SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) October 13, 2008
AMERISERV FINANCIAL, Inc.
(exact name of registrant as specified in its charter)
Pennsylvania 0-11204 25-1424278
(State or other (commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
Main and Franklin Streets, Johnstown, Pa. 15901
(address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 814-533-5300
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
( ) Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
( ) Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4c))
Form 8-K
Item 2.02 Results of operation and financial condition.
AMERISERV FINANCIAL Inc. (the "Registrant") announced third quarter and first nine months results through September 30, 2008. 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 13, 2008, announcing the third quarter and first nine months results through September 30, 2008.
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
Senior Vice President
& CFO
Date: October 13, 2008
Exhibit 99.1
AMERISERV FINANCIAL REPORTS INCREASED EARNINGS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2008
JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) reported third quarter 2008 net income of $1,149,000 or $0.05 per diluted share. This represents an increase of $275,000 or 31.5% over the third quarter 2007 net income of $874,000 or $0.04 per diluted share. For the nine month period ended September 30, 2008, the Company earned $3,894,000 or $0.18 per diluted share. This also represents an increase of $1,784,000 or over 84.5% when compared to net income of $2,110,000 or $0.10 per diluted share for the first nine months of 2007. The following table highlights the Company’s financial performance for the both the three and nine month periods ended September 30, 2008 and 2007:
| Third Quarter 2008 | Third Quarter 2007 |
| Nine Months Ended September 30, 2008 | Nine Months Ended September 30, 2007 |
|
|
|
|
|
|
Net income | $1,149,000 | $874,000 |
| $3,894,000 | $2,110,000 |
Diluted earnings per share | $ 0.05 | $ 0.04 |
| $ 0.18 | $0.10 |
Allan R. Dennison, President and Chief Executive Officer, commented on the 2008 financial results, “Our conservatively positioned balance sheet has allowed AmeriServ Financial to post improved financial performance during a historic period of turmoil and crisis within the financial markets. Our Company has no direct exposure to subprime mortgages, Fannie Mae or Freddie Mac preferred stock, or credit exposure to any of the large financial firms that have recently failed or been taken over. The Bank’s loyal deposit base has provided us with ample liquidity to grow our loan portfolio during the third quarter of 2008 when many banks have restricted lending due to the credit crunch. We enter the fourth quarter of 2008 with an improved net interest margin, stable asset quality, and strong capital levels which provide us with greater financial flexibility during this period of economic uncertainty.”
The Company’s net interest income in the third quarter of 2008 increased by $1.2 million from the prior year’s third quarter and for the first nine months of 2008 increased by $2.9 million or 16.4% when compared to the first nine months of 2007. The Company’s net interest margin is also up sharply by 59 and 49 basis points, respectively for the quarter and nine month periods ended September 30, 2008. The Company’s balance sheet positioning allowed it to benefit from the significant Federal Reserve reductions in short-term interest rates and the return to a more traditional positively sloped yield curve. As a result of these changes, the Company’s interest expense on deposits and borrowings declined at a faster rate than the interest income on loans and investment securities. Additionally, an improved earning asset mix with fewer investment securities and more loans outstanding also contributed to the increased net interest income and margin in 2008. For the first nine months of 2008, total loans have increased by $28 million or 4.4%. Overall, net interest income has now increased for seven consecutive quarters and the Company believes its balance sheet is well positioned for further reductions in short-term interest rates recently announced by the Federal Reserve.
The Company recorded a $775,000 provision for loan losses in the third quarter of 2008 and a $2.3 million provision for the nine month period ended September 30, 2008 compared to a $150,000 loan loss provision for the same periods in 2007. When determining the provision for loan losses, the Company considers a number of factors some of which include periodic credit reviews, delinquency and charge-off trends, concentrations of credit, loan volume trends and broader local and national economic trends. The higher loan provision in 2008 was caused by the Company’s decision to strengthen its allowance for loan losses due to the downgrade of the rating classification of several specific performing commercial loans and uncertainties in the local and national economies. Overall net charge-offs are down modestly in 2008 when compared to 2007. Specifically, for the nine month period ended September 30, 2008, net charge-offs have amounted to $875,000 or 0.18% of total loans compared to net charge-offs of $1.1 million or 0.25% of total loans for the same nine month period in 2007. Non-performing assets increased by $673,000 since the second quarter of 2008 but are still lower than the year-end 2007 level. Non-performing assets totaled $4.4 million or 0.66% of total loans at September 30, 2008 compared to $5.3 million or 0.83% of total loans at December 31, 2007. Overall, the allowance for loan losses provided 198% coverage of non-performing assets and was 1.31% of total loans at September 30, 2008 compared to 137% of non-performing assets and 1.14% of total loans at December 31, 2007. Note also that the Company has no direct exposure to sub-prime mortgage loans in either the loan or investment portfolios.
