AmeriServ Financial Reports Earnings For The Second Quarter And First Six Months Of 2016

Dienstag, 19.07.2016 14:05 von

PR Newswire

JOHNSTOWN, Pa., July 19, 2016 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) returned to more typical profitability levels in the second quarter of 2016 by reporting net income available to common shareholders of $1,362,000, or $0.07 per diluted common share.  This earnings performance was consistent with the second quarter of 2015 where net income available to common shareholders totaled $1,369,000, or $0.07 per diluted common share.  For the six month period ended June 30, 2016, the Company reported net income available to common shareholders of $80,000, which rounds to $0.00 per diluted share.  This represented a decrease in earnings per share from the first half of 2015 where net income available to common shareholders totaled $2,685,000, or $0.14 per diluted common share, due primarily to an increased provision for loan losses that was recorded in the first quarter of 2016.  The following table highlights the Company's financial performance for both the three and six month periods ended June 30, 2016 and 2015:          



Second Quarter

2016

Second Quarter

2015



Six Months Ended

June 30, 2016

Six Months Ended

June 30, 2015













Net income

$1,362,000

$1,421,000



$95,000

$2,790,000

Net income available to

common shareholders

$1,362,000

$1,369,000



$80,000

$2,685,000

Diluted earnings per share

$ 0.07

$ 0.07



$ 0.00

$0.14

 

Jeffrey A. Stopko, President and Chief Executive Officer, commented on the 2016 second quarter financial results: "I was pleased with the solid growth in both loan and deposits that AmeriServ Financial achieved in the second quarter as customers are responding positively to our banking for life focus.  Additionally, our previously announced expense reduction measures are taking hold as the second quarter 2016 non-interest expense is at its lowest level since the third quarter of 2011.  This expense discipline is necessary as we continue to operate in a challenging interest rate environment that pressures our net interest margin.  Finally, our asset quality continues to be very strong, with non-performing assets amounting to only 0.25% of total loans at June 30, 2016."

The Company's net interest income in the second quarter of 2016 decreased by $314,000, or 3.6%, from the prior year's second quarter and for the first six months of 2016 decreased by $690,000, or 3.9%, when compared to the first six months of 2015.  The Company's net interest margin of 3.27% for the first six months of 2016 was 24 basis points lower than the net interest margin of 3.51% for the first half of 2015.  There was a similar net interest margin decline of 22 basis points between the second quarter of 2016 and the prior year's second quarter.  The reduction in net interest income is a direct result of net interest margin compression that is prevalent in the banking industry as well as additional interest expense that is associated with the Company's late fourth quarter 2015 issuance of subordinated debt.  The prolonged low interest rate environment  that  exists  in the economy,  along with intense market competition for loans, more than offset the Company continuing to grow earning assets and control its cost of funds through disciplined deposit pricing.  Specifically, the earning asset growth occurred in the loan portfolio as total loans averaged $885 million in the first half of  2016  which is $35.5  million, or  4.2%,  higher  than the  $849  million average  for the first half of 2015.  This loan growth reflects the successful results of the Company's business development efforts, with an emphasis on generating commercial loans and owner occupied commercial real estate loans particularly through its loan production offices.  Despite this meaningful loan growth experienced between years, loan interest income decreased by $62,000, or 0.3%.  Interest income on investments showed some growth in the second quarter of 2016 but is down for the six month period as the Company benefited from a special dividend from the FHLB of Pittsburgh in the first half of 2015.  Overall, total interest income decreased by $121,000, or 0.6%, in the first half of 2016. 

Total interest expense for the first half of 2016 increased by $569,000, or 17.8%, due to higher levels of both borrowings and deposit interest expense.  The Company experienced a $330,000 increase in the interest cost for borrowings in the first half of 2016 with $258,000 of this increase attributable to the Company's recent subordinated debt issuance.  Specifically, the Company issued $7.65 million of subordinated debt which has a 6.50% fixed interest rate in late December 2015.  The proceeds from the subordinated debt issuance, along with other cash on hand, was used to redeem all $21 million of our outstanding SBLF preferred stock on January 27, 2016.  The remainder of the increase in borrowings interest expense was due to a greater utilization of FHLB term advances to extend borrowings for interest rate risk management purposes. 

