AMERISERV FINANCIAL, INC. JOHNSTOWN, Pa., Jan. 20, 2015 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported fourth quarter 2014 net income available to common shareholders of $697,000, or $0.04 per diluted common share. This compares to net income available to common shareholders of $1,789,000, or $0.09 per diluted common share, reported for the fourth quarter of 2013. For the year ended December 31, 2014, the Company reported net income available to common shareholders of $2,813,000, or $0.15 per diluted share. This represented a 42.3% decline in earnings per share from the full year 2013 where net income available to common shareholders totaled $4,984,000 or $0.26 per diluted common share. The following table highlights the Company's financial performance for both quarters and years ended December 31, 2014 and 2013:
Fourth Quarter Fourth Quarter Year Ended Year Ended
2014 2013
December 31, 2014 December 31, 2013
----------------- -----------------
Net income $749,000 $1,841,000 $3,023,000 $5,193,000
---------- -------- ---------- ---------- ----------
Net income available to
common shareholders
$697,000 $1,789,000 $2,813,000 $4,984,000
--- -------- ---------- ---------- ----------
Diluted earnings per share $0.04 $0.09 $0.15 $0.26
-------------------------- ----- ----- ----- -----
Jeffrey A. Stopko, Interim President and Chief Executive Officer, commented on the fourth quarter 2014 financial results: "Our fourth quarter 2014 results included a $400,000 pension charge related to 25 employees who elected to participate in an early retirement incentive program. Since the majority of these retired employees will not be replaced, the Company expects to achieve meaningful salary and benefits expense savings in 2015. I was also pleased that we were able to grow net interest income by $1.2 million in 2014 due to continued growth of our loan portfolio while maintaining excellent asset quality. Overall, AmeriServ Financial enters 2015 with a strong balance sheet that is well positioned for future growth."
The Company's net interest income in the fourth quarter of 2014 increased by $134,000 from the prior year's fourth quarter and for the full year 2014 increased by $1,183,000, or 3.6%, when compared to the full year 2013. The Company's net interest margin of 3.52% for the full year 2014 was four basis points lower than the net interest margin of 3.56% for the full year 2013. The Company has been able to mitigate this net interest margin pressure and to increase net interest income by both growing its earning assets and reducing its cost of funds. Specifically, the earning asset growth has occurred in the loan portfolio as total loans averaged a record $805 million for the full year 2014 which is $58 million, or 7.8%, higher than the $746 million average for the 2013 year. This loan growth reflects the successful results of the Company's more intensive sales calling efforts, with an emphasis on generating commercial loans and owner occupied commercial real estate loans, which qualify as Small Business Lending Fund (SBLF) loans. As a result of this growth in SBLF qualified loans, the Company has locked in the lowest preferred dividend rate available under the program of 1% until the first quarter of 2016. Interest income in 2014 has also benefitted from reduced premium amortization on mortgage backed securities due to slower mortgage prepayment speeds. Overall, total interest income has increased by $1,098,000 in 2014. Total interest expense for the 2014 year declined by $85,000 from the full year 2013 due to the Company's proactive efforts to reduce deposit costs. Even with this reduction in deposit costs, the Company still experienced growth in deposits which reflects the loyalty of our core deposit base and ongoing efforts to cross sell new loan customers into deposit products. Specifically, total deposits averaged a record level of $872 million for the full year 2014 which is $25 million, or 3.0%, higher than the $847 million average for the full year 2013. This decreased interest expense for deposits has been partially offset by a $190,000 increase in the interest cost for borrowings as the Company has utilized more FHLB term advances to extend borrowings and provide protection against rising interest rates.