The Company’s non-interest income in the third quarter of 2008 decreased by $255,000 from the prior year’s third quarter but for the first nine months of 2008 increased by $2.1 million when compared to the first nine months of 2007. Increased revenue from bank owned life insurance due to the payment of death claims favorably impacted the 2007 third quarter performance and the second quarter 2008 results. Overall for the nine month period, income from bank owned life insurance is $1.4 million greater in 2008 than 2007. The remainder of the increase in non-interest income was driven by increases in several other non-interest revenue categories. Deposit service charges increased by $100,000 for the 2008 quarterly period and $420,000 or 22.2% for the nine month period due to increased overdraft fees and greater service charge revenue that resulted from a realignment of the bank’s checking accounts to include more fee based products. The Company also recorded an increase on gains realized on residential mortgage loan sales into the secondary market that amounted to $22,000 for the third quarter of 2008 and $128,000 for the nine month period ended September 30, 2008. This increase reflects improved residential mortgage production from the Company’s primary market as this has been an area of emphasis in the Company’s strategic plan. Trust fees were up modestly by $14,000 for the 2008 quarterly period and by $148,000 or 2.9% for the nine month period due to continued successful new business development efforts which has helped mitigate the declines in the market value of assets due to reduced equity values. The decline in equity values was also responsible for the approximate $90,000 drop in investment advisory fees in 2008. Finally, the Company took advantage of the positively sloped yield curve to position the investment portfolio for better future earnings by selling some of the lower yielding securities in the portfolio and replacing them with higher yielding securities with a modestly longer duration. The Company realized a net security loss of $117,000 in 2008 from this strategy.
Total non-interest expense in the third quarter of 2008 was essentially flat with the prior year’s third quarter and for the first nine months of 2008 increased by $620,000 or 2.4% when compared to the first nine months of 2007. The higher 2008 expenses were due to a $802,000 increase in other expenses, a $274,000 increase in professional fees, and a $91,000 charge on the prepayment of $6 million of Federal Home Loan Bank Advances. Note that the increase in other expenses was due to higher advertising and business development expenses in 2008 and the non-recurrence of a favorable $400,000 recovery on a previous mortgage loan securitization that was realized in the second quarter of 2007. The increased professional fees resulted primarily from higher legal and other professional fees in the trust company. The $91,000 FHLB debt prepayment charge resulted from the Company’s decision to retire some higher cost advances and replace them with lower cost current market rate advances in order to reduce ongoing interest expense. These negative items were partially offset by expense decreases recorded in salaries and employee benefits and equipment expense as a result of the Company’s continuing focus on containing and reducing non-interest expenses. For the first nine months of 2008, salaries and employee benefits costs are down by $228,000 or 1.6% due to on average a reduction of 19 full-time equivalent employees and reduced medical insurance premiums. The $329,000 reduction in equipment expense resulted from the benefits achieved on the migration to a new core data processing operating system and mainframe processor.
ASRV had total assets of $911 million and shareholders’ equity of $93.7 million or a book value of $4.29 per share at September 30, 2008. The Company built its capital and maintained a strong asset leverage ratio of 10.37% at quarter-end. During the first quarter of 2008, the Company repurchased 354,500 shares of its common stock at an average price of $3.11 in conjunction with the terms of the Company’s stock buyback program that was announced on January 22, 2008. The Company did not repurchase any additional shares during the second or third quarter.
