JOHNSTOWN, Pa., Jan. 23 /PRNewswire-FirstCall/ -- AmeriServ Financial,
Inc. (Nasdaq: ASRV) reported fourth quarter 2006 net income of $581,000 or
$0.03 per diluted share compared to net income of $220,000 or $0.01 per
diluted share for the fourth quarter of 2005. For the full year 2006, the
Company reported net income of $2.3 million or $0.11 per diluted share
compared to a net loss of $9.1 million or ($0.45) per diluted share for the
2005 year. Note that for comparative purposes the successful completion of
a $10.3 million private placement common stock offering in the third
quarter of 2005 provided the Company with the necessary capital to execute
a restructuring that strengthened the Company's balance sheet but caused
the full year 2005 loss. The following table highlights the Company's
financial performance for both the quarters and years ended December 31,
2006 and 2005:
Fourth Fourth Year Ended Year Ended
Quarter 2006 Quarter 2005 December 31, 2006 December 31, 2005
Net
income
(loss) $581,000 $220,000 $2,332,000 ($9,141,000)
Diluted
earnings
per
share $ 0.03 $ 0.01 $ 0.11 ($ 0.45)
At December 31, 2006, ASRV had total assets of $896 million and
stockholders' equity of $85 million or $3.82 per share. The Company's asset
leverage ratio improved to 10.54% at December 31, 2006, compared to 10.24%
at December 31, 2005.
Allan R. Dennison, President and Chief Executive Officer, commented on
the 2006 results, "Our improved profitability in 2006 shows the benefits of
our higher quality balance sheet and our focus on traditional community
banking. The financial performance highlights of the year include
significant improvements in asset quality, growth in both loans and
deposits, strong earnings from our trust operations, and reduced
non-interest expenses. These positive items provided earnings support
against the net interest margin pressure experienced during the year due to
the flat to inverted yield curve in 2006. As discussed in our recently
released strategic direction statement, AmeriServ Financial's focus will be
to drive continued meaningful earnings improvement in 2007 and move our
financial performance metrics closer to industry norms."
The Company's net interest income in the fourth quarter of 2006
decreased by $472,000 from the prior year's fourth quarter but for the full
year 2006 increased by $366,000 when compared to 2005. The fourth quarter
decline in both net interest income and net interest margin resulted from
the Company's cost of funds increasing at a faster pace than the earning
asset yield. This resulted from deposit customer preference for higher
yielding certificates of deposit and money market accounts due to the
inverted yield curve with short- term interest rates exceeding intermediate
to longer term rates. The Company, however, did note that the monthly net
interest margin experienced during November and December of 2.93% was the
same as the quarterly net interest margin suggesting that the margin may be
reaching a point of stabilization after several quarters of contraction.
For the full year 2006, the growth in net interest income reflects the
benefits from an increased net interest margin which more than offset a
reduced level of earning assets. Specifically, in 2006 the net interest
margin increased by 36 basis points to 3.12% while the level of average
earning assets declined by $91 million or 10.4%. Both of these items
reflect the deleverage of high cost debt from the Company's balance sheet
which has resulted in lower levels of both borrowed funds and investment
securities. Wholesale borrowings averaged only 3.9% of total assets in 2006
compared to 15.8% of total assets in 2005 while investment securities as a
percentage of total assets has declined from 36.5% to 25.4% during this
same period. The Company's net interest margin also benefited from
increased loans in the earning asset mix as total loans outstanding
averaged $564 million in 2006, a $39 million or 7.4% increase over 2005.
This loan growth was driven by increased commercial and commercial real
estate loans. Total deposits averaged $735 million in 2006; a $35 million
or 5.0% increase over 2005. These higher deposits in 2006 were due to
increased deposits from the trust company's operations and increased
certificates of deposit as customers have demonstrated a preference for
this product due to higher short-term interest rates.
