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 21, 2003
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.)
Form 8-K
Item 12. Results of Operations and Financial Condition
AMERISERV FINANCIAL Inc. (the "Registrant") press release dated October 21, 2003, announcing its earnings for the three (3) and nine (9) month periods ended September 30, 2003 is attached hereto as Exhibit 99.1 and incorporated herein by reference
Exhibits
--------
Exhibit 99.1 Press release dated October 21, 2003, announcing its earnings for the
three (3) and nine (9) month periods ended September 30, 2003.
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 21, 2003
Exhibit 99.1
Jeffrey A. Stopko
October 21, 2003
Senior Vice President &
Chief Financial Officer
(814)-533-5310
AMERISERV FINANCIAL REPORTS SECOND CONSECUTIVE QUARTER OF PROFITABIITY
JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) completed its second consecutive quarter of profitability by reporting net income for the third quarter of 2003 of $249,000 or $0.02 per diluted share. This represents significant improvement and a dramatic turnaround from the net loss of $4.2 million or $0.31 per share reported in the third quarter of 2002. As a result of the positive second and third quarter 2003 performance, the Company is also profitable for the nine month period ended September 30, 2003 with net income of $369,000 or $0.03 per diluted share compared to a net loss of $3.2 million or $0.23 per share for the same period in 2002. The following table highlights the Company’s financial performance for both the three and nine month periods ended September 30, 2003 and 2002:
Third Quarter 2003 | Third Quarter 2002 | Nine Months Ended September 30, 2003 | Nine Months Ended September 30, 2002 | ||
Net income (loss) | $249,000 | ($4,224,000) | $369,000 | ($3,190,000) | |
Diluted earnings (loss) per share | 0.02 | (0.31) | 0.03 | (0.23) |
At September 30, 2003, ASRV had total assets of $1.16 billion and shareholders’ equity of $73 million or $5.21 per share. The Company is well capitalized for regulatory purposes with an asset leverage ratio at September 30, 2003 of 7.19%, compared to a regulatory minimum of 5.0%.
The Company’s provision for loan losses totaled $384,000 or 0.30% of total loans in the third quarter of 2003. This represented a decrease of $3 million from the third quarter 2002 provision of $3.4 million or 2.24% of total loans. Net charge-offs also experienced a similar decline dropping from $3.1 million or 2.08% of total loans in the third quarter of 2002 to $428,000 or 0.33% of total loans in the third quarter of 2003. The Company’s allowance for loan losses totaled $11.9 million at September 30, 2003 providing 106% coverage of non-performing assets. Non-performing assets totaled $11.2 million at September 30, 2003. This represented an increase of $1.1 million from the June 30, 2003 level primarily due to the transfer of a commercial lease into non-accrual status. The Company’s largest non-performing asset continues to be a $4.8 million commercial mortgage loan to a borrower in the personal care industry that is supported by an 80% guarantee by the U.S. Department of Agriculture and is secured by a first mortgage on the personal care facility. If the government guaranteed portion of this commercial mortgage were excluded from the non-performing asset totals, the loan loss reserve coverage of non-performing assets would amount to 162% at September 30, 2003. Overall, the allowance for loan losses as a percentage of total loans increased to 2.39% at September 30, 2003 compared to 1.75% at December 31, 2002 and 0.97% at September 30, 2002.
The Company’s net interest income in the third quarter of 2003 decreased by $1.1 million from the prior year third quarter due to a reduced level of earning assets and a 34 basis point decline in the net interest margin to 2.14%. Loan portfolio shrinkage experienced during 2003 was a predominant factor contributing to both the lower level of earning assets and the quarterly net interest margin contraction. The overall net decrease in loans reflects continuing prepayment pressures caused by the historically low interest rate environment and the Company’s internal focus on improving asset quality. The Company completed the restructuring of its lending division during the third quarter of 2003 and is now better positioned to generate increased new loan production in the fourth quarter of 2003. The record rate of mortgage re-financings also contributed to accelerated prepayments on the Company’s mortgage backed securities portfolio. This caused an approximate $500,000 increase in amortization expense on premiums associated with the mortgage-backed securities thus reducing the yield earned on the investment securities portfolio. The Company believes that the after-effect of the significant May-June refinancing wave is now largely completed and the negative earnings impact related to these accelerated prepayments should decline in the fourth quarter.
