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) July 19, 2005
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 second quarter and six month year to date results as of June 30, 2005. For a more detailed description of the announcement see the press release attached as Exhibit #99.1.
Exhibits
--------
Exhibit 99.1
Press release dated July 19, 2005, announcing the second quarter and six months year to date results as of June 30, 2005.
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: July 19, 2005
Exhibit 99.1
Jeffrey A. Stopko
July 19, 2005
Senior Vice President &
Chief Financial Officer
(814)-533-5310
AMERISERV FINANCIAL REPORTS IMPROVED FINANCIAL RESULTS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF 2005
JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) reported increased earnings for both the quarter and six month period ended June 30, 2005. ASRV reported net income of $370,000 or $0.02 per diluted share for the second quarter of 2005 which represented an increase of $116,000 or 45.7% over the net income performance of $254,000 or $0.02 per diluted share reported in the second quarter of 2004. For the six month period ended June 30, 2005, the Company has now earned $1.2 million or $0.06 per diluted share which represents significant improvement over the net income of $480,000 or $0.03 per diluted share reported for the six month period ended June 30, 2004. The following table highlights the Company’s financial performance for both the three and six month periods ended June 30, 2005 and 2004:
Second Quarter 2005 | Second Quarter 2004 | Six Months Ended June 30, 2005 | Six Months Ended June 30, 2004 | ||
Net income | $370,000 | $254,000 | $1,203,000 | $480,000 | |
Diluted earnings per share | $ 0.02 | $ 0.02 | $ 0.06 | $ 0.03 |
At June 30, 2005, ASRV had total assets of $1.0 billion and shareholders’ equity of $86 million or $4.37 per share. The Company’s asset leverage ratio improved to 9.92% at June 30, 2005, compared to 7.71% at June 30, 2004.
Allan R. Dennison, President and Chief Executive Officer, commented on the improved second quarter 2005 results, “Meaningful asset quality improvements, the benefits of the balance sheet repositioning strategies executed in the fourth quarter of 2004, and increased net income contribution from our trust company were the key factors contributing to the increased earnings in 2005. I was particularly pleased that our non-performing assets have now declined for five consecutive quarters and our net charge-offs averaged only 0.05% of total loans in 2005 compared to 0.48% in 2004. Our loan loss reserve coverage of non-performing assets has now improved to 284%.”
As a result of this improved asset quality, the Company was able to release a portion of its allowance for loan losses into earnings in the second quarter of 2005. This loan loss provision benefit amounted to $275,000 in the second quarter of 2005 compared to a loan loss provision of $259,000 in the second quarter of 2004. For the six months ended June 30, 2005, the Company recorded a negative loan loss provision of $275,000 compared to a provision of $643,000 for the same period in 2004 or a net favorable change of $918,000. As previously mentioned, the lower levels of non-performing assets and classified loans evidence the improved asset quality. Non-performing assets declined from $10.2 million or 2.02% of total loans at June 30, 2004 to $3.3 million or 0.64% of total loans at June 30, 2005. The allowance for loan losses provided 284% coverage of non-performing assets at June 30, 2005 compared to 254% coverage at December 31, 2004, and 108% coverage at June 30, 2004. The allowance for loan losses as a percentage of total loans amounted to 1.81% at June 30, 2005.
The Company’s net interest income in the second quarter of 2005 increased by $78,000 from the prior year’s second quarter and for the first six months of 2005 increased by $161,000 when compared to the first six months of 2004. This improvement reflects the benefits from an increased net interest margin which more than offset a reduced level of earning assets. Specifically, for the first six months of 2005 the net interest margin increased by 37 basis points to 2.69% while the level of average earning assets declined by $135 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 $519 million in the first six months of 2005 a $23 million or 4.7% 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 $696 million for the first six months of 2005, a $34 million or 5.2% increase from the same 2004 period due to increased deposits from the trust company’s operations. Overall, the Company has been able to generate increased net interest income from a smaller but stronger balance sheet despite the negative impact resulting from a flatter yield curve in 2005.