As a result of improved asset quality, the Company was able to reverse
a small portion of its allowance for loan losses into earnings in both the
fourth quarter of 2006 and the full year 2006. This loan loss provision
benefit amounted to $75,000 in the fourth quarter of 2006 and $125,000 for
the full year 2006. This compares to a zero loan loss provision in the
fourth quarter of 2005 and a negative loan loss provision of $175,000
reversed into earnings in the full year 2005. Non-performing assets
decreased to $2.3 million or 0.39% of total loans at December 31, 2006
compared to $4.3 million or 0.78% of total loans at December 31, 2005.
Classified loans have also declined from $20.2 million at December 31, 2005
to $15.2 million at December 31, 2006. Net charge-offs were also lower in
the fourth quarter of 2006 amounting to $135,000 or 0.09% of total loans
compared to $292,000 or 0.21% of total loans in the fourth quarter of 2005.
For the year ended December 31, 2006, net charge-offs amounted to $926,000
or 0.16% of total loans compared to net charge-offs of $575,000 or 0.11% of
total loans for the 2005 year. Overall, as a result of the improved asset
quality, the allowance for loan losses provided 353% coverage of
non-performing assets at December 31, 2006 compared to 212% coverage at
December 31, 2005. The allowance for loan losses as a percentage of total
loans amounted to 1.37% at December 31, 2006 compared to 1.66% at December
31, 2005.
The Company's non-interest income in the fourth quarter of 2006
decreased by $139,000 from the prior year's fourth quarter but for the full
year 2006 increased by $2.6 million when compared to the 2005 year. Note
that in 2005 the Company incurred a $2.5 million loss on investment
security sales in conjunction with its balance sheet restructuring. There
were no investment security losses in 2006. Non-interest income in both the
fourth quarter and full year 2006 did benefit from growth in trust revenues
as trust fees increased by $390,000 or 6.4% for the full year due to
continued successful new business development efforts in both the union and
traditional trust product lines. Over the past year, the fair market value
of trust assets has grown by 10.7% to $1.8 billion at December 31, 2006.
Non-interest income for both the fourth quarter and full year 2006 was
negatively impacted by lower deposit service charges and other income. For
the 2006 year, deposit service charges decreased by $139,000 due to fewer
overdraft fees. Other income declined by $204,000 due to reduced revenues
from AmeriServ Associates, a subsidiary that previously provided asset
liability management and investment consulting services to smaller
community banks, that was closed in the second quarter of 2006 because it
no longer fit the Company's strategic direction.
Total non-interest expense in the fourth quarter of 2006 decreased by
$800,000 from the prior year's fourth quarter and for the full year 2006
declined by $14.7 million when compared to the 2005 year. In the third
quarter of 2005, the Company incurred $12.3 million in charges related to
FHLB prepayment penalties and interest rate hedge termination costs in
conjunction with its balance sheet restructuring. Additionally in the
fourth quarter of 2005, the Company incurred a $210,000 charge to write-off
unamortized issuance costs related to the redemption of $7.2 million of
high coupon trust preferred securities. There were no such charges in 2006.
Excluding these special charges, it is apparent that the continuing
emphasis on cost rationalization has permitted the Company to achieve
meaningful reductions in non-interest expense. Expense reductions were
experienced in all reported non-interest expense line items for the both
the fourth quarter and full year 2006 with some of the largest full year
reductions occurring in professional fees ($1,034,000), salaries and
benefits ($393,000), other expenses ($615,000), equipment expense
($160,000) and FDIC insurance expense ($97,000). The termination of the
Memorandum of Understanding earlier in 2006 was a key factor causing the
Company to begin realizing expense savings within professional fees, other
expenses, and FDIC insurance in the second half of the year. Also, the loss
from discontinued operations declined from $119,000 in 2005 to $0 in 2006
as the Company completed the exit from its mortgage servicing operation in
2005.