The Company’s total non-interest income in the third quarter of 2003 declined by $947,000 from the prior year third quarter due primarily to fewer gains realized on investment security sales. Investment security gains decreased by $954,000 and were at their lowest quarterly level in seven quarters as the increasing interest rate environment limited the Company’s ability to capture profits on prepaying securities. The Company’s decision to exit the merchant card business in the fourth quarter of 2002 was the item responsible for the decline in other income. Items that favorably impacted third quarter 2003 non-interest income were increased trust fees and deposit service charges. The trust division is focused on continuing to increase the fee revenue generated from union business activities, particularly the ERECT and Build Funds, which are collective investment funds for trade union pension funds.
The Company’s total non-interest expense in the third quarter of 2003 favorably decreased by $5.9 million when compared to the prior year third quarter due to the Company’s continued focus on reducing and containing expenses. The Company recorded a $3.0 million impairment charge on its mortgage servicing rights in the third quarter of 2002 compared to a modest impairment reversal of $230,000 in the third quarter of 2003. The dramatic downsizing of the mortgage servicing asset in the first quarter of 2003 has significantly reduced the volatility of this business line on the Company’s financial performance. The value of the Company’s mortgage servicing rights has declined from $6.9 million at December 31, 2002 to $1.9 million at September 30, 2003. The Company also recorded in the third quarter of 2002 a $920,000 restructuring charge associated with implementing its earnings improvement program. There was no such charge in the third quarter of 2003. The Company is realizing the benefits of its ongoing focus on reducing expenses as evidenced by salaries and employee benefits dropping by $613,000. There were 42 fewer full-time equivalent employees when compared to the beginning of the third quarter of 2002. Other expenses also declined by $988,000 due to cost cutting in numerous expense categories, some of the larger of which included advertising expense, merchant card expense, business development expense and education expenses.
AmeriServ Financial, Inc., is the parent of AmeriServ Financial Bank and AmeriServ Trust & Financial Services in Johnstown, AmeriServ Associates of State College, and AmeriServ Life Insurance Company.
This news release may contain forward-looking statements that involve risks and uncertainties, including the risks detailed in the Company's Annual Report and Form 10-K to the Securities and Exchange Commission as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially.
Nasdaq NMS: ASRV
SUPPLEMENTAL FINANCIAL PERFORMANCE DATA (A)
October 21, 2003
(In thousands, except per share and ratio data)
2003
1QTR | 2QTR | 3QTR | YEAR | |
TO DATE | ||||
PERFORMANCE DATA FOR THE PERIOD: | ||||
Net income (loss) | $(795) | $915 | $249 | $369 |
PERFORMANCE PERCENTAGES (annualized): | ||||
Return on average equity | (4.17)% | 4.84% | 1.35% | 0.65% |
Net interest margin | 2.48 | 2.41 | 2.14 | 2.34 |
Net charge-offs as a percentage of average loans | 0.20 | 0.02 | 0.33 | 0.18 |
Loan loss provision as a percentage of average loans | 1.19 | 0.40 | 0.30 | 0.64 |
Efficiency ratio | 94.98 | 84.81 | 94.05 | 91.02 |
PER COMMON SHARE: | ||||
Net income (loss): | ||||
Basic | $(0.06) | $0.07 | $0.02 | $0.03 |
Average number of common shares outstanding | 13,923,010 | 13,935,086 | 13,945,889 | 13,934,746 |
Diluted | (0.06) | 0.07 | 0.02 | 0.03 |
Average number of common shares outstanding | 13,923,010 | 13,940,460 | 13,954,648 | 13,940,926 |
Cash dividends declared | 0.00 | 0.00 | 0.00 | 0.00 |
2002
1QTR | 2QTR | 3QTR | YEAR | |
TO DATE | ||||
PERFORMANCE DATA FOR THE PERIOD: | ||||
Net income (loss) | $626 | $408 | $(4,224) | $(3,190) |
PERFORMANCE PERCENTAGES (annualized): | ||||
Return on average equity | 3.16% | 2.04% | (20.19)% | (5.25)% |
Net interest margin | 2.35 | 2.63 | 2.48 | 2.49 |
Net charge-offs as a percentage of average loans | 0.06 | 1.09 | 2.08 | 1.08 |
Loan loss provision as a percentage of average loans | 0.37 | 0.56 | 2.24 | 1.07 |
Efficiency ratio | 88.34 | 89.52 | 127.78 | 101.86 |
PER COMMON SHARE: | ||||
Net income (loss): | ||||
Basic | $0.05 | $0.03 | $(0.31) | $(0.23) |
Average number of common shares outstanding | 13,689,478 | 13,748,179 | 13,799,547 | 13,746,138 |
Diluted | 0.05 | 0.03 | (0.31) | (0.23) |
Average number of common shares outstanding | 13,712,382 | 13,778,716 | 13,800,897 | 13,765,998 |
Cash dividends declared | 0.09 | 0.09 | 0.09 | 0.27 |
NOTES:
(A)
All quarterly data unaudited.
