JOHNSTOWN, Pa., Oct. 18 /PRNewswire-FirstCall/ -- AmeriServ Financial,
Inc. (Nasdaq: ASRV), as expected, reported a loss of $10.6 million or ($0.53)
per diluted share for the third quarter of 2005 compared to net income of
$742,000 or $0.05 per diluted share for the third quarter of 2004. For the
first nine months of 2005, the Company reported a net loss of $9.4 million or
($0.47) per diluted share compared to net income of $1.2 million or $0.09 per
diluted share for the first nine months of 2004. The following table
highlights the Company's financial performance for both the three and nine-
month periods ended September 30, 2005 and 2004:
Third Third Nine Months Nine Months
Quarter Quarter Ended Ended
2005 2004 September 30, September 30,
2005 2004
Net income
(loss) ($10,564,000) $742,000 ($9,361,000) $1,222,000
Diluted earnings
per share (0.53) 0.05 (0.47) 0.09
The previously announced successful completion of a $10.3 million private
placement common stock offering provided the Company with the capital to
facilitate a series of transactions in the third quarter of 2005 which were
designed to significantly improve the Company's interest rate risk position
and position the Company for future increased earnings performance. These
transactions and their related impact on third quarter earnings were as
follows: 1) The Company retired all remaining $100 million of Federal Home
Loan Bank (FHLB) convertible advances that had a cost of approximately 6.0%
and a 2010 maturity. The Company incurred a $6.5 million pre-tax prepayment
penalty to accomplish this transaction. 2) The Company terminated all
interest rate hedges associated with the FHLB debt. The Company incurred a
pre-tax termination fee of $5.8 million to eliminate these hedges on which the
Company was a net payer. 3) The Company sold $112 million of investment
securities to provide the cash needed at the bank for this FHLB debt and swap
prepayment. The Company incurred a $2.6 million pre-tax loss on these
investment security sales. The execution of these transactions combined with
the capital provided from the successful private placement common stock
offering strengthened the Company's balance sheet and reduced its risk
profile. At September 30, 2005, the Company's asset leverage ratio improved
to 9.90% compared to 7.85% at September 30, 2004.
Allan R. Dennison, President and Chief Executive Officer, commented on the
third quarter 2005 results, "While there was considerable cost associated with
executing these balance sheet restructuring strategies, it was necessary for
the Company to take these corrective actions to complete this phase of our
turnaround. AmeriServ now has a traditional community bank balance sheet with
debt levels below our peers. We now will be able to fully focus on community
banking and our dynamically growing trust company in order to drive meaningful
future earnings improvement."
The Company's provision for loan losses totaled $100,000 or 0.08% of total
loans in the third quarter of 2005 compared to no provision recognized in the
prior year third quarter. The third quarter 2005 provision was slightly lower
than the net charge-offs for the quarter which totaled $145,000 or 0.11% of
total loans. For the nine month period ended September 30, 2005, the Company
recorded a negative loan loss provision of $175,000 compared to a provision of
$643,000 for the same period in 2004 or a net favorable change of $818,000.
The overall reduced provision in 2005 resulted from improved asset quality.
Non-performing assets have declined for six consecutive quarters and now total
$3.3 million or 0.61% of total loans. Net charge-offs year-to-date in 2005
have totaled $283,000 or only 0.07% of total loans compared to net charge-offs
of $2.3 million or 0.63% in 2004. As a result of these asset quality
improvements, the allowance for loan losses provided 284% coverage of non-
performing assets at September 30, 2005 compared to 254% coverage at December
31, 2004, and 195% coverage at September 30, 2004. The allowance for loan
losses as a percentage of total loans amounted to 1.73% at September 30, 2005.
The Company's net interest income in the third quarter of 2005 decreased
by $194,000 from the prior year third quarter and for the first nine months of
2005 declined by $33,000 when compared to the first nine months of 2004. This
decrease reflects the impact of a reduced level of earning assets that offset
the benefit of an increased net interest margin. Specifically, for the first
nine months of 2005 the net interest margin increased by 34 basis points to
2.60% while the level of average earning assets declined by $143 million.
