15.10.2013 14:00:00

AmeriServ Financial Reports Earnings For The Third Quarter And First Nine Months Of 2013

JOHNSTOWN, Pa., Oct. 15, 2013 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported third quarter 2013 net income available to common shareholders of $1,173,000 or $0.06 per diluted common share.  This represented a 20% increase in earnings per share from the third quarter of 2012 where net income available to common shareholders totaled $1,056,000 or $0.05 per diluted common share.  For the nine month period ended September 30, 2013, the Company reported net income available to common shareholders of $3,195,000 or $0.17 per diluted share.  This represented a 5.6% decline in earnings per share from the same nine month period in 2012 where net income available to common shareholders totaled $3,528,000 or $0.18 per diluted common share.  The following table highlights the Company's financial performance for both the three and nine month periods ended September 30, 2013 and 2012:      


Third Quarter 2013

Third Quarter 2012


Nine Months Ended

September 30, 2013

Nine Months Ended

September 30, 2012







Net income

$1,226,000

$1,307,000


$3,352,000

$4,304,000

Net income available to common shareholders

 

$1,173,000

 

$1,056,000


 

$3,195,000

 

$3,528,000

Diluted earnings per share

$ 0.06

$ 0.05


$ 0.17

$0.18

Glenn L. Wilson, President and Chief Executive Officer, commented on the third quarter 2013 financial results: "I was pleased that growth in total revenue, combined with effective capital management, caused the increase in earnings per share in the third quarter of 2013.  Specifically, an increase in net interest income resulted from continued strong growth of our loan portfolio, as total loans grew by $57 million, or 8.1% over the past twelve months.  Material loan growth occurred in loan categories that qualify for the Small Business Lending Fund (SBLF) and as a result we have now locked in for continued payment the lowest preferred dividend rate available under the program of 1% until the first quarter of 2016.  Non-interest income, the other key revenue component, also increased by $337,000 or over 9% between years, due largely to fee growth within our trust and wealth management businesses as a result of increased assets under management and continued good residential mortgage sales activity." 

The Company's net interest income in the third quarter of 2013 increased by $58,000 from the prior year's third quarter, and for the first nine months of 2013 increased by $142,000 when compared to the first nine months of 2012.  The Company's net interest margin of 3.52% for the first nine months of 2013 was 11 basis points lower than the net interest margin of 3.63% for the first nine months of 2012.  The lower net interest margin demonstrates the impact of Federal Reserve low interest rate policies which has pressured community banks interest revenue. The Company has sought to mitigate this net interest margin pressure and modestly increase net interest income by both reducing its cost of funds and growing its earning assets, particularly loans.  Specifically, these efforts have resulted in total loans averaging $737 million in the first nine months of 2013, which is $58 million or 8.5% higher than the $679 million average in the first nine months of 2012.  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 SBLF loans, particularly through its loan production offices.  As a result of this growth in SBLF qualified loans, the Company continues to pay the lowest preferred share dividend rate of 1% available under the SBLF program.  This lower rate has saved the Company $619,000 in preferred stock dividend payments so far in 2013.  Despite this solid growth in loans, total interest revenue still dropped by $899,000 between years and reflects the lower interest rate environment.  However, careful management of funding costs has allowed the Company to partially mitigate this drop in interest revenue during the past year.  Specifically, total interest expense for the first nine months of 2013 declined by $1.0 million from the same prior year period due to the Company's proactive efforts to reduce deposit costs.  Even with this reduction in deposit costs, the Company still experienced growth in deposits which reflects the loyalty of its core deposit base and its ongoing efforts to cross sell new loan customers into deposit products.  Specifically, total deposits have averaged $844 million in the first nine months of 2013, which is $14 million or 1.7% higher than the $830 million average in the first nine months of 2012.  The company is pleased that the majority of the deposit growth has occurred in non-interest bearing demand deposit accounts.     