The Company’s non-interest income in the second quarter of 2005 decreased by $181,000 from the prior year’s second quarter and for the first six months of 2005 declined by $972,000 when compared to the first six months of 2004. Fewer gains realized on asset sales were the primary factor responsible for the lower non-interest income in 2005. Specifically, gains realized on the sale of investment securities dropped by $111,000 in the second quarter of 2005 and by $970,000 for the six month period due to the higher interest rate environment in place in 2005. Deposit service charges only declined by $12,000 in the second quarter of 2005 but are down by $158,000 for the six-month period due primarily to fewer overdraft fees. Other income is down by approximately $162,000 for both the quarter and six-month period due to lower mortgage production related revenues and declines in several other fee income categories. These items overshadowed a $159,000 quarterly improvement and a $364,000 or 13.9% increase in trust fees for the six month period ended June 30, 2005 due to continued successful union-related new business development efforts and the benefit of new customer fee schedules that were implemented in the fourth quarter of 2004.
The Company’s total non-interest expense in the second quarter of 2005 increased by $69,000 from the prior year’s second quarter but for the first six months of 2005 decreased by $172,000 when compared to the first six months of 2004. The largest factor causing the quarterly increase in non-interest expense was an $111,000 increase in professional fees due to higher legal costs and the initial costs associated with implementing Sarbanes-Oxley Section 404. Professional fees are also up by $138,000 for the six-month period. Total employee costs are up by $75,000 for the second quarter and by $116,000 or 1.2% for six month period ended June 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 $142,000 for the quarter and $284,000 for the six-month period. The closure of the Company’s Harrisburg branch office also contributed to the lower occupancy costs which declined by $61,000 in the second quarter and by $105,000 for the six months ended June 30, 2005. Also, the loss from discontinued operations totaled $74,000 for the second quarter and $139,000 for the six-month period as the Company completed the closure of its mortgage servicing operation as of June 30, 2005.
The Company’s first six-months 2005 net income performance was favorably impacted by an income tax benefit. Specifically in the first quarter of 2005, the Company lowered its income tax expense by $475,000 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. The Company returned to a more typical income tax expense in the second quarter of 2005 as the Company recorded an income tax provision of $96,000 or an effective tax rate of 17.8%.
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
July 19, 2005
(In thousands, except per share and ratio data)
(All quarterly and 2005 data unaudited)
2005
1QTR | 2QTR | YEAR | |||
TO DATE | |||||
PERFORMANCE DATA FOR THE PERIOD: | |||||
Net income | $833 | $370 | $1,203 | ||
PERFORMANCE PERCENTAGES (annualized): | |||||
Return on average equity | 3.95% | 1.75% | 2.85% | ||
Net interest margin | 2.75 | 2.63 | 2.69 | ||
Net charge-offs as a percentage of average loans | 0.05 | 0.06 | 0.05 | ||
Loan loss provision as a percentage of average loans | - | (0.21) | (0.11) | ||
Efficiency ratio | 94.42 | 96.81 | 95.60 | ||
PER COMMON SHARE: | |||||
Net income: | |||||
Basic | $0.04 | $0.02 | $0.06 | ||
Average number of common shares outstanding | 19,720,827 | 19,726,345 | 19,723,601 | ||
Diluted | 0.04 | 0.02 | 0.06 | ||
Average number of common shares outstanding | 19,760,049 | 19,764,647 | 19,762,371 | ||
2004
1QTR | 2QTR | YEAR | |||
TO DATE | |||||
PERFORMANCE DATA FOR THE PERIOD: | |||||
Net income | $226 | $254 | $480 | ||
PERFORMANCE PERCENTAGES (annualized): | |||||
Return on average equity | 1.21% | 1.41% | 1.31% | ||
Net interest margin | 2.39 | 2.25 | 2.32 | ||
Net charge-offs as a percentage of average loans | 0.48 | 0.48 | 0.48 | ||
Loan loss provision as a percentage of average loans | 0.31 | 0.21 | 0.26 | ||
Efficiency ratio | 93.83 | 94.80 | 94.29 | ||
PER COMMON SHARE: | |||||
Net income: | |||||
Basic | $0.02 | $0.02 | $0.03 | ||
Average number of common shares outstanding | 13,962,010 | 13,969,211 | 13,965,611 | ||
Diluted | 0.02 | 0.02 | 0.03 | ||
Average number of common shares outstanding | 14,025,836 | 14,023,577 | 14,023,450 | ||
AMERISERV FINANCIAL, INC.