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. The Company's net interest margin also
benefited from increased loans in the earning asset mix as total loans
outstanding averaged $520 million in the first nine months of 2005 a
$27 million or 5.4% increase from the same 2004 period. This loan growth was
most evident in the commercial loan portfolio. Deposits continued their
recovery from the low point reached in the fourth quarter of 2004. Total
deposits averaged $697 million for the first nine months of 2005, a
$30 million or 4.6% increase from the same 2004 period due to increased
deposits from the trust company's operations. On a linked quarter basis in
2005, the Company has experienced net interest income and net interest margin
pressure due to the negative impact that the flatter yield curve has had on
the Company's remaining leverage program. The balance sheet restructuring
that the Company executed late in the third quarter of 2005 was designed to
address this issue and position the Company for net interest income and margin
expansion beginning in the fourth quarter.
The Company's non-interest income in the third quarter of 2005 decreased
by $3.4 million from the prior year's third quarter and for the first nine
months of 2005 declined by $4.4 million when compared to the first nine months
of 2004. The largest factor responsible for these declines was the previously
mentioned $2.6 million investment security loss realized on the third quarter
balance sheet restructuring. The Company had realized investment security
gains of $228,000 in the third quarter of 2004 and $1.3 million for the nine-
month period ended September 30, 2004. Other income declined by $742,000 in
the third quarter of 2005 and by $903,000 for the nine-month period as the
Company benefited from a $666,000 gain on the sale of an OREO property in the
third quarter of 2004. There was no such gain in 2005. Lower mortgage
production related revenues also contributed to the decrease in other income
in 2005. Deposit service charges increased by $31,000 in the third quarter of
2005 but are down by $127,000 for the nine-month period due primarily to fewer
overdraft fees and checking service charges. These items overshadowed a
$209,000 quarterly improvement and a $573,000 or 14.4% increase in trust fees
for the nine month period ended September 30, 2005 due to continued successful
new business development efforts and the benefit of new customer fee schedules
that were implemented in the fourth quarter of 2004.
The Company's non-interest expense for both the third quarter and first
nine months of 2005 increased by approximately $13.2 million from the same
2004 periods. The previously discussed special charges related to the FHLB
prepayment penalty and interest rate hedge termination costs were the
predominant factors causing the increased non-interest expense. Professional
fees were also up by $392,000 for the quarter and $530,000 for the nine-month
period ended September 30, 2005 due to costs associated with implementing
Sarbanes-Oxley Section 404 and higher legal fees. Total employee costs are up
by $98,000 for the third quarter and by $214,000 or 1.5% for the nine-month
period ended September 30, 2005 due primarily to higher medical insurance
costs and pension costs which has offset the benefit of a smaller employee
base. The Company did benefit from reduced amortization of core deposit
intangibles that decreased by $286,000 for the nine-month period ended
September 30, 2005. Also, the loss from discontinued operations declined by
$268,000 in the third quarter of 2005 and by $339,000 for the nine-month
period as a result of the closure of the unprofitable mortgage servicing
operation as of June 30, 2005.
The Company's third quarter and nine-month 2005 performance was favorably
impacted by an increased income tax benefit resulting from the pre-tax loss
incurred in 2005. However, in both 2005 and 2004, the Company lowered its
income tax expense by approximately $450,000 due to a reduction in reserves
for prior year tax contingencies as a result of the successful conclusion of
an IRS examination on several open tax years.
At September 30, 2005, ASRV had total assets of $901 million and
shareholders' equity of $85 million or $3.85 per share. 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, 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
October 18, 2005
(In thousands, except per share and ratio data)
(All quarterly and 2005 data unaudited)
2005
1QTR 2QTR 3QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE PERIOD:
Net income (loss) $833 $370 ($10,564) $(9,361)
PERFORMANCE PERCENTAGES
(annualized):
Return on average equity 3.95% 1.75% (49.42)% (14.71)%
Net interest margin 2.75 2.63 2.43 2.60
Net charge-offs as a
percentage of average
loans 0.05 0.06 0.11 0.07
Loan loss provision as a
percentage of average
loans - (0.21) 0.08 (0.04)
Efficiency ratio 94.42 96.81 362.6 161.70
PER COMMON SHARE:
Net income (loss):
Basic $0.04 $0.02 $(0.53) $(0.47)
Average number of common
shares outstanding 19,720,827 19,726,345 19,785,455 19,744,446
Diluted 0.04 0.02 (0.53) (0.47)
Average number of common
shares outstanding 19,760,049 19,764,647 19,812,487 19,777,709
2004
1QTR 2QTR 3QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE
PERIOD:
Net income $226 $254 $742 $1,222
PERFORMANCE PERCENTAGES
(annualized):
Return on average equity 1.21% 1.41% 4.21% 2.25%
Net interest margin 2.39 2.25 2.15 2.26
Net charge-offs as a
percentage of average
loans 0.48 0.48 0.92 0.63
Loan loss provision as a
percentage of average
loans 0.31 0.21 - 0.17
Efficiency ratio 93.83 94.80 96.89 95.16
PER COMMON SHARE:
Net income:
Basic $0.02 $0.02 $0.05 $0.09
Average number of common
shares outstanding 13,962,010 13,969,211 13,975,838 13,969,045
Diluted 0.02 0.02 0.05 0.09
Average number of common
shares outstanding 14,025,836 14,023,577 14,009,952 14,019,351
AMERISERV FINANCIAL, INC.