The Company recorded a $375,000 provision for loan losses in the fourth quarter of 2014 compared to a negative provision for loan losses of $1.0 million recognized in the fourth quarter of 2013. This represents an unfavorable swing of $1,375,000 between periods and is the largest factor contributing to the lower fourth quarter earnings in 2014. The positive provision in the fourth quarter of 2014 was needed to cover net loan charge-offs and support the continuing growth of the loan portfolio. The large negative provision in the fourth quarter of 2013 resulted from the release of reserves due to the pay-off of a large classified loan and a continued reduction in the level of criticized loans and non-performing assets. For the full year 2014, the Company also recorded a $375,000 provision for loan losses compared to a $1.1 million negative provision for the 2013 year. The Company experienced net loan charge-offs of $334,000, or 0.16% of total loans, in the fourth quarter of 2014 compared to net loan charge-offs of $80,000, or 0.04% of total loans, in the fourth quarter of 2013. However, for the full year 2014 actual credit losses realized through net charge-offs totaled $856,000, or 0.11% of total loans, which represents a decrease from the 2013 year when net charge-offs totaled $1.4 million, or 0.18% of total loans. Overall, for the 2014 year, the Company continued to maintain outstanding asset quality. At December 31, 2014, non-performing assets totaled $2.9 million, or only 0.35% of total loans, which represents the first time that our non-performing assets have been under $3 million since 2007. When determining the provision for loan losses, the Company considers a number of factors, some of which include periodic credit reviews, non-performing assets, loan delinquency and charge-off trends, concentrations of credit, loan volume trends and broader local and national economic trends. In summary, the allowance for loan losses provided a strong 400% coverage of non-performing loans, and 1.16% of total loans, at December 31, 2014, compared to 327% coverage of non-performing loans, and 1.29% of total loans, at December 31, 2013.
Total non-interest income in the fourth quarter of 2014 decreased by $307,000 from the prior year's fourth quarter and for the full year 2014 decreased by $1.4 million, or 9.0%, when compared to the full year 2013. The primary factors causing the fourth quarter 2014 decline were a $93,000 decrease in deposit service charges and a $61,000 decrease in trust and investment advisory fees. The decline in deposit service charges was due to fewer overdraft charges and account analysis fees as customers have generally maintained higher balances in their checking accounts in 2014. The decline in trust and investment advisory fees was caused by the loss of certain clients at our investment advisory subsidiary due to the departure of the former chief executive officer of that business line earlier in 2014. The largest factor contributing to the $1.4 million decline in non-interest income for the full year 2014 was reduced revenue from residential mortgage banking activities due to lower refinance activity as a result of higher mortgage rates and reduced purchase activity, particularly in the first quarter of 2014. This caused gains realized on residential mortgage loan sales into the secondary market and other mortgage related fees to decrease by a total of $525,000 for the 2014 year. Other factors contributing to the non-interest income decline for the full year 2014 included a $249,000 decrease in bank owned life insurance revenue due largely to the receipt of a death claim in 2013, a $226,000 reduction in financial services commission revenue, and a net unfavorable swing of $140,000 on other real estate owned property transactions.
Total non-interest expense in the fourth quarter of 2014 increased by $24,000 from the prior year's fourth quarter and for the full year 2014 increased by $1.1 million, or 2.7%, when compared to the full year 2013. The item responsible for the fourth quarter 2014 increase was a $400,000 pension charge related to 25 employees who elected to participate in an early retirement incentive program. Without this charge, non-interest expense would have declined in the fourth quarter of 2014 as savings from our previously announced profitability improvement program are beginning to take hold. The largest factors contributing to the $1.1 million increase in non-interest expense for the full year 2014 included a $669,000 goodwill impairment charge and a $1.1 million increase in professional fees. As previously disclosed, the Company recorded the goodwill impairment charge in the third quarter of 2014 as a loss of clients caused a reduction in the projected earnings capacity of our investment advisory subsidiary. The increased professional fees in 2014 were due to higher legal costs related to litigation against the former CEO of our investment advisory subsidiary, the consulting costs associated with our profitability improvement project and new recurring costs related to outsourcing our computer operations and statement processing to a third party vendor. The overall cost savings benefit from outsourcing these services is captured in lower personnel costs in these departments and reduced software expense, which is a key factor contributing to the decline in other expenses of $541,000 for the full year 2014. Finally, the Company recorded an income tax expense of $1.6 million, or an effective tax rate of 34.6%, for the 2014 year compared to income tax expense of $2.3 million, or an effective tax rate of 30.6%, for the 2013 year. The higher effective tax rate in 2014 was primarily due to the non-deductibility of the goodwill impairment charge for tax purposes.
The Company had total assets of $1.09 billion, shareholders' equity of $114 million, a book value of $4.97 per common share and a tangible book value of $4.33 per common share at December 31, 2014. The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status with a risk based capital ratio of 14.80%, an asset leverage ratio of 11.34% and a tangible common equity to tangible assets ratio of 7.56% at December 31, 2014.