(In thousands, except per share, statistical, and ratio data)
(All quarterly and 2005 data unaudited)
2005
1QTR | 2QTR | |||
PERFORMANCE DATA AT PERIOD END | ||||
Assets | $996,450 | $996,786 | ||
Investment securities | 381,124 | 385,398 | ||
Loans | 527,344 | 522,437 | ||
Allowance for loan losses | 9,856 | 9,480 | ||
Goodwill and core deposit intangibles | 12,896 | 12,680 | ||
Mortgage servicing rights | - | - | ||
Deposits | 725,369 | 691,740 | ||
Stockholders’ equity | 83,720 | 86,267 | ||
Trust assets – fair market value (B) | 1,465,028 | 1,487,496 | ||
Non-performing assets | 3,819 | 3,334 | ||
Asset leverage ratio | 9.77% | 9.92% | ||
PER COMMON SHARE: | ||||
Book value (A) | $4.24 | $4.37 | ||
Market value | 5.61 | 5.35 | ||
Market price to book value | 132.35% | 122.36% | ||
STATISTICAL DATA AT PERIOD END: | ||||
Full-time equivalent employees | 394 | 383 | ||
Branch locations | 22 | 22 | ||
Common shares outstanding | 19,722,884 | 19,729,678 |
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 |
NOTES:
(A) Other comprehensive income had a negative impact of $0.18 on book value per share at June 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
YEAR | |||||
INTEREST INCOME | 1QTR | 2QTR | TO DATE | ||
Interest and fees on loans | $7,954 | $8,105 | $16,059 | ||
Total investment portfolio | 3,737 | 3,607 | 7,344 | ||
Total Interest Income | 11,691 | 11,712 | 23,403 | ||
INTEREST EXPENSE | |||||
Deposits | 2,845 | 3,188 | 6,033 | ||
All other funding sources | 2,551 | 2,533 | 5,084 | ||
Total Interest Expense | 5,396 | 5,721 | 11,117 | ||
NET INTEREST INCOME | 6,295 | 5,991 | 12,286 | ||
Provision for loan losses | - | (275) | (275) | ||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 6,295 | 6,266 | 12,561 | ||
NON-INTEREST INCOME | |||||
Trust fees | 1,472 | 1,506 | 2,978 | ||
Net realized gains on investment securities available for sale | 78 | - | 78 | ||
Net realized gains on loans held for sale | 72 | 83 | 155 | ||
Service charges on deposit accounts | 584 | 704 | 1,288 | ||
Bank owned life insurance | 250 | 254 | 504 | ||
Other income | 692 | 633 | 1,325 | ||
Total Non-interest Income | 3,148 | 3,180 | 6,328 | ||
NON-INTEREST EXPENSE | |||||
Salaries and employee benefits | 4,751 | 4,680 | 9,431 | ||
Net occupancy expense | 668 | 592 | 1,260 | ||
Equipment expense | 639 | 622 | 1,261 | ||
Professional fees | 823 | 938 | 1,761 | ||
FDIC deposit insurance expense | 71 | 69 | 140 | ||
Amortization of core deposit intangibles | 216 | 216 | 432 | ||
Other expenses | 1,775 | 1,789 | 3,564 | ||
Total Non-interest Expense | 8,943 | 8,906 | 17,849 | ||
INCOME BEFORE INCOME TAXES | 500 | 540 | 1,040 | ||
Provision (benefit) for income taxes | (398) | 96 | (302) | ||
INCOME FROM CONTINUING OPERATIONS | $898 | $444 | $1,342 | ||
LOSS FROM DISCONTINUED OPERATIONS | (65) | (74) | (139) | ||
NET INCOME | $833 | $370 | $1,203 | ||
2004
YEAR | |||||||
INTEREST INCOME | 1QTR | 2QTR | TO DATE | ||||
Interest and fees on loans | $7,691 | $7,679 | $15,370 | ||||
Total investment portfolio | 5,228 | 4,943 | 10,171 | ||||
Total Interest Income | 12,919 | 12,622 | 25,541 | ||||
INTEREST EXPENSE | |||||||
Deposits | 2,543 | 2,529 | 5,072 | ||||
All other funding sources | 4,164 | 4,180 | 8,344 | ||||
Total Interest Expense | 6,707 | 6,709 | 13,416 | ||||
NET INTEREST INCOME | 6,212 | 5,913 | 12,125 | ||||