(In thousands, except per share, statistical, and ratio data)
(All quarterly and 2005 data unaudited)
2005
1QTR 2QTR 3QTR
PERFORMANCE DATA AT PERIOD
END:
Assets $996,450 $996,786 $901,194
Investment securities 381,124 385,398 253,082
Loans 527,344 522,437 544,900
Allowance for loan losses 9,856 9,480 9,435
Goodwill and core deposit
intangibles 12,896 12,680 12,464
Mortgage servicing rights - - -
Deposits 725,369 691,740 698,297
Stockholders' equity 83,720 86,267 85,022
Trust assets - fair market
value (B) 1,465,028 1,487,496 1,600,968
Non-performing assets 3,819 3,334 3,323
Asset leverage ratio 9.77% 9.92% 9.90%
PER COMMON SHARE:
Book value (A) $4.24 $4.37 $3.85
Market value 5.61 5.35 4.35
Market price to book value 132.35% 122.36% 113.07%
STATISTICAL DATA AT PERIOD
END:
Full-time equivalent
employees 394 383 384
Branch locations 22 22 22
Common shares outstanding 19,722,884 19,729,678 22,105,786
2004
1QTR 2QTR 3QTR 4QTR
PERFORMANCE DATA AT PERIOD
END:
Assets $1,099,564 $1,178,406 $1,088,849 $1,009,976
Investment securities 504,980 581,553 488,617 401,019
Loans 503,404 500,522 506,551 521,416
Allowance for loan losses 11,379 10,932 9,827 9,893
Goodwill and core deposit
intangibles 13,905 13,547 13,329 13,112
Mortgage servicing rights 1,493 1,642 1,395 -
Deposits 656,348 670,941 659,176 644,391
Stockholders' equity 77,721 67,213 73,471 85,219
Trust assets - fair market
value (B) 1,256,064 1,246,458 1,228,126 1,309,362
Non-performing assets 13,482 10,155 5,047 3,894
Asset leverage ratio 7.75% 7.71% 7.85% 9.20%
PER COMMON SHARE:
Book value $5.57 $4.81 $5.26 $4.32
Market value 6.10 5.55 5.00 5.17
Market price to book value 109.52% 115.50% 95.13% 119.62%
STATISTICAL DATA AT PERIOD
END:
Full-time equivalent
employees 415 412 409 406
Branch locations 23 23 23 23
Common shares outstanding 13,965,737 13,972,424 13,978,726 19,717,841
Note:
(A) Other comprehensive income had a negative impact of $0.15 on book
value per share at September 30, 2005.
(B) Not recognized on the balance sheet
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(All quarterly and 2005 data unaudited)
2005
1QTR 2QTR 3QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on loans $7,954 $8,105 $8,200 $24,259
Total investment portfolio 3,737 3,607 3,273 10,617
Total Interest Income 11,691 11,712 11,473 34,876
INTEREST EXPENSE
Deposits 2,845 3,188 3,290 9,323
All other funding sources 2,551 2,533 2,725 7,809
Total Interest Expense 5,396 5,721 6,015 17,132
NET INTEREST INCOME 6,295 5,991 5,458 17,744
Provision of loan losses - (275) 100 (175)
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 6,295 6,266 5,358 17,919
NON-INTEREST INCOME
Trust fees 1,472 1,506 1,586 4,564
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 27 182
Service charges on deposit accounts 584 704 723 2,011
Bank owned life insurance 250 254 256 760
Other income 692 633 643 1,968
Total Non-Interest Income 3,148 3,180 658 6,986
NON-INTEREST EXPENSE
Salaries and employee benefits 4,751 4,680 4,804 14,235
Net occupancy expense 668 592 649 1,909
Equipment expense 639 622 620 1,881
Professional fees 823 938 1,483 3,244
FDIC deposit insurance expense 71 69 76 216
Amortization of core deposit
intangibles 216 216 216 648
Prepayment penalties - - 12,287 12,287
Other expenses 1,775 1,789 2,143 5,707
Total Non-Interest Expense 8,943 8,906 22,278 40,127
INCOME (LOSS) BEFORE INCOME TAXES 500 540 (16,262) (15,222)
Provision (benefit) for income taxes (398) 96 (5,689) (5,991)
Income (loss) from continuing
operations $898 $444 $(10,573) $(9,231)
Income (loss) from discontinued
operations (65) (74) 9 (130)