The Company did not record a provision for loan losses in the third quarter of 2013 as compared to a $200,000 negative provision recorded in the third quarter of 2012.  For the nine month period in 2013, the Company recorded a negative loan loss provision of $100,000 compared to a $1,325,000 negative provision in the first nine months of 2012.  There has been $1,225,000 less earnings benefit from negative loan loss provisions in 2013.  Overall, sustained improvements in asset quality evidenced by low levels of non-performing assets and classified loans has allowed the Company to continue to benefit from negative or zero loan loss provisions in 2013 while still maintaining strong coverage ratios.  At September 30, 2013, non-performing assets totaled $5.0 million or 0.66% of total loans which is comparable with the level they have operated at in six of the last seven quarters.  The Company experienced modest net loan recoveries of $39,000 in the third quarter of 2013 compared to net charge-offs of $289,000 in the third quarter of 2012.  For the first nine months of 2013, actual credit losses realized through net charge-offs totaled $1.3 million or 0.23% of total loans which represents an increase from the first nine months of 2012 when net charge-offs totaled $470,000 or 0.09% of total loans.  The higher net charge-offs in 2013 reflect the resolution of a $2 million problem commercial real estate loan for which the Company had previously established specific reserves for 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 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 268% coverage of non-performing loans, and was 1.46% of total loans, at September 30, 2013, compared to 210% of non-performing loans, and 1.74% of total loans, at December 31, 2012.

The Company's growth in non-interest revenue has also been a financial performance highlight in 2013.  Total non-interest income in the third quarter of 2013 increased by $337,000 or 9.2% from the prior year's third quarter and for the first nine months of 2013 increased by $821,000 or 7.4% when compared to the first nine months of 2012.  The 2013 non-interest income increase was primarily driven by increased revenue from our wealth management businesses.  Specifically, trust and investment advisory fees increased by $178,000 or 10.4% for the third quarter 2013 and $363,000 or 6.7% for the nine month period of 2013 due to increased assets under management which reflects both successful new business development activities and market appreciation of existing assets. Third quarter 2013 non-interest income also benefitted from a $66,000 investment security gain realized on the sale of certain rapidly prepaying mortgage backed securities and a $79,000 gain realized on the sale of an other real estate owned property which is included within other income.  Additionally, for the nine month period in 2013, non-interest income also benefitted from increased revenue from residential mortgage banking activities.  Specifically, gains realized on residential mortgage loan sales into the secondary market increased by $123,000 due to increased mortgage loan production in the first nine months of 2013.  The higher residential mortgage loan production reflected both increased refinance and purchase activity although refinance activity did begin to slow in the third quarter. Income from bank owned life insurance increased by $149,000 for the 2013 nine month period due to the receipt of a death claim payment.               

Total non-interest expense in the third quarter of 2013 increased by $326,000 or 3.2% from the prior year's third quarter and for the first nine months of 2013 increased by $1.2 million or 4.0% when compared to the first nine months of 2012.  Salaries and employee benefits increased by $119,000 or 1.9% for the third quarter and $664,000 or 3.7% for the nine month period due to higher salaries expense and pension expense.  The higher pension expense relates to the Company's defined benefit pension plan and reflects the negative impact that the low interest rate environment is having on the discount rate used to calculate the plan liabilities.  This increasing pension cost was a key factor causing the Company to implement a soft freeze of its defined benefit pension plan to provide that non-union employees hired on or after January 1, 2013 are not eligible to participate.  Instead, such employees are eligible to participate in a qualified 401(k) plan.  Professional fees also increased by $57,000 in the third quarter and $382,000 for the nine month period due largely to higher legal costs, recruitment fees, and increases in several other professional fee categories.  Also an increase in the reserve for unfunded commitments, which is reflected in the other expense category, increased 2013 third quarter expense by $111,000 and nine month expense by $126,000 due to increased loan approval activity.  Finally, the Company recorded an income tax expense of $1.4 million or an effective tax rate of 29.6% for the first nine months of 2013 compared to an income tax expense of $1.9 million or an effective tax rate of 30.9% for the first nine months of 2012. The lower income tax expense and effective rate in 2013 reflects the Company's reduced pre-tax earnings combined with an increased amount of tax free earnings from bank owned life insurance.