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
October 13, 2008
(In thousands, except per share and ratio data)
(All quarterly and 2008 data unaudited)
2008
| 1QTR | 2QTR | 3QTR | YEAR |
|
|
|
| TO DATE |
PERFORMANCE DATA FOR THE PERIOD: |
|
|
|
|
Net income | $1,229 | $1,516 | $1,149 | $3,894 |
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PERFORMANCE PERCENTAGES (annualized): |
|
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|
|
Return on average assets | 0.55% | 0.71% | 0.52% | 0.59% |
Return on average equity | 5.43 | 6.64 | 4.93 | 5.66 |
Net interest margin | 3.32 | 3.58 | 3.59 | 3.49 |
Net charge-offs as a percentage of average loans | 0.06 | 0.46 | 0.04 | 0.18 |
Loan loss provision as a percentage of average loans | 0.10 | 0.89 | 0.48 | 0.49 |
Efficiency ratio | 82.87 | 73.20 | 79.72 | 78.33 |
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PER COMMON SHARE: |
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Net income: |
|
|
|
|
Basic | $0.06 | $0.07 | $0.05 | $0.18 |
Average number of common shares outstanding | 22,060 | 21,847 | 21,855 | 21,921 |
Diluted | 0.06 | 0.07 | 0.05 | 0.18 |
Average number of common shares outstanding | 22,062 | 21,848 | 21,856 | 21,922 |
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|
2007
| 1QTR | 2QTR | 3QTR | YEAR |
|
|
|
| TO DATE |
PERFORMANCE DATA FOR THE PERIOD: |
|
|
|
|
Net income | $428 | $808 | $874 | $2,110 |
|
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PERFORMANCE PERCENTAGES (annualized): |
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|
Return on average assets | 0.20% | 0.37% | 0.39% | 0.32% |
Return on average equity | 2.05 | 3.79 | 4.00 | 3.30 |
Net interest margin | 2.97 | 3.01 | 3.00 | 3.00 |
Net charge-offs as a percentage of average loans | 0.06 | 0.07 | 0.61 | 0.25 |
Loan loss provision as a percentage of average loans | - | - | 0.10 | 0.03 |
Efficiency ratio | 94.16 | 88.52 | 87.15 | 89.84 |
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PER COMMON SHARE: |
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Net income: |
|
|
|
|
Basic | $0.02 | $0.04 | $0.04 | $0.10 |
Average number of common shares outstanding | 22,159 | 22,164 | 22,175 | 22,166 |
Diluted | 0.02 | 0.04 | 0.04 | 0.10 |
Average number of common shares outstanding | 22,166 | 22,171 | 22,177 | 22,170 |
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AMERISERV FINANCIAL, INC.
(In thousands, except per share, statistical, and ratio data)
(All quarterly and 2008 data unaudited)
2008
| 1QTR | 2QTR | 3QTR |
|
PERFORMANCE DATA AT PERIOD END |
|
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|
Assets | $902,349 | $877,230 | $911,306 |
|
Investment securities | 151,967 | 148,819 | 148,777 |
|
Loans | 632,934 | 623,798 | 663,996 |
|
Allowance for loan losses | 7,309 | 7,963 | 8,677 |
|
Goodwill and core deposit intangibles | 14,254 | 14,038 | 13,821 |
|
Deposits | 682,459 | 722,913 | 688,998 |
|
FHLB borrowings | 106,579 | 40,214 | 106,897 |
|
Stockholders’ equity | 91,558 | 92,248 | 93,671 |
|
Non-performing assets | 3,050 | 3,717 | 4,390 |
|
Asset leverage ratio | 9.78% | 10.47% | 10.37% |
|
PER COMMON SHARE: |
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Book value (A) | $4.19 | $4.22 | $4.29 |
|
Market value | 2.79 | 2.98 | 2.51 |
|
Market price to book value | 66.62% | 70.59% | 58.57% |
|
Trust assets – fair market value (B) | 1,828,475 | 1,813,231 | 1,678,398 |
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STATISTICAL DATA AT PERIOD END: |
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Full-time equivalent employees | 350 | 353 | 352 |
|
Branch locations | 19 | 18 | 18 |
|
Common shares outstanding | 21,842,691 | 21,850,773 | 21,859,409 |
|
2007
| 1QTR | 2QTR | 3QTR | 4QTR |
PERFORMANCE DATA AT PERIOD END |
|
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|
Assets | $891,559 | $876,160 | $897,940 | $904,878 |
Investment securities | 185,338 | 174,508 | 170,765 | 163,474 |
Loans | 603,834 | 604,639 | 629,564 | 636,155 |
Allowance for loan losses | 8,010 | 7,911 | 7,119 | 7,252 |
Goodwill and core deposit intangibles | 15,119 | 14,903 | 14,687 | 14,470 |
Deposits | 768,947 | 762,902 | 763,771 | 710,439 |
FHLB borrowings | 15,170 | 4,258 | 23,482 | 82,115 |
Stockholders’ equity | 85,693 | 86,226 | 88,517 | 90,294 |
Trust assets – fair market value (B) | 1,828,475 | 1,872,366 | 1,846,240 | 1,883,307 |
Non-performing assets | 2,706 | 2,825 | 2,463 | 5,280 |
Asset leverage ratio | 10.23% | 10.36% | 10.44% | 9.74% |
PER COMMON SHARE: |
|
|
|
|
Book value | $3.87 | $3.89 | $3.99 | $4.07 |
Market value | 4.79 | 4.40 | 3.33 | 2.77 |
Market price to book value | 123.88% | 113.12% | 83.44% | 68.07% |
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STATISTICAL DATA AT PERIOD END: |
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Full-time equivalent employees | 375 | 376 | 358 | 351 |
Branch locations | 21 | 21 | 20 | 20 |
Common shares outstanding | 22,161,445 | 22,167,235 | 22,180,650 | 22,188,997 |
NOTES:
(A) Other comprehensive income had a negative impact of $0.16 on book value per share at September 30, 2008.