AMERISERV FINANCIAL, INC.
(In thousands, except per share, statistical, and ratio data)
2003
1QTR | 2QTR | 3QTR | |
PERFORMANCE DATA AT PERIOD END | |||
Assets | $1,190,360 | $1,167,610 | $1,160,915 |
Investment securities | 546,427 | 544,967 | 577,374 |
Loans | 555,335 | 525,591 | 496,951 |
Allowance for loan losses | 11,415 | 11,916 | 11,872 |
Goodwill and core deposit intangibles | 15,337 | 14,979 | 14,621 |
Mortgage servicing rights | 2,214 | 1,784 | 1,859 |
Deposits | 669,103 | 661,932 | 648,844 |
Stockholders’ equity | 75,364 | 76,384 | 72,688 |
Trust assets | 1,091,391 | 1,146,695 | 1,009,520 |
Non-performing assets | 11,687 | 10,163 | 11,227 |
Asset leverage ratio | 6.94% | 7.10% | 7.19% |
PER COMMON SHARE: | |||
Book value (A) | $5.41 | $5.48 | $5.21 |
Market value | 3.50 | 3.80 | 4.17 |
Market price to book value | 64.69% | 69.35% | 80.03% |
STATISTICAL DATA AT PERIOD END: | |||
Full-time equivalent employees | 416 | 427 | 422 |
Branch locations | 23 | 23 | 23 |
Common shares outstanding | 13,929,324 | 13,940,999 | 13,949,383 |
2002
1QTR | 2QTR | 3QTR | 4QTR | |
PERFORMANCE DATA AT PERIOD END | ||||
Assets | $1,213,764 | $1,202,086 | $1,182,678 | $1,175,550 |
Investment securities | 532,349 | 493,322 | 491,861 | 505,778 |
Loans | 587,624 | 600,778 | 594,285 | 572,977 |
Allowance for loan losses | 6,286 | 5,518 | 5,757 | 10,035 |
Goodwill and core deposit intangibles | 16,968 | 16,610 | 16,252 | 15,894 |
Mortgage servicing rights | 8,315 | 7,566 | 5,146 | 6,917 |
Deposits | 680,435 | 705,662 | 674,573 | 669,929 |
Stockholders’ equity | 78,051 | 82,491 | 79,711 | 77,756 |
Trust assets | 1,198,480 | 1,190,834 | 1,082,311 | 1,057,816 |
Non-performing assets | 9,105 | 5,668 | 5,407 | 6,964 |
Asset leverage ratio | 7.54% | 7.46% | 7.00% | 6.84% |
PER COMMON SHARE: | ||||
Book value (A) | $5.69 | $6.00 | $5.77 | $5.59 |
Market value | 4.96 | 4.58 | 2.45 | 2.85 |
Market price to book value | 87.17% | 76.37% | 42.45% | 50.98% |
STATISTICAL DATA AT PERIOD END: | ||||
Full-time equivalent employees | 468 | 464 | 445 | 422 |
Branch locations | 24 | 24 | 24 | 23 |
Common shares outstanding | 13,709,329 | 13,754,342 | 13,811,595 | 13,898,302 |
NOTES:
(A) Other comprehensive income had a positive impact of $0.01 on book value per share at September 30, 2003.