ASRV had total assets of $1.038 billion, shareholders' equity of $110 million, a book value of $4.76 per common share and a tangible book value of $4.09 per common share at September 30, 2013.  The Company continued to maintain strong capital ratios that considerably exceed the regulatory defined well capitalized status with a risk based capital ratio of 15.35, an asset leverage ratio of 11.44% and a tangible common equity to tangible assets ratio of 7.48% at September 30, 2013. 

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, 2013




(In thousands, except per share and ratio data)




(Unaudited)














2013









1QTR

2QTR

3QTR


YEAR









TO DATE



PERFORMANCE DATA FOR THE PERIOD:









Net income


$ 1,056

$ 1,070

$ 1,226


$ 3,352



Net income available to common shareholders


1,004

1,018

1,173


3,195












PERFORMANCE PERCENTAGES (annualized):









Return on average assets


0.43%

0.43%

0.47%


0.44%



Return on average equity


3.86

3.86

4.44


4.05



Net interest margin


3.59

3.50

3.46


3.52



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


0.76

(0.02)

(0.02)


0.23



Loan loss provision (credit) as a percentage of average loans


(0.14)

0.08

-


(0.02)



Efficiency ratio


89.52

86.28

85.41


87.05












PER COMMON SHARE:









Net income:









Basic


$ 0.05

$ 0.05

$ 0.06


$ 0.17



Average number of common shares outstanding


19,168

19,039

18,784


18,995



Diluted


0.05

0.05

0.06


0.17



Average number of common shares outstanding


19,257

19,128

18,878


19,086



Cash dividends declared


$ -

$ 0.01

$ 0.01


$ 0.02














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 (credit) 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



Cash dividends declared


$ -

$ -

$ -


$ -

 

 

 















AMERISERV FINANCIAL, INC.



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



(Unaudited)









2013






1QTR

2QTR

3QTR


FINANCIAL CONDITION DATA AT PERIOD END:






Assets


$ 999,718

$ 1,025,084

$1,038,144


Short-term investments/overnight funds


23,995

9,291

8,646


Investment securities


162,866

168,284

167,110


Loans and loans held for sale


717,852

751,522

763,681


Allowance for loan losses


10,960

11,145

11,183


Goodwill


12,613

12,613

12,613


Deposits


847,189

840,272

852,211


FHLB borrowings


16,000

50,292

52,096


Shareholders' equity


111,445

109,282

110,370


Non-performing assets


4,387

5,027

5,037


Asset leverage ratio


11.58%

11.52%

11.44%


Tangible common equity ratio


7.88

7.47

7.48


PER COMMON SHARE:






Book value (A)


$ 4.72

$ 4.70

$ 4.76


Tangible book value (A)


4.06

4.03

4.09


Market value


3.13

2.74

3.15


Trust assets - fair market value (B)


$ 1,566,236

$ 1,562,366

$1,599,402








STATISTICAL DATA AT PERIOD END:






Full-time equivalent employees


357

360

358


Branch locations


18

18

18


Common shares outstanding


19,168,188

18,784,188

18,784,188
















2012






1QTR

2QTR

3QTR

4QTR

FINANCIAL CONDITION DATA AT PERIOD END:






Assets


$ 967,401

$ 997,102

$1,002,281

$1,000,991

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

7.78

PER COMMON SHARE:






Book value (A)


$ 4.46

$ 4.66

$ 4.74

$ 4.67

Tangible book value (A)


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







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)














2013









1QTR

2QTR

3QTR


YEAR









TO DATE



INTEREST INCOME


















Interest and fees on loans


$        8,628

$           8,590

$  8,765


$   25,983



Interest on investments


1,074

1,037

1,046


3,157



Total Interest Income


9,702

9,627

9,811


29,140












INTEREST EXPENSE









Deposits


1,350

1,288

1,274


3,912



All borrowings


310

318

337


965



Total Interest Expense


1,660

1,606

1,611


4,877












NET INTEREST INCOME


8,042

8,021

8,200


24,263



Provision (credit) for loan losses


(250)