NET INCOME (LOSS) $833 $370 $(10,564) $(9,361)
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
(All quarterly data unaudited)
2004
1QTR 2QTR 3QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on loans $7,691 $7,679 $7,346 $22,716
Total investment portfolio 5,228 4,943 5,352 15,523
Total Interest Income 12,919 12,622 12,698 38,239
INTEREST EXPENSE
Deposits 2,543 2,529 2,628 7,700
All other funding sources 4,164 4,180 4,418 12,762
Total Interest Expense 6,707 6,709 7,046 20,462
NET INTEREST INCOME 6,212 5,913 5,652 17,777
Provision of loan losses 384 259 - 643
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 5,828 5,654 5,652 17,134
NON-INTEREST INCOME
Trust fees 1,267 1,347 1,377 3,991
Net realized gains on investment
securities available for sale 937 111 228 1,276
Net realized gains on loans held for
sale 40 115 108 263
Service charges on deposit accounts 730 716 692 2,138
Bank owned life insurance 275 276 279 830
Other income 690 796 1,385 2,871
Total Non-Interest Income 3,939 3,361 4,069 11,369
NON-INTEREST EXPENSE
Salaries and employee benefits 4,710 4,605 4,706 14,021
Net occupancy expense 712 653 620 1,985
Equipment expense 648 630 611 1,889
Professional fees 796 827 1,091 2,714
FDIC deposit insurance expense 72 71 72 215
Amortization of core deposit
intangibles 358 358 218 934
Other expenses 1,888 1,693 1,726 5,307
Total Non-Interest Expense 9,184 8,837 9,044 27,065
INCOME BEFORE INCOME TAXES 583 178 677 1,438
Provision (benefit) for income taxes 126 (55) (324) (253)
Income from continuing operations $457 $233 $1,001 $1,691
Income (loss) from discontinued
operations (231) 21 (259) (469)
NET INCOME $226 $254 $742 $1,222
AMERISERV FINANCIAL, INC.
AVERAGE BALANCE SHEET DATA
(In thousands)
(All quarterly and 2005 data unaudited)
Note: 2004 data appears before 2005.
2004 2005
NINE NINE
3QTR MONTHS 3QTR MONTHS
Interest earning assets:
Loans and loans held for sale,
net of unearned income $490,468 $493,905 $523,159 $520,427
Deposits with banks 3,806 4,499 862 801
Federal funds sold - 91 - -
Total investment securities 562,415 552,867 374,316 387,195
Total interest earning assets 1,056,689 1,051,362 898,337 908,423
Non-interest earning assets:
Cash and due from banks 22,021 21,785 22,128 21,520
Premises and equipment 10,359 10,640 9,306 9,504
Assets of discontinued
operations 2,700 2,947 1,462 1,647
Other assets 59,460 63,226 61,585 62,113
Allowance for loan losses (10,538) (11,084) (9,433) (9,714)
Total assets 1,140,691 1,138,876 983,385 993,493
Interest bearing liabilities:
Interest bearing deposits:
Interest bearing demand 54,133 53,079 55,693 54,513
Savings 104,840 105,565 96,935 98,652
Money market 121,990 120,374 153,278 153,854
Other time 288,747 280,706 286,108 283,895
Total interest bearing
deposits 569,710 559,724 592,014 590,914
Borrowings:
Federal funds purchased,
securities sold under
agreements to repurchase,
and other short-term
borrowings 125,286 129,557 79,958 85,764
Advanced from Federal Home
Loan Bank 226,041 226,301 92,669 98,234
Guaranteed junior subordinated
deferrable interest
debentures 35,567 35,567 20,285 20,285
Total interest bearing
liabilities 956,604 951,149 784,926 795,197
Non-interest bearing
liabilities:
Demand deposits 105,819 106,486 106,119 105,732
Liabilities of discontinued
operations 554 404 356 496
Other liabilities 7,694 8,229 7,180 6,984
Stockholders' equity 70,020 72,608 84,804 85,084
Total liabilities and
stockholders' equity $1,140,691 $1,138,876 $983,385 $993,493
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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