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(Quarterly data unaudited)
2003
YEAR | ||||
INTEREST INCOME | 1QTR | 2QTR | 3QTR | TO DATE |
Interest and fees on loans | $9,083 | $8,595 | $8,044 | $25,722 |
Total investment portfolio | 5,660 | 5,631 | 5,035 | 16,326 |
Total Interest Income | 14,743 | 14,226 | 13,079 | 42,048 |
INTEREST EXPENSE | ||||
Deposits | 3,140 | 2,965 | 2,765 | 8,870 |
All other funding sources | 4,956 | 4,827 | 4,618 | 14,401 |
Total Interest Expense | 8,096 | 7,792 | 7,383 | 23,271 |
NET INTEREST INCOME | 6,647 | 6,434 | 5,696 | 18,777 |
Provision for loan losses | 1,659 | 534 | 384 | 2,577 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 4,988 | 5,900 | 5,312 | 16,200 |
NON-INTEREST INCOME | ||||
Trust fees | 1,253 | 1,253 | 1,254 | 3,760 |
Net realized gains on investment securities available for sale | 1,278 | 1,420 | 402 | 3,100 |
Net realized gains on loans and loans held for sale | 173 | 221 | 165 | 559 |
Service charges on deposit accounts | 767 | 800 | 812 | 2,379 |
Net mortgage servicing fees | 71 | 77 | 55 | 203 |
Gain (loss) on sale of mortgage servicing | (758) | - | - | (758) |
Bank owned life insurance | 298 | 307 | 305 | 910 |
Other income | 913 | 1,017 | 989 | 2,919 |
Total Non-interest Income | 3,995 | 5,095 | 3,982 | 13,072 |
NON-INTEREST EXPENSE | ||||
Salaries and employee benefits | 4,789 | 4,717 | 4,729 | 14,235 |
Net occupancy expense | 752 | 701 | 682 | 2,135 |
Equipment expense | 817 | 750 | 692 | 2,259 |
Professional fees | 903 | 1,058 | 951 | 2,912 |
FDIC deposit insurance expense | 28 | 26 | 75 | 129 |
Amortization of core deposit intangibles | 358 | 358 | 358 | 1,074 |
Impairment charge (credit) for mortgage servicing rights | 366 | 254 | (230) | 390 |
Goodwill impairment loss | 199 | - | - | 199 |
Other expenses | 1,908 | 1,922 | 1,855 | 5,685 |
Total Non-interest Expense | 10,120 | 9,786 | 9,112 | 29,018 |
INCOME (LOSS) BEFORE INCOME TAXES | (1,137) | 1,209 | 182 | 254 |
Provision (benefit) for income taxes | (342) | 294 | (67) | (115) |
NET INCOME (LOSS) | $(795) | $915 | $249 | $369 |
2002
YEAR | ||||
INTEREST INCOME | 1QTR | 2QTR | 3QTR | TO DATE |
Interest and fees on loans | $10,562 | $10,434 | $10,191 | $31,187 |
Total investment portfolio | 6,698 | 6,637 | 6,011 | 19,346 |
Total Interest Income | 17,260 | 17,071 | 16,202 | 50,533 |
INTEREST EXPENSE | ||||
Deposits | 4,288 | 4,215 | 4,015 | 12,518 |
All other funding sources | 6,389 | 5,549 | 5,393 | 17,331 |
Total Interest Expense | 10,677 | 9,764 | 9,408 | 29,849 |
NET INTEREST INCOME | 6,583 | 7,307 | 6,794 | 20,684 |
Provision for loan losses | 540 | 815 | 3,380 | 4,735 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 6,043 | 6,492 | 3,414 | 15,949 |
NON-INTEREST INCOME | ||||
Trust fees | 1,279 | 1,235 | 1,077 | 3,591 |
Net realized gains on investment securities available for sale | 637 | 1,314 | 1,356 | 3,307 |
Net realized gains on loans and loans held for sale | 124 | 141 | 160 | 425 |
Service charges on deposit accounts | 674 | 694 | 732 | 2,100 |