150

-


(100)












NET INTEREST INCOME AFTER PROVISION (CREDIT)









FOR LOAN LOSSES


8,292

7,871

8,200


24,363












NON-INTEREST INCOME









Trust fees


1,667

1,779

1,668


5,114



Investment advisory fees


214

220

225


659



Net realized gains on investment securities 


71

-

66


137



Net realized gains on loans held for sale


386

241

285


912



Service charges on deposit accounts


511

538

560


1,609



Bank owned life insurance


201

388

204


793



Other income


766

909

978


2,653



Total Non-Interest Income


3,816

4,075

3,986


11,877












NON-INTEREST EXPENSE









Salaries and employee benefits


6,331

6,176

6,251


18,758



Net occupancy expense


773

751

694


2,218



Equipment expense


455

455

429


1,339



Professional fees


1,035

1,150

1,034


3,219



FDIC deposit insurance expense


134

151

152


437



Other expenses


1,894

1,759

1,853


5,506



Total Non-Interest Expense


10,622

10,442

10,413


31,477












PRETAX INCOME 


1,486

1,504

1,773


4,763



Income tax expense 


430

434

547


1,411



NET INCOME 


1,056

1,070

1,226


3,352



Preferred stock dividends 


52

52

53


157



NET INCOME AVAILABLE TO COMMON SHAREHOLDERS


$       1,004

$           1,018

$  1,173


$     3,195









































2012









1QTR

2QTR

3QTR


YEAR









TO DATE



INTEREST INCOME


















Interest and fees on loans


$     8,729

$           8,552

$  8,807


$   26,088



Interest on investments


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 


-

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



  

  

  










AMERISERV FINANCIAL, INC.



AVERAGE BALANCE SHEET DATA



(In thousands)



(Unaudited)
























2013



2012





NINE



NINE



3QTR

MONTHS


3QTR

MONTHS








Interest earning assets:







Loans and loans held for sale, net of unearned income


$       754,996

$          736,896


$ 701,104

$ 678,995

Deposits with banks


6,542

8,541


5,265

8,870

Short-term investment in money market funds


2,632

3,437


4,717

4,567

Fed funds sold


318

106


-

-

Total investment securities


172,880

168,666


187,474

190,662

Total interest earning assets


937,368

917,646


898,560

883,094








Non-interest earning assets:







Cash and due from banks


16,469

16,720


17,090

16,775

Premises and equipment


13,018

12,656


11,019

10,925

Other assets 


72,125

76,683


81,526

81,793

Allowance for loan losses


(11,177)

(11,571)


(13,167)

(13,830)








Total assets


1,027,803

1,012,134


995,028

978,757








Interest bearing liabilities:







Interest bearing deposits:







Interest bearing demand


79,224

72,308


63,321

59,703

Savings


88,270

88,128


86,373

85,152

Money market


211,725

210,993


216,644

208,414

Other time


315,890

313,075


328,410

330,073

Total interest bearing deposits


695,109

684,504


694,748

683,342

Borrowings:







Federal funds purchased and other short-term borrowings


18,711

13,590


3,808

2,827

Advances from Federal Home Loan Bank


20,193

16,537


4,417

5,683

Guaranteed junior subordinated deferrable interest debentures


13,085

13,085


13,085

13,085

Total interest bearing liabilities


747,098

727,716


716,058

704,937








Non-interest bearing liabilities:







  Demand deposits


159,627

159,550


150,844

146,229

  Other liabilities 


11,622

14,298


16,467

15,970

Shareholders' equity


109,456

110,570


111,659

111,621

Total liabilities and shareholders' equity


$        1,027,803

$       1,012,134


$ 995,028

$ 978,757

 

SOURCE AmeriServ Financial, Inc.

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