The Company experienced significant growth in deposits between years which is a reflection of the loyalty and stability of our core deposit base that provides a strong foundation from which this growth builds.  Management's ability to acquire new core deposit funding from outside of our traditional market areas as well as our ongoing efforts to cross sell new loan customers into deposit products were the primary reasons for this growth.  Specifically, total deposits averaged $933 million for the first half of 2016 which is $38.9 million, or 4.4%, higher than the $894 million average for the first half of 2015.  The Company is also pleased that a meaningful portion of this deposit growth occurred in non-interest bearing demand deposit accounts.  Deposit interest expense through six months of 2016 increased by $239,000, or 10.2%, due to the higher balance of deposits along with certain money market accounts repricing upward after the December 2015 Federal Reserve fed funds interest rate increase.

The Company recorded a $250,000 provision for loan losses in the second quarter of 2016 compared to a $200,000 provision for loan losses in the second quarter of 2015.  For the six month period in 2016, the Company recorded a $3,350,000 provision for loan losses compared to a $450,000 provision for loan losses in the first six months of 2015.  The substantially higher than typical provision and net loan charge-offs recorded in the first quarter of 2016 were necessary to resolve the Company's only meaningful direct loan exposure to the energy industry, the specifics of which were discussed in detail in the Company's first quarter results.  The provision recorded in the second quarter of 2016 was more typical of what is required to support the continuing growth of the loan portfolio and cover net loan charge-offs.  The Company experienced net loan charge-offs of $24,000, or 0.01% of total loans, in the second quarter of 2016, compared to net loan charge-offs of $172,000, or 0.08% of total loans, in the second quarter of 2015.  For the six month periods, there were net loan charge-offs of $3.5 million, or 0.80%, of total loans, in first half of 2016, compared to net loan charge-offs of $356,000, or 0.08% of total loans,  in 2015.  Overall, the Company continued to maintain outstanding asset quality in the first half of 2016.  At June 30, 2016, non-performing assets totaled $2.2 million, or only 0.25% of total loans.  In summary, the allowance for loan losses  provided  a  strong  437%  coverage  of  non-performing  loans,  and  1.09%  of  total  loans, at June 30, 2016, compared to 158% coverage of non-performing loans, and 1.13% of total loans, at December 31, 2015.

Total non-interest income in the second quarter of 2016 increased by $50,000, or 1.4%, from the prior year's second quarter, and for the first six months of 2016 decreased by $225,000, or 3.0%, when compared to the first six months of 2015.  For the second quarter, the increase was primarily due to a higher level of other income by $107,000 and gains from investment security sales transactions by $32,000, both of which more than offset decreased revenue from mortgage loan sales by $40,000 and reduced fees from service charges on deposit accounts by $25,000.  For the six month period, a greater recognition of gains from investment security sale transactions by $89,000 along with a higher level of other income by $92,000 was more than offset by lower levels of revenue from bank owned life insurance by $198,000 after the Company received a death claim in 2015 and no such claim occurred in 2016.  Also, decreased refinance activity and a reduced level of new mortgage loan originations in the first six months of 2016 resulted in lower revenue from mortgage loan sales by $124,000 and reduced fees from residential mortgage lending activity by $63,000.  Finally despite the volatility in the equity and bond markets in 2016, trust and investment advisory fees were relatively consistent increasing modestly by $8,000 for the six month period.