Net mortgage servicing fees | 92 | 123 | 97 | 312 |
Bank owned life insurance | 554 | 317 | 309 | 1,180 |
Other income | 1,288 | 1,200 | 1,198 | 3,686 |
Total Non-interest Income | 4,648 | 5,024 | 4,929 | 14,601 |
NON-INTEREST EXPENSE | ||||
Salaries and employee benefits | 5,145 | 5,128 | 5,342 | 15,615 |
Net occupancy expense | 739 | 750 | 682 | 2,171 |
Equipment expense | 783 | 768 | 741 | 2,292 |
Professional fees | 750 | 847 | 1,057 | 2,654 |
FDIC deposit insurance expense | 29 | 29 | 28 | 86 |
Amortization of core deposit intangibles | 358 | 358 | 358 | 1,074 |
Impairment charge (credit) for mortgage servicing rights | (123) | 787 | 3,034 | 3,698 |
Wholesale mortgage production exit costs | (26) | (14) | - | (40) |
Restructuring costs | - | - | 920 | 920 |
Other expenses | 2,280 | 2,403 | 2,843 | 7,526 |
Total Non-interest Expense | 9,935 | 11,056 | 15,005 | 35,996 |
INCOME (LOSS) BEFORE INCOME TAXES | 756 | 460 | (6,662) | (5,446) |
Provision (benefit) for income taxes | 130 | 52 | (2,438) | (2,256) |
NET INCOME (LOSS) | $626 | $408 | $(4,224) | $(3,190) |
AMERISERV FINANCIAL, INC.
Nasdaq NMS: ASRV
Average Balance Sheet Data (In thousands)
(Quarterly Data Unaudited)
Note: 2002 data appears before 2003.
2002
2003
NINE | NINE | |||
3QTR | MONTHS | 3QTR | MONTHS | |
Interest earning assets: | ||||
Loans and loans held for sale, net of unearned income | $591,743 | $586,753 | $497,647 | $526,902 |
Deposits with banks | 15,379 | 16,800 | 5,183 | 5,475 |
Federal funds sold | 124 | 702 | 80 | 38 |
Total investment securities | 483,688 | 494,591 | 565,477 | 531,716 |
Total interest earning assets | 1,090,934 | 1,098,846 | 1,068,387 | 1,064,131 |
Non-interest earning assets: | ||||
Cash and due from banks | 21,957 | 22,218 | 22,008 | 22,366 |
Premises and equipment | 13,060 | 13,249 | 11,827 | 12,142 |
Other assets | 67,308 | 67,798 | 62,114 | 67,674 |
Allowance for loan losses | (5,529) | (5,959) | (11,881) | (11,286) |
Total assets | $1,187,730 | $1,196,152 | $1,152,455 | $1,155,027 |
Interest bearing liabilities: | ||||
Interest bearing deposits: | ||||
Interest bearing demand | $49,633 | $49,290 | $52,565 | $51,868 |
Savings | 103,435 | 100,213 | 105,055 | 103,470 |
Money market | 125,893 | 130,710 | 122,536 | 125,199 |
Other time | 301,037 | 302,521 | 278,641 | 284,244 |
Total interest bearing deposits | 579,998 | 582,734 | 558,797 | 564,781 |
Borrowings: | ||||
Federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings | 70,244 | 46,697 | 100,602 | 98,839 |
Advanced from Federal Home Loan Bank | 304,645 | 335,700 | 277,313 | 270,110 |
Guaranteed junior subordinated deferrable interest debentures | 34,500 | 34,500 | 34,500 | 34,500 |
Total interest bearing liabilities | 989,387 | 999,631 | 971,212 | 968,230 |
Non-interest bearing liabilities: | ||||
Demand deposits | 106,752 | 105,604 | 102,378 | 104,761 |
Other liabilities | 8,602 | 9,634 | 6,048 | 6,738 |
Stockholders’ equity | 82,989 | 81,283 | 72,817 | 75,298 |
Total liabilities and stockholders’ equity | $1,187,730 | $1,196,152 | $1,152,455 | $1,155,027 |