstanding
Diluted 0.06 0.06 0.05 0.18
Average number of common shares 20,722 19,652 19,351 19,904
outstanding
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 973 1,648 1,027 3,648
shareholders
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 0.70 (0.07) 0.20 0.28
average loans
Loan loss provision as a percentage of (0.37) (0.72) (0.33) (0.47)
average loans
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 21,208 21,208 21,208 21,208
outstanding
Diluted 0.05 0.08 0.05 0.17
Average number of common shares 21,230 21,236 21,227 21,231
outstanding
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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 and core deposit intangibles 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
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NOTES:
(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.
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