The Company recorded an income tax benefit of $19,000 in the fourth
quarter of 2006 compared to an income tax expense of $89,000 in the fourth
quarter of 2005. The tax benefit in the fourth quarter of 2006 resulted
from the elimination of a $100,000 income tax valuation allowance related
to the deductibility of charitable contributions that management determined
was no longer needed given the level of taxable income generated by the
Company in 2006. For the full year 2006, the Company recorded an income tax
expense of $420,000 which reflects an estimated effective tax rate of
approximately 15.3%. The income tax expense recorded in 2006 compares to a
$5.9 million income tax benefit recorded in 2005 as a result of the sizable
pre-tax loss incurred last year.
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 NMS: ASRV
SUPPLEMENTAL FINANCIAL PERFORMANCE DATA
January 23, 2007
(In thousands, except per share and ratio data)
(All quarterly and 2006 data unaudited)
2006
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE PERIOD:
Net income $540 $568 $643 $581 $2,332
PERFORMANCE PERCENTAGES
(annualized):
Return on average assets 0.25% 0.26% 0.29% 0.26% 0.27%
Return on average equity 2.59 2.71 3.00 2.66 2.74
Net interest margin 3.20 3.16 3.06 2.93 3.12
Net charge-offs as a percentage of
average loans 0.09 0.07 0.39 0.09 0.16
Loan loss provision as a
percentage of average loans - (0.04) - (0.05) (0.02)
Efficiency ratio 92.68 92.08 91.38 94.34 92.60
PER COMMON SHARE:
Net income:
Basic $0.02 $0.03 $0.03 $0.03 $0.11
Average number of common shares
outstanding 22,119 22,143 22,148 22,154 22,141
Diluted 0.02 0.03 0.03 0.03 0.11
Average number of common shares
outstanding 22,127 22,153 22,156 22,161 22,149
2005
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE
PERIOD:
Net income (loss) $833 $370 ($10,564) $220 $(9,141)
PERFORMANCE PERCENTAGES
(annualized):
Return on average assets 0.34% 0.15% (4.26)% 0.10% (0.95)%
Return on average equity 3.95 1.75 (49.42) 1.03% (10.77)
Net interest margin 2.75 2.63 2.43 3.21 2.76
Net charge-offs as a percentage
of average loans 0.05 0.06 0.11 0.21 0.11
Loan loss provision as a
percentage of average loans - (0.21) 0.08 - (0.03)
Efficiency ratio 94.42 96.81 362.60 96.65 143.54
PER COMMON SHARE:
Net income (loss):
Basic $0.04 $0.02 $(0.53) $0.01 $(0.45)
Average number of common shares
outstanding 19,721 19,726 19,785 22,109 20,340
Diluted 0.04 0.02 (0.53) 0.01 (0.45)
Average number of common shares
outstanding 19,760 19,765 19,785 22,123 20,340
AMERISERV FINANCIAL, INC.
(In thousands, except per share, statistical, and ratio data)
(All quarterly and 2006 data unaudited)
2006
1QTR 2QTR 3QTR 4QTR
PERFORMANCE DATA AT PERIOD
END:
Assets $876,393 $887,608 $882,837 $895,992
Investment securities 223,658 210,230 209,046 204,344
Loans 548,466 573,884 580,560 589,435
Allowance for loan losses 9,026 8,874 8,302 8,092
Goodwill and core deposit
intangibles 12,031 11,815 11,599 11,382
Deposits 727,987 740,979 743,687 741,755
FHLB borrowings 45,223 43,031 31,949 50,037
Stockholders' equity 84,336 84,231 86,788 84,684
Trust assets - fair market
value (B) 1,669,525 1,679,634 1,702,210 1,778,652
Non-performing assets 4,193 4,625 2,978 2,292
Asset leverage ratio 10.36% 10.54% 10.52% 10.54%
PER COMMON SHARE:
Book value (A) $3.81 $3.80 $3.92 $3.82
Market value 5.00 4.91 4.43 4.93