(B) Not recognized on the balance sheet.
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(All quarterly and 2008 data unaudited)
2008
|
|
|
| YEAR |
INTEREST INCOME | 1QTR | 2QTR | 3QTR | TO DATE |
Interest and fees on loans | $10,462 | $9,862 | $10,015 | $30,339 |
Total investment portfolio | 1,820 | 1,588 | 1,717 | 5,125 |
Total Interest Income | 12,282 | 11,450 | 11,732 | 35,464 |
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INTEREST EXPENSE |
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Deposits | 4,499 | 3,861 | 3,774 | 12,134 |
All borrowings | 1,048 | 623 | 727 | 2,398 |
Total Interest Expense | 5,547 | 4,484 | 4,501 | 14,532 |
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NET INTEREST INCOME | 6,735 | 6,966 | 7,231 | 20,932 |
Provision for loan losses | 150 | 1,375 | 775 | 2,300 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 6,585 | 5,591 | 6,456 | 18,632 |
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NON-INTEREST INCOME |
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Trust fees | 1,790 | 1,737 | 1,691 | 5,218 |
Net realized gains (losses) on investment securities | - | (137) | 20 | (117) |
Net realized gains on loans held for sale | 89 | 121 | 138 | 348 |
Service charges on deposit accounts | 734 | 807 | 771 | 2,312 |
Investment advisory fees | 226 | 218 | 185 | 629 |
Bank owned life insurance | 249 | 1,923 | 260 | 2,432 |
Other income | 750 | 674 | 702 | 2,126 |
Total Non-interest Income | 3,838 | 5,343 | 3,767 | 12,948 |
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NON-INTEREST EXPENSE |
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Salaries and employee benefits | 4,830 | 4,812 | 4,758 | 14,400 |
Net occupancy expense | 661 | 653 | 586 | 1,900 |
Equipment expense | 431 | 414 | 402 | 1,247 |
Professional fees | 769 | 910 | 922 | 2,601 |
FHLB prepayment penalty | - | 91 | - | 91 |
FDIC deposit insurance expense | 22 | 20 | 30 | 72 |
Amortization of core deposit intangibles | 216 | 216 | 217 | 649 |
Other expenses | 1,850 | 1,909 | 1,869 | 5,628 |
Total Non-interest Expense | 8,779 | 9,025 | 8,784 | 26,588 |
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PRETAX INCOME | 1,644 | 1,909 | 1,439 | 4,992 |
Income tax expense | 415 | 393 | 290 | 1,098 |
NET INCOME | $1,229 | $1,516 | $1,149 | $3,894 |
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2007
|
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| YEAR |
INTEREST INCOME | 1QTR | 2QTR | 3QTR | TO DATE |
Interest and fees on loans | $10,061 | $10,303 | $10,591 | $30,955 |
Total investment portfolio | 2,114 | 2,005 | 1,863 | 5,982 |
Total Interest Income | 12,175 | 12,308 | 12,454 | 36,937 |
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INTEREST EXPENSE |
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Deposits | 5,699 | 5,931 | 5,994 | 17,624 |
All borrowings | 521 | 364 | 438 | 1,323 |
Total Interest Expense | 6,220 | 6,295 | 6,432 | 18,947 |
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NET INTEREST INCOME | 5,955 | 6,013 | 6,022 | 17,990 |
Provision for loan losses | - | - | 150 | 150 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 5,955 | 6,013 | 5,872 | 17,840 |
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NON-INTEREST INCOME |
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Trust fees | 1,704 | 1,689 | 1,677 | 5,070 |
Net realized gains on loans held for sale | 25 | 79 | 116 | 220 |
Service charges on deposit accounts | 585 | 636 | 671 | 1,892 |