Total non-interest expense in the second quarter of 2016 decreased by $200,000, or 2.0%, from the prior year's second quarter and for the first six months of 2016 increased by $101,000, or 0.5%, when compared to the first six months of 2015.  As noted in our first quarter 2016 earnings release, the non-recurring costs for legal and accounting services that were necessary to resolve a trust operations trading error are the reasons for the negative comparison for the six month period.  With those particular expenses now largely behind us, the second quarter of 2016 non-interest expense comparison to 2015 is favorable and reflective of the Company's ongoing focus and successful efforts to reduce and control non-interest expenses.  Professional fees continue to compare unfavorably by increasing $171,000, or 6.9%, for the six month time period, but compare favorably by decreasing $83,000, or 6.5%, for the second quarter.  Our cost control efforts are also clearly evident, both, for the quarter and six month time period comparisons as occupancy and equipment related expenses are lower by $99,000, or 8.3%, for the second quarter and lower by $233,000, or 9.3%, for the six months.  Salaries and employee benefits were down by $76,000, or 1.3%, in the second quarter but are up slightly by $17,000, or 0.1%, in the first half of 2016.  The favorable comparison between the second quarter of 2016 and the second quarter of 2015 is due to the previously disclosed branch consolidation in the State College Market and reduction of staff in the executive office.  Finally, the Company recorded an income tax expense of $28,000, or an effective tax rate of 22.8%, in the first six months of 2016 which is lower when compared to the income tax expense of $1,249,000, or an effective tax rate of 30.9%, for the first six months of 2015.  The lower income tax expense and effective tax rate is due to the first quarter 2016 loss recognized by the Company.  However, as described throughout this release, we are pleased to report that the actions taken for an immediate improvement in the second quarter of 2016 to a more typical and expected profitability level have proven successful.  We anticipate this to continue in the second half of the year.

The Company had total assets of $1.1 billion, shareholders' equity of $99.2 million, a book value of $5.25 per common share and a tangible book value of $4.62 per common share at June 30, 2016.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status and had a tangible common equity to tangible assets ratio of 7.72% at June 30, 2016. 

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: ASRV

SUPPLEMENTAL FINANCIAL PERFORMANCE DATA



June 30, 2016



(Dollars In Thousands, Except Per Share And Ratio Data)

(Unaudited)



















2016











1QTR

2QTR

YEAR











TO DATE



PERFORMANCE DATA FOR THE PERIOD:











Net income 



(1,267)

1,362

95



Net income available to common shareholders



(1,282)

1,362

80















PERFORMANCE PERCENTAGES (annualized):











Return on average assets



(0.45%)

0.48%

0.02%



Return on average equity



(4.86)

5.60

2.66



Net interest margin



3.30

3.23

3.27



Net charge-offs as a percentage of average loans



1.60

0.01

0.80



Loan loss provision as a percentage of average loans



1.42

0.11

0.76



Efficiency ratio



89.24

82.05

85.61















PER COMMON SHARE:











Net income:











Basic



(0.07)

0.07

-



Average number of common shares outstanding



18,884

18,897

18,890



Diluted



(0.07)

0.07

-



Average number of common shares outstanding



18,884

18,948

18,943



Cash dividends declared



0.01

0.01

0.02



















2015











1QTR

2QTR

YEAR











TO DATE



PERFORMANCE DATA FOR THE PERIOD:











Net income 



1,369

1,421

2,790



Net income available to common shareholders



1,316

1,369

2,685















PERFORMANCE PERCENTAGES (annualized):











Return on average assets



0.51%

0.52%

0.51%



Return on average equity



4.80

4.88

4.84



Net interest margin



3.57

3.45

3.51



Net charge-offs as a percentage of average loans



0.09

0.08

0.08



Loan loss provision as a percentage of average loans



0.12

0.09

0.11



Efficiency ratio



82.29

81.93

82.11















PER COMMON SHARE:











Net income:











Basic



0.07

0.07

0.14



Average number of common shares outstanding



18,851

18,859

18,855



Diluted



0.07

0.07

0.14



Average number of common shares outstanding



18,909

18,941

18,923



Cash dividends declared



0.01

0.01

0.02



 



AMERISERV FINANCIAL, INC.