Provision for loan losses | 384 | 259 | 643 | ||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 5,828 | 5,654 | 11,482 | ||||
NON-INTEREST INCOME | |||||||
Trust fees | 1,267 | 1,347 | 2,614 | ||||
Net realized gains (losses) on investment securities available for sale | 937 | 111 | 1,048 | ||||
Net realized gains on loans held for sale | 40 | 115 | 155 | ||||
Service charges on deposit accounts | 730 | 716 | 1,446 | ||||
Bank owned life insurance | 275 | 276 | 551 | ||||
Other income | 690 | 796 | 1,486 | ||||
Total Non-interest Income | 3,939 | 3,361 | 7,300 | ||||
NON-INTEREST EXPENSE | |||||||
Salaries and employee benefits | 4,710 | 4,605 | 9,315 | ||||
Net occupancy expense | 712 | 653 | 1,365 | ||||
Equipment expense | 648 | 630 | 1,278 | ||||
Professional fees | 796 | 827 | 1,623 | ||||
FDIC deposit insurance expense | 72 | 71 | 143 | ||||
Amortization of core deposit intangibles | 358 | 358 | 716 | ||||
Other expenses | 1,888 | 1,693 | 3,581 | ||||
Total Non-interest Expense | 9,184 | 8,837 | 18,021 | ||||
INCOME BEFORE INCOME TAXES | 583 | 178 | 761 | ||||
Provision (benefit) for income taxes | 126 | (55) | 71 | ||||
INCOME FROM CONTINUING OPERATIONS | $457 | $233 | $690 | ||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | (231) | 21 | (210) | ||||
NET INCOME | $226 | $254 | $480 | ||||
AMERISERV FINANCIAL, INC.
Nasdaq NMS: ASRV
Average Balance Sheet Data (In thousands)
(All quarterly and 2005 data unaudited)
Note: 2004 data appears before 2005.
2004
2005
SIX | SIX | |||
2QTR | MONTHS | 2QTR | MONTHS | |
Interest earning assets: | ||||
Loans and loans held for sale, net of unearned income | $495,519 | $495,623 | $518,735 | $519,060 |
Deposits with banks | 5,117 | 4,845 | 524 | 922 |
Federal funds sold | 47 | 137 | - | - |
Total investment securities | 554,425 | 548,093 | 391,072 | 393,483 |
Total interest earning assets | 1,055,108 | 1,048,698 | 910,331 | 913,465 |
Non-interest earning assets: | ||||
Cash and due from banks | 21,221 | 21,667 | 20,290 | 21,216 |
Premises and equipment | 10,580 | 10,781 | 9,523 | 9,603 |
Assets of discontinued operations | 3,511 | 3,353 | 1,718 | 1,775 |
Other assets | 66,392 | 64,828 | 61,513 | 62,343 |
Allowance for loan losses | (11,258) | (11,358) | (9,841) | (9,854) |
Total assets | $1,145,554 | $1,137,969 | $993,534 | $998,548 |
Interest bearing liabilities: | ||||
Interest bearing deposits: | ||||
Interest bearing demand | $53,266 | $52,552 | $54,089 | $53,923 |
Savings | 106,627 | 105,928 | 99,410 | 99,509 |
Money market | 118,704 | 119,567 | 163,391 | 154,142 |
Other time | 279,128 | 276,684 | 288,499 | 282,791 |
Total interest bearing deposits | 557,725 | 554,731 | 605,389 | 590,365 |
Borrowings: | ||||
Federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings | 134,982 | 131,693 | 68,212 | 88,666 |
Advanced from Federal Home Loan Bank | 226,050 | 226,430 | 101,011 | 101,017 |
Guaranteed junior subordinated deferrable interest debentures | 35,567 | 35,567 | 20,285 | 20,285 |
Total interest bearing liabilities | 954,324 | 948,421 | 794,897 | 800,333 |
Non-interest bearing liabilities: | ||||
Demand deposits | 107,295 | 106,820 | 106,234 | 105,538 |
Liabilities of discontinued operations | 551 | 403 | 612 | 624 |
Other liabilities | 10,722 | 8,423 | 6,959 | 6,829 |
Stockholders’ equity | 72,662 | 73,902 | 84,832 | 85,224 |
Total liabilities and stockholders’ equity | $1,145,554 | $1,137,969 | $993,534 | $998,548 |