Investment advisory fees | 102 | 329 | 275 | 706 |
Bank owned life insurance | 258 | 265 | 479 | 1,002 |
Other income | 559 | 594 | 804 | 1,957 |
Total Non-interest Income | 3,233 | 3,592 | 4,022 | 10,847 |
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NON-INTEREST EXPENSE |
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|
Salaries and employee benefits | 4,885 | 4,930 | 4,813 | 14,628 |
Net occupancy expense | 664 | 615 | 618 | 1,897 |
Equipment expense | 546 | 564 | 466 | 1,576 |
Professional fees | 695 | 818 | 814 | 2,327 |
FDIC deposit insurance expense | 22 | 22 | 22 | 66 |
Amortization of core deposit intangibles | 216 | 216 | 216 | 648 |
Other expenses | 1,645 | 1,357 | 1,824 | 4,826 |
Total Non-interest Expense | 8,673 | 8,522 | 8,773 | 25,968 |
|
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|
PRETAX INCOME | 515 | 1,083 | 1,121 | 2,719 |
Income tax expense | 87 | 275 | 247 | 609 |
NET INCOME | $428 | $808 | $874 | $2,110 |
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AMERISERV FINANCIAL, INC.
Nasdaq: ASRV
Average Balance Sheet Data (In thousands)
(All quarterly and 2008 data unaudited)
Note: 2007 data appears before 2008.
2007
2008
|
| NINE |
| NINE |
| 3QTR | MONTHS | 3QTR | MONTHS |
Interest earning assets: |
|
|
|
|
Loans and loans held for sale, net of unearned income | $612,424 | $601,592 | $634,807 | $628,928 |
Deposits with banks | 616 | 525 | 399 | 403 |
Federal funds | 2,249 | 3,009 | 32 | 152 |
Total investment securities | 176,474 | 187,398 | 160,459 | 161,264 |
|
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|
|
Total interest earning assets | 791,763 | 792,524 | 795,697 | 790,747 |
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Non-interest earning assets: |
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|
|
Cash and due from banks | 18,673 | 17,734 | 16,574 | 17,188 |
Premises and equipment | 8,607 | 8,722 | 9,593 | 9,193 |
Other assets | 71,506 | 69,550 | 71,647 | 72,402 |
Allowance for loan losses | (7,808) | (7,947) | (8,088) | (7,582) |
|
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|
|
Total assets | $882,741 | $880,583 | $885,423 | $881,948 |
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Interest bearing liabilities: |
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Interest bearing deposits: |
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|
|
Interest bearing demand | $55,151 | $56,559 | $65,704 | $65,169 |
Savings | 71,503 | 73,112 | 71,520 | 70,388 |
Money market | 173,844 | 182,215 | 108,181 | 92,907 |
Other time | 353,331 | 344,153 | 341,455 | 359,255 |
Total interest bearing deposits | 653,829 | 656,039 | 586,860 | 587,719 |
Borrowings: |
|
|
|
|
Federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings | 6,760 | 8,441 | 60,635 | 57,818 |
Advanced from Federal Home Loan Bank | 5,499 | 3,607 | 10,258 | 11,266 |
Guaranteed junior subordinated deferrable interest debentures | 13,085 | 13,085 | 13,085 | 13,085 |
Total interest bearing liabilities | 679,173 | 681,172 | 670,838 | 669,888 |
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Non-interest bearing liabilities: |
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|
|
Demand deposits | 106,055 | 104,336 | 111,136 | 110,366 |
Other liabilities | 10,768 | 9,477 | 10,763 | 9,836 |
Stockholders’ equity | 86,745 | 85,598 | 92,686 | 91,858 |
Total liabilities and stockholders’ equity | $882,741 | $880,583 | $885,423 | $881,948 |