(Dollars in thousands, except per share, statistical, and ratio data)

(Unaudited)

















2016











1QTR

2QTR





FINANCIAL CONDITION DATA AT PERIOD END:









Assets



1,121,701

1,142,492





Short-term investments/overnight funds



5,556

6,836





Investment securities



139,000

145,753





Loans and loans held for sale



882,410

895,513





Allowance for loan losses



9,520

9,746





Goodwill 



11,944

11,944





Deposits



906,773

940,931





FHLB borrowings



88,952

72,617





Subordinated debt, net



7,424

7,430





Shareholders' equity



97,589

99,232





Non-performing assets



3,007

2,230





Tangible common equity ratio



7.72

7.72





PER COMMON SHARE:











Book value (A)



5.16

5.25





Tangible book value (A)



4.53

4.62





Market value



2.99

3.02





Trust assets - fair market value (B)



1,974,180

1,982,868

















STATISTICAL DATA AT PERIOD END:











Full-time equivalent employees



317

311





Branch locations



16

16





Common shares outstanding



18,894,561

18,896,876

































2015











1QTR

2QTR

3QTR

4QTR

FINANCIAL CONDITION DATA AT PERIOD END:









Assets



1,103,416

1,112,934

1,110,843

1,148,922

Short-term investments/overnight funds



10,127

9,843

14,966

25,067

Investment securities



142,010

142,448

135,013

140,886

Loans and loans held for sale



853,972

866,243

868,213

883,987

Allowance for loan losses



9,689

9,717

9,772

9,921

Goodwill 



11,944

11,944

11,944

11,944

Deposits



892,676

862,902

869,899

903,294

FHLB borrowings



71,219

109,430

100,988

96,748

Subordinated debt, net



-

-

-

7,418

Shareholders' equity



116,328

117,305

119,408

118,973

Non-performing assets



3,046

2,565

2,294

6,297

Tangible common equity ratio



7.64

7.66

7.87

7.57

PER COMMON SHARE:











Book value (A)



5.06

5.11

5.21

5.19

Tangible book value (A)



4.42

4.47

4.58

4.56

Market value



2.98

3.33

3.24

3.20

Trust assets - fair market value (B)



2,033,573

2,012,358

1,935,495

1,974,882













STATISTICAL DATA AT PERIOD END:











Full-time equivalent employees



318

318

318

318

Branch locations



17

17

17

17

Common shares outstanding



18,855,021

18,861,811

18,870,811

18,870,811













Note:

(A)  For 2015, Preferred stock of $21 million received through the Small Business Lending Fund is excluded from the book value per common share and  tangible book value per common share calculations.  The Company repaid the US Treasury for the SBLF funds on January 27, 2016.

(B)  Not recognized on the consolidated balance sheets.

 

 

AMERISERV FINANCIAL, INC.





CONSOLIDATED STATEMENT OF INCOME



(Dollars in thousands)





(Unaudited)























2016













1QTR

2QTR

YEAR













TO DATE





INTEREST INCOME



























Interest and fees on loans



9,465

9,409

18,874





Interest on investments



957

980

1,937





Total Interest Income



10,422

10,389

20,811



















INTEREST EXPENSE













Deposits



1,254

1,330

2,584





All borrowings



610

573

1,183





Total Interest Expense



1,864

1,903

3,767



















NET INTEREST INCOME



8,558

8,486

17,044





Provision for loan losses



3,100

250

3,350



















NET INTEREST INCOME AFTER PROVISION













FOR LOAN LOSSES



5,458

8,236

13,694



















NON-INTEREST INCOME













Trust and investment advisory fees



2,075

2,124

4,199





Service charges on deposit accounts



415

404

819





Net realized gains on loans held for sale



107

185

292





Mortgage related fees



63

98

161





Net realized gains on investment securities 



57

60

117





Bank owned life insurance



167

169

336





Other income



553

702

1,255





Total Non-Interest Income



3,437

3,742

7,179



















NON-INTEREST EXPENSE













Salaries and employee benefits



6,166

5,868

12,034





Net occupancy expense



737

690

1,427





Equipment expense



436

409

845





Professional fees



1,465

1,192

2,657





FDIC deposit insurance expense



179

188

367





Other expenses



1,728

1,692

3,420





Total Non-Interest Expense



10,711

10,039

20,750



















PRETAX INCOME 



(1,816)