Market price to book value 131.26% 129.09% 113.07% 128.98%
STATISTICAL DATA AT PERIOD
END:
Full-time equivalent
employees 375 367 364 369
Branch locations 22 22 21 21
Common shares outstanding 22,140,172 22,145,639 22,150,767 22,156,094
2005
1QTR 2QTR 3QTR 4QTR
PERFORMANCE DATA AT
PERIOD END:
Assets $996,450 $996,786 $901,194 $880,176
Investment securities 381,124 385,398 253,082 231,924
Loans 527,344 522,437 544,900 550,602
Allowance for loan losses 9,856 9,480 9,435 9,143
Goodwill and core deposit
intangibles 12,896 12,680 12,464 12,247
Deposits 725,369 691,740 698,297 712,655
FHLB borrowings 160,388 191,904 90,437 64,171
Stockholders' equity 83,720 86,267 85,022 84,474
Trust assets - fair market
value (B) 1,465,028 1,487,496 1,600,968 1,606,978
Non-performing assets 3,819 3,334 3,323 4,316
Asset leverage ratio 9.77% 9.92% 9.90% 10.24%
PER COMMON SHARE:
Book value $4.24 $4.37 $3.85 $3.82
Market value 5.61 5.35 4.35 4.38
Market price to book value 132.35% 122.36% 113.07% 114.65%
STATISTICAL DATA AT PERIOD
END:
Full-time equivalent
employees 394 383 384 378
Branch locations 22 22 22 22
Common shares outstanding 19,722,884 19,729,678 22,105,786 22,112,273
Note:
(A) Other comprehensive income had a negative impact of $0.29 on book
value per share at December 31, 2006.
(B) Not recognized on the balance sheet
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(All quarterly and 2006 data unaudited)
2006
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on loans $8,900 $9,155 $9,677 $9,865 $37,597
Total investment portfolio 2,279 2,259 2,218 2,212 8,968
Total Interest Income 11,179 11,414 11,895 12,077 46,565
INTEREST EXPENSE
Deposits 4,026 4,563 5,143 5,500 19,232
All borrowings 861 660 653 681 2,855
Total Interest Expense 4,887 5,223 5,796 6,181 22,087
NET INTEREST INCOME 6,292 6,191 6,099 5,896 24,478
Provision of loan losses - (50) - (75) (125)
NET INTEREST INCOME AFTER
PROVISION
FOR LOAN LOSSES 6,292 6,241 6,099 5,971 24,603
NON-INTEREST INCOME
Trust fees 1,641 1,671 1,603 1,604 6,519
Net realized gains on loans held
for sale 23 20 26 36 105
Service charges on deposit
accounts 627 651 645 638 2,561
Bank owned life insurance 256 260 428 263 1,207
Other income 695 666 545 543 2,449
Total Non-Interest Income 3,242 3,268 3,247 3,084 12,841
NON-INTEREST EXPENSE
Salaries and employee benefits 4,815 4,612 4,600 4,642 18,669
Net occupancy expense 655 591 573 591 2,410
Equipment expense 639 631 529 550 2,349
Professional fees 795 859 791 763 3,208
FDIC deposit insurance expense 73 74 22 23 192
Amortization of core deposit
intangibles 216 216 216 217 865
Other expenses 1,665 1,794 1,833 1,707 6,999
Total Non-Interest Expense 8,858 8,777 8,564 8,493 34,692
INCOME BEFORE INCOME TAXES 676 732 782 562 2,752
Provision (benefit) for income
taxes 136 164 139 (19) 420
NET INCOME $540 $568 $643 $581 $2,332
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(All quarterly and 2006 data unaudited)
2005
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on loans $7,954 $8,105 $8,200 $8,688 $32,947
Total investment portfolio 3,737 3,607 3,273 2,301 12,918
Total Interest Income 11,691 11,712 11,473 10,989 45,865
INTEREST EXPENSE
Deposits 2,845 3,188 3,290 3,662 12,985
All borrowings 2,551 2,533 2,725 959 8,768
Total Interest Expense 5,396 5,721 6,015 4,621 21,753
NET INTEREST INCOME 6,295 5,991 5,458 6,368 24,112
Provision of loan losses - (275) 100 - (175)