QUARTERLY COMMON STOCK DIVIDEND
The Company also announced that its Board of Directors declared a $0.01 per share quarterly common stock cash dividend. The cash dividend is payable February 17, 2015 to shareholders of record on February 2, 2015. This cash dividend represents a 1.3% annualized yield using the January 13, 2015 closing common stock price of $3.02. For the full year 2014, the Company's dividend payout ratio was 26.7%.
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
December 31, 2014
(Dollars in thousands, except per share and ratio
data)
(Unaudited)
2014
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE PERIOD:
Net income 930 979 365 749 3,023
Net income available to common shareholders 877 927 312 697 2,813
PERFORMANCE PERCENTAGES (annualized):
Return on average assets 0.36% 0.37% 0.14% 0.28% 0.29%
Return on average equity 3.30 3.41 1.25 2.54 2.61
Net interest margin 3.56 3.47 3.42 3.49 3.52
Net charge-offs (recoveries) as a percentage of average loans - (0.02) 0.28 0.16 0.11
Loan loss provision (credit) as a percentage of average loans - - - 0.18 0.05
Efficiency ratio 89.02 88.29 93.68 87.58 89.63
PER COMMON SHARE:
Net income:
Basic 0.05 0.05 0.02 0.04 0.15
Average number of common shares outstanding 18,786 18,795 18,795 18,795 18,793
Diluted 0.05 0.05 0.02 0.04 0.15
Average number of common shares outstanding 18,904 18,936 18,908 18,887 18,908
Cash dividends declared 0.01 0.01 0.01 0.01 0.04
2013
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
PERFORMANCE DATA FOR THE PERIOD:
Net income 1,056 1,070 1,226 1,841 5,193
Net income available to common shareholders 1,004 1,018 1,173 1,789 4,984
PERFORMANCE PERCENTAGES (annualized):
Return on average assets 0.43% 0.43% 0.47% 0.70% 0.51.%
Return on average equity 3.86 3.86 4.44 6.57 4.69
Net interest margin 3.59 3.50 3.46 3.57 3.56
Net charge-offs (recoveries) as a percentage of average loans 0.76 (0.02) (0.02) 0.04 0.18
Loan loss provision (credit) as a percentage of average loans (0.14) 0.08 - (0.51) (0.15)
Efficiency ratio 89.52 86.28 85.41 86.17 86.83
PER COMMON SHARE:
Net income:
Basic 0.05 0.05 0.06 0.10 0.26
Average number of common shares outstanding 19,168 19,039 18,784 18,784 18,942
Diluted 0.05 0.05 0.06 0.09 0.26
Average number of common shares outstanding 19,257 19,128 18,878 18,879 19,034
Cash dividends declared - 0.01 0.01 0.01 0.03
AMERISERV FINANCIAL, INC.
(Dollars in thousands, except per share, statistical,
and ratio data)
(Unaudited)
2014
1QTR 2QTR 3QTR 4QTR
FINANCIAL CONDITION DATA AT PERIOD END:
Assets 1,051,108 1,063,717 1,070,431 1,089,263
Short-term investments/overnight funds 9,019 8,013 6,662 9,092
Investment securities 154,754 153,603 150,471 146,950
Loans and loans held for sale 789,620 804,675 817,887 832,131
Allowance for loan losses 10,109 10,150 9,582 9,623
Goodwill 12,613 12,613 11,944 11,944
Deposits 875,333 873,908 872,170 869,881
FHLB borrowings 40,483 52,677 63,438 80,880
Shareholders' equity 114,590 115,946 116,146 114,407
Non-performing assets 3,274 4,469 3,897 2,917
Asset leverage ratio 11.50% 11.56% 11.44% 11.34%
Tangible common equity ratio 7.80 7.83 7.86 7.56
PER COMMON SHARE:
Book value (A) 4.97 5.05 5.06 4.97
Tangible book value (A) 4.31 4.38 4.43 4.33
Market value 3.85 3.48 3.30 3.13
Trust assets - fair market value (B) 1,693,663 1,778,522 1,774,988 1,784,278
STATISTICAL DATA AT PERIOD END:
Full-time equivalent employees 347 345 341 314
Branch locations 18 17 17 17
Common shares outstanding 18,793,388 18,794,888 18,794,888 18,794,888