1,939

123





Income tax expense 



(549)

577

28





NET INCOME 



(1,267)

1,362

95





Preferred stock dividends 



15

-

15





NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

(1,282)

1,362

80

































































2015













1QTR

2QTR

YEAR













TO DATE





INTEREST INCOME



























Interest and fees on loans



9,456

9,480

18,936





Interest on investments



1,067

929

1,996





Total Interest Income



10,523

10,409

20,932



















INTEREST EXPENSE













Deposits



1,174

1,171

2,345





All borrowings



415

438

853





Total Interest Expense



1,589

1,609

3,198



















NET INTEREST INCOME



8,934

8,800

17,734





Provision for loan losses



250

200

450



















NET INTEREST INCOME AFTER PROVISION 













FOR LOAN LOSSES



8,684

8,600

17,284



















NON-INTEREST INCOME













Trust and investment advisory fees



2,056

2,135

4,191





Service charges on deposit accounts



419

429

848





Net realized gains on loans held for sale



191

225

416





Mortgage related fees



115

109

224





Net realized gains on investment securities 



-

28

28





Bank owned life insurance



363

171

534





Other income



568

595

1,163





Total Non-Interest Income



3,712

3,692

7,404



















NON-INTEREST EXPENSE













Salaries and employee benefits



6,073

5,944

12,017





Net occupancy expense



841

718

1,559





Equipment expense



466

480

946





Professional fees



1,211

1,275

2,486





FDIC deposit insurance expense



167

164

331





Other expenses



1,652

1,658

3,310





Total Non-Interest Expense



10,410

10,239

20,649



















PRETAX INCOME 



1,986

2,053

4,039





Income tax expense 



617

632

1,249





NET INCOME 



1,369

1,421

2,790





Preferred stock dividends 



53

52

105





NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

1,316

1,369

2,685





 

 

AMERISERV FINANCIAL, INC.

AVERAGE BALANCE SHEET DATA

(Dollars in thousands)

        (Unaudited)















































2016





2015





















2QTR

SIX



2QTR

SIX







MONTHS





MONTHS

Interest earning assets:













Loans and loans held for sale, net of unearned income

888,839

884,951



857,294

849,453

Short-term investment in money market funds



10,208

9,082



9,108

10,593

Deposits with banks



1,065

2,275



1,235

1,235

Total investment securities



144,808

143,484



146,434

147,043

Total interest earning assets



1,044,920

1,039,792



1,014,071

1,008,324















Non-interest earning assets:













Cash and due from banks



19,235

18,987



18,067

17,680

Premises and equipment



11,969

12,030



12,725

12,839

Other assets 



68,640

68,195



69,880

70,091

Allowance for loan losses



(9,652)

(9,769)



(9,744)

(9,709)















Total assets



1,135,112

1,129,235



1,104,999

1,099,225















Interest bearing liabilities:













Interest bearing deposits:













Interest bearing demand



108,615

104,954



101,586

97,256

Savings



96,551

95,927



96,694

94,592

Money market



275,888

270,161



231,814

232,178

Other time



290,482

279,143



291,270

298,660

Total interest bearing deposits



771,536

750,185



721,364

722,686

Borrowings:













Federal funds purchased and other short-term borrowings

3,682

16,565



27,771

20,628

Advances from Federal Home Loan Bank



49,081

49,108



45,933

44,757

Guaranteed junior subordinated deferrable interest debentures

13,085

13,085



13,085

13,085

Subordinated debt



7,650

7,650



-

-

Total interest bearing liabilities



845,034

836,593



808,153

801,156















Non-interest bearing liabilities:













  Demand deposits



183,547

182,322



169,250

170,904

  Other liabilities 



8,752

9,061



10,741

10,897

Shareholders' equity



97,779

101,259



116,855

116,268

Total liabilities and shareholders' equity



1,135,112

1,129,235



1,104,999

1,099,225

 

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SOURCE AmeriServ Financial, Inc.

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