JOHNSTOWN, Pa., Sept. 19 /PRNewswire-FirstCall/ --
AmeriServ Financial, Inc. (Nasdaq: ASRV) announced today that its Board of
Directors finalized the first phase of the previously announced earnings
improvement program and has established a new dividend rate effective with the
fourth quarter dividend declaration scheduled for November 2002. The
Company's new common dividend rate is $0.12 per year, which equates to a yield
of 4.80% at the current price of $2.50. Publicly traded Pennsylvania bank
stocks currently yield 2.9%. The new dividend rate continues the corporate
philosophy of providing shareholders with a better than peer common stock
dividend yield. The Board of Directors also has approved targeting a common
dividend payout ratio within the range of 40% to 60% of net income, a range
that is consistent with comparable Pennsylvania bank holding companies.
The Board of Directors also approved the capital management strategy of
using excess cash earnings beyond that required to support the common dividend
at the new rate and the dividend requirement on its trust preferred securities
to reinstate, at its discretion, a stock buyback program. This buyback
program could apply to either its common stock or trust preferred shares.
This strategy is feasible because the Company continues to be considered well
capitalized for regulatory purposes with an asset leverage ratio at June 30,
2002 of 7.46%, compared to a regulatory minimum of 5.0%.
The first phase of the earnings improvement program will produce at least
$4 million of pre-tax earnings improvement with $3.5 million or 88% coming
from identified cost savings and $500,000 or 12% coming from identified
revenue enhancements. The first phase will begin immediately and be completed
by year-end. Within the cost savings, approximately $2 million will be
achieved through a reduction in force that will result in the elimination of
43 full-time equivalent employees or 9.1% of the Company's workforce. The
jobs being eliminated include 23 union positions and 20 non-union positions.
The Company in 2003 also plans to implement a wage freeze for all non-union
personnel and will suspend the Executive at Risk Compensation Plan.
Other expense savings will be achieved through a significant curtailment
of advertising expense, reduced technology-related expenditures through
reallocation of existing personal computers, reduced charitable contributions,
and the deferment of certain planned capital expenditures. Within the branch
network the Company will consolidate the East Hills office into the nearby
University Heights office; the East Hills drive-up facility will remain open.
Seven-day convenience hours will be reduced at the Somerset office while
Saturday hours will still be maintained.
The leadership of United Steelworkers of America, AFL-CIO-CLC, Local Union
2635-06/07 has agreed to present a package of certain wage and benefit cost
savings for 2003 to the union membership for vote at a special meeting to be
held on September 22, 2002. Greater details on the package and the outcome of
the membership vote will be provided next week. AmeriServ Financial is one of
just thirteen unionized banks in America and has been unionized since 1973.
Local 2635-06/07 represents approximately 58% of the Company's employees.
Full earnings benefit from all first phase actions will be achieved in
2003. The Company does expect to report a net loss for the third quarter of
2002 due in part to approximately $1 million in charges associated with the
earnings improvement program. The Company also plans to further strengthen
its allowance for loan losses in the third quarter and will incur additional
mortgage servicing impairment charges as a result of the continued downward
movement in mortgage interest rates. A portion of the mortgage servicing
impairment charge will be offset by gains on the sale of certain investment
securities that have risks of accelerated prepayments or extension.
Phase two of the earnings improvement plan will begin immediately and
continue through the first quarter of 2003. This phase will include, but not
be limited to, continued efforts to sell or exit Standard Mortgage Corporation
of Atlanta, Georgia and the commercial leasing business line. Additionally,
the Company's trust, commercial lending, loan processing, and management
information systems divisions will undergo a full strategic and efficiency
evaluation. Independent consulting experts will be used, in part, to
accomplish the goals of this second phase with the associated consulting costs
to be expensed in the fourth quarter of 2002.
Orlando Hanselman, Chairman, President and CEO and Jeffrey Stopko, Senior
Vice President and CFO, will host a conference call that will further discuss
this press release and will be web cast live over the Internet on
September 24, 2002 at 4:00 p.m. EDT. To listen live over the Internet to the
web cast simply log on to http://www.videonewswire.com/AMERISERV/092402 or to
participate in the conference call dial 1-800-233-2795 and use conference ID#
AMERISERV. To listen to an audio replay of the web cast dial 1-800-839-4018
for up to 45 days after the conference call.
AmeriServ Financial, Inc., a financial holding company is the parent of
AmeriServ Financial (the Bank) and AmeriServ Trust & Financial Services in
Johnstown, AmeriServ Associates of State College, and AmeriServ Life Insurance
Company in Arizona. The AmeriServ Financial, Inc. customer reach is extensive
beyond its primary dominant market of Cambria and Somerset Counties. The
Bank's mortgage subsidiary also has retail mortgage operations based in
Greensburg, State College, and Altoona. Standard Mortgage Corporation (also a
subsidiary of the Bank) has mortgage servicing operations based in Atlanta,
Georgia. AmeriServ Associates, the consulting subsidiary, has financial
services industry clients that are located in Pennsylvania, Ohio and Michigan.
AmeriServ Trust and Financial Services, with $1.2 billion of client assets
under management, has union investor clients in Pennsylvania, Ohio, Michigan,
West Virginia, and Indiana.
SOURCE AmeriServ Financial, Inc.
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Related links:
http://www.ameriservfinancial.com
Audio:http://www.videonewswire.com/AMERISERV/092402
CONTACT:
Jeffrey A. Stopko, Senior Vice President &
Chief Financial Officer of AmeriServ Financial, +1-814-533-5310
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