NET INTEREST INCOME AFTER
PROVISION
FOR LOAN LOSSES 6,295 6,266 5,358 6,368 24,287
NON-INTEREST INCOME
Trust fees 1,472 1,506 1,586 1,565 6,129
Net realized gains (losses) on
investment securities
available for sale 78 - (2,577) - (2,499)
Net realized gains on loans
held for sale 72 83 27 27 209
Service charges on deposit
accounts 584 704 723 689 2,700
Bank owned life insurance 250 254 256 257 1,017
Other income 692 633 643 685 2,653
Total Non-Interest Income 3,148 3,180 658 3,223 10,209
NON-INTEREST EXPENSE
Salaries and employee benefits 4,751 4,680 4,804 4,827 19,062
Net occupancy expense 668 592 609 683 2,552
Equipment expense 639 622 620 628 2,509
Professional fees 823 938 1,483 998 4,242
FDIC deposit insurance expense 71 69 76 73 289
Amortization of core deposit
intangibles 216 216 216 217 865
Prepayment penalties - - 12,287 - 12,287
Other expenses 1,775 1,789 2,183 1,867 7,614
Total Non-Interest Expense 8,943 8,906 22,278 9,293 49,420
INCOME (LOSS) BEFORE INCOME
TAXES 500 540 (16,262) 298 (14,924)
Provision (benefit) for income
taxes (398) 96 (5,689) 89 (5,902)
Income (loss) from continuing
operations 898 444 (10,573) 209 (9,022)
Income (loss) from discontinued
operations (65) (74) 9 11 (119)
NET INCOME (LOSS) $833 $370 $(10,564) $220 $(9,141)
AMERISERV FINANCIAL, INC.
AVERAGE BALANCE SHEET DATA
(In thousands)
(All quarterly and 2006 data unaudited)
Note: 2005 data appears before 2006.
2005 2006
TWELVE TWELVE
4QTR MONTHS 4QTR MONTHS
Interest earning assets:
Loans and loans held for sale,
net of unearned income $540,325 $525,401 $582,165 $564,173
Deposits with banks 816 770 688 706
Federal funds - - 248 62
Total investment securities 246,096 351,955 211,747 221,704
Total interest earning assets 787,237 878,126 794,848 786,645
Non-interest earning assets:
Cash and due from banks 21,235 21,449 18,439 18,841
Premises and equipment 8,949 9,365 8,285 8,324
Assets of discontinued operations 821 1,135 - -
Other assets 66,040 63,401 68,003 68,920
Allowance for loan losses (9,311) (9,613) (8,237) (8,750)
Total assets 874,971 963,863 881,338 873,980
Interest bearing liabilities:
Interest bearing deposits:
Interest bearing demand 55,244 54,695 59,280 57,817
Savings 91,324 96,819 75,150 81,964
Money market 166,168 156,932 173,538 172,029
Other time 288,108 284,951 336,089 319,220
Total interest bearing deposits 600,844 593,397 644,057 631,030
Borrowings:
Federal funds purchased,
securities sold under
agreements to repurchase, and
other short-term borrowings 55,316 78,152 27,910 32,821
Advanced from Federal Home Loan
Bank 993 73,924 951 967
Guaranteed junior subordinated
deferrable interest debentures 16,525 19,345 13,085 13,085
Total interest bearing liabilities 673,678 764,818 686,003 677,903
Non-interest bearing liabilities:
Demand deposits 110,876 107,018 101,188 104,266
Liabilities of discontinued
operations 222 379 - -
Other liabilities 5,974 6,780 7,310 6,765
Stockholders' equity 84,221 84,868 86,837 85,046
Total liabilities and
stockholders' equity $874,971 $963,863 $881,338 $873,980
SOURCE AmeriServ Financial, Inc.
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Related links:
http://www.ameriservfinancial.com/
CONTACT:
Jeffrey A. Stopko, Senior Vice President &
Chief Financial Officer of AmeriServ Financial, Inc.,
+1-814-533-5310
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