2013
1QTR 2QTR 3QTR 4QTR
FINANCIAL CONDITION DATA AT PERIOD END:
Assets 999,718 1,025,084 1,038,144 1,056,036
Short-term investments/overnight funds 23,995 9,291 8,646 9,778
Investment securities 162,866 168,284 167,110 160,165
Loans and loans held for sale 717,852 751,522 763,681 786,748
Allowance for loan losses 10,960 11,145 11,183 10,104
Goodwill 12,613 12,613 12,613 12,613
Deposits 847,189 840,272 852,211 854,522
FHLB borrowings 16,000 50,292 52,096 66,555
Shareholders' equity 111,445 109,282 110,370 113,307
Non-performing assets 4,387 5,027 5,037 4,109
Asset leverage ratio 11.58% 11.52% 11.44% 11.45%
Tangible common equity ratio 7.88 7.47 7.48 7.64
PER COMMON SHARE:
Book value (A) 4.72 4.70 4.76 4.91
Tangible book value (A) 4.06 4.03 4.09 4.24
Market value 3.13 2.74 3.15 3.03
Trust assets - fair market value (B) 1,566,236 1,562,366 1,599,402 1,668,654
STATISTICAL DATA AT PERIOD END:
Full-time equivalent employees 357 360 358 352
Branch locations 18 18 18 18
Common shares outstanding 19,168,188 18,784,188 18,784,188 18,784,188
Note:
(A) 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.
(B) Not recognized on the consolidated balance sheets.
AMERISERV FINANCIAL, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands)
(Unaudited)
2014
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on loans 9,032 8,939 9,019 9,352 36,342
Interest on investments 1,063 1,044 1,000 992 4,099
----- ----- ----- --- -----
Total Interest Income 10,095 9,983 10,019 10,344 40,441
INTEREST EXPENSE
Deposits 1,211 1,240 1,237 1,201 4,889
All borrowings 359 359 379 411 1,508
--- --- --- --- -----
Total Interest Expense 1,570 1,599 1,616 1,612 6,397
----- ----- ----- ----- -----
NET INTEREST INCOME 8,525 8,384 8,403 8,732 34,044
Provision (credit) for loan losses - - - 375 375
--- --- --- --- ---
NET INTEREST INCOME AFTER PROVISION (CREDIT)
FOR LOAN LOSSES 8,525 8,384 8,403 8,357 33,669
NON-INTEREST INCOME
Trust and investment advisory fees 2,032 1,948 1,807 1,978 7,765
Service charges on deposit accounts 478 501 507 471 1,957
Net realized gains on loans held for sale 101 171 275 201 748
Mortgage related fees 117 160 190 123 590
Net realized gains on investment securities 57 120 - - 177
Bank owned life insurance 187 185 188 189 749
Other income 560 553 626 598 2,337
--- --- --- --- -----
Total Non-Interest Income 3,532 3,638 3,593 3,560 14,323
NON-INTEREST EXPENSE
Salaries and employee benefits 6,314 6,107 6,139 6,400 24,960
Net occupancy expense 839 717 709 699 2,964
Equipment expense 470 494 468 460 1,892
Professional fees 1,308 1,464 1,360 1,277 5,409
FDIC deposit insurance expense 160 154 159 163 636
Goodwill impairment charge - - 669 - 669
Other expenses 1,647 1,684 1,739 1,771 6,841
----- ----- ----- ----- -----
Total Non-Interest Expense 10,738 10,620 11,243 10,770 43,371
PRETAX INCOME 1,319 1,402 753 1,147 4,621
Income tax expense 389 423 388 398 1,598
--- --- --- --- -----
NET INCOME 930 979 365 749 3,023
Preferred stock dividends 53 52 53 52 210
--- --- --- --- ---
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 877 927 312 697 2,813
--- --- --- --- -----
2013
1QTR 2QTR 3QTR 4QTR YEAR
TO DATE
INTEREST INCOME
Interest and fees on loans 8,628 8,590 8,765 9,137 35,120
Interest on investments 1,074 1,037 1,046 1,066 4,223
----- ----- ----- ----- -----
Total Interest Income 9,702 9,627 9,811 10,203 39,343
INTEREST EXPENSE
Deposits 1,350 1,288 1,274 1,252 5,164
All borrowings 310 318 337 353 1,318
--- --- --- --- -----
Total Interest Expense 1,660 1,606 1,611 1,605 6,482
----- ----- ----- ----- -----
NET INTEREST INCOME 8,042 8,021 8,200 8,598 32,861
Provision (credit) for loan losses (250) 150 - (1,000) (1,100)
---- --- --- ------ ------
NET INTEREST INCOME AFTER PROVISION (CREDIT)
FOR LOAN LOSSES 8,292 7,871 8,200 9,598 33,961
NON-INTEREST INCOME
Trust and investment advisory fees 1,881 1,999 1,893 2,039 7,812
Service charges on deposit accounts 511 538 560 564 2,173
Net realized gains on loans held for sale 386 241 285 177 1,089
Mortgage related fees 201 228 212 133 774
Net realized gains on investment securities 71 - 66 67 204
Bank owned life insurance 201 388 204 205 998
Other income 565 681 766 682 2,694
--- --- --- --- -----
Total Non-Interest Income 3,816 4,075 3,986 3,867 15,744
NON-INTEREST EXPENSE
Salaries and employee benefits 6,331 6,176 6,251 6,357 25,115
Net occupancy expense 773 751 694 719 2,937
Equipment expense 455 455 429 512 1,851
Professional fees 1,035 1,150 1,034 1,108 4,327
FDIC deposit insurance expense 134 151 152 174 611
Other expenses 1,894 1,759 1,853 1,876 7,382
----- ----- ----- ----- -----
Total Non-Interest Expense 10,622 10,442 10,413 10,746 42,223
PRETAX INCOME 1,486 1,504 1,773 2,719 7,482
Income tax expense 430 434 547 878 2,289
--- --- --- --- -----
NET INCOME 1,056 1,070 1,226 1,841 5,193
Preferred stock dividends 52 52 53 52 209
--- --- --- --- ---
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 1,004 1,018 1,173 1,789 4,984
----- ----- ----- ----- -----
AMERISERV FINANCIAL, INC.
AVERAGE BALANCE SHEET DATA
(Dollars in thousands)
(Unaudited)
2014 2013
TWELVE TWELVE
4QTR MONTHS 4QTR MONTHS
Interest earning assets:
Loans and loans held for sale, net of unearned income 827,613 804,721 775,273 746,490
Deposits with banks 8,186 7,227 6,504 8,027
Short-term investment in money market funds 1,235 1,243 2,709 3,260
Federal funds sold - - - 79
Total investment securities 153,000 157,238 168,084 168,521
------- ------- ------- -------
Total interest earning assets 990,034 970,429 952,570 926,377
Non-interest earning assets:
Cash and due from banks 16,254 16,919 17,022 16,795
Premises and equipment 13,310 13,282 13,389 12,839
Other assets 68,787 69,423 71,386 75,360
Allowance for loan losses (9,501) (9,951) (11,020) (11,434)
------ ------ ------- -------
Total assets 1,078,884 1,060,102 1,043,347 1,019,937
========= ========= ========= =========
Interest bearing liabilities:
Interest bearing deposits:
Interest bearing demand 103,500 97,641 83,582 75,126
Savings 89,274 89,554 86,892 87,819
Money market 225,907 228,150 217,966 212,735
Other time 297,783 300,915 311,731 312,741
------- ------- ------- -------
Total interest bearing deposits 716,464 716,260 700,171 688,421
Borrowings:
Federal funds purchased and other short-term borrowings 25,316 18,783 31,121 17,973
Advances from Federal Home Loan Bank 39,723 32,885 23,069 18,170
Guaranteed junior subordinated deferrable interest debentures 13,085 13,085 13,085 13,085
------ ------ ------ ------
Total interest bearing liabilities 794,588 781,013 767,446 737,649
Non-interest bearing liabilities:
Demand deposits 160,515 155,365 154,026 158,169
Other liabilities 6,694 7,969 10,619 13,378
Shareholders' equity 117,087 115,755 111,256 110,741
------- ------- ------- -------
Total liabilities and shareholders' equity 1,078,884 1,060,102 1,043,347 1,019,937
========= ========= ========= =========
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SOURCE AmeriServ Financial, Inc.
