ÂPHM014 MP 16:30 USBANCORP Announces Earnings

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 22, 2003


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.)










Form 8-K


Item 9. Regulation FD Disclosure


This item is being filed as an Item 12. “Results of Operations and Financial Condition.” Pursuant to the Securities and Exchange Commission’s filing guidance issued on March 27,2003 regarding Final Rule 33-8216.


AMERISERV FINANCIAL Inc. (the "Registrant") press release dated April 22, 2003, announcing its earnings for the three (3) month period ended March 31, 2003 is attached hereto as Exhibit 99.1 and incorporated herein by reference


Exhibits

--------


Exhibit 99.1

Press release dated July 22, 2003, announcing its earnings for the three (3) and six (6) month periods ended June 30, 2003.



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 22, 2003







Exhibit 99.1


Jeffrey A. Stopko

 

    July 22, 2003

Senior Vice President &


Chief Financial Officer


(814)-533-5310


AMERISERV FINANCIAL RETURNS TO PROFITABIITY; ANNOUNCES INCREASED SECOND QUARTER 2003 EARNINGS     


JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) returned to profitability by reporting net income for the second quarter of 2003 of $915,000 or $0.07 per diluted share.  When compared to net income of $408,000 or $0.03 per diluted share reported in the second quarter of 2002, this represents an increase of $507,000 or over 100%.  This financial performance reflects continued progress in the Company’s turnaround and the first quarter of profitability after net losses experienced in the three previous quarters.  Specifically, the Company reported a net loss of $4.2 million in the third quarter of 2002, a net loss of $2 million in the fourth quarter of 2002, and a net loss of $795,000 in the first quarter of 2003.  As a result of the positive second quarter 2003 performance, the Company is also now profitable for the six month period ended June 30, 2003 with net income of $120,000 or $0.01 per diluted share.  The following table highlights the Company’s financial performance for both the three and six month periods ended June 30, 2003 and 2002:      


 

Second Quarter 2003

Second Quarter 2002

 

Six Months

Ended

June 30, 2003

Six Months

Ended

June 30, 2002

Net income

$915,000

$408,000

 

$120,000

$1,034,000

Diluted earnings per share

0.07

0.03

 

0.01

0.08

   

At June 30, 2003, ASRV had total assets of $1.17 billion and shareholders’ equity of $76 million or $5.48 per share.  The Company continues to be considered well capitalized for regulatory purposes with an asset leverage ratio at June 30, 2003 of 7.10%, compared to a regulatory minimum of 5.0%.


The Company’s provision for loan losses totaled $534,000 or 0.40% of total loans in the second quarter of 2003.  This represented a decrease of $281,000 from the second quarter 2002 provision of $815,000 or 0.56% of total loans.  The second quarter 2003 provision exceeded net charge-offs for the quarter that totaled $33,000 or 0.02% of total loans, which resulted in the Company further building its allowance for loan losses to $11.9 million at June 30, 2003.  Non-performing assets totaled $10.2 million or 1.93% of total loans at June 30, 2003.  This represented a decrease of $1.5 million from the March 31, 2003 level of $11.7 million but an increase of $3.2 million from the December 31, 2002 total of $7.0 million.  The Company’s largest non-performing asset is a $4.8 million commercial mortgage loan to a borrower in the personal care industry that is supported by an 80% guarantee by the U.S. Department of Agriculture and is secured by a first mortgage on the personal care facility.  The Company’s loan loss reserve coverage of non-performing assets amounted to 117% at June 30, 2003 compared to 144% at December 31, 2002 and 97% at June 30, 2002.  The allowance for loan losses as a percentage of total loans increased to 2.27% at June 30, 2003 compared to 1.75% at December 31, 2002 and 0.92% at June 30, 2002.                                                                    














The Company’s net interest income in the second quarter of 2003 decreased by $873,000 from the prior year second quarter due to a reduced level of earning assets and a decline in the net interest margin to 2.41%.   Loan portfolio shrinkage experienced in the first half of 2003 was the predominant factor contributing to both the lower level of earning assets and the net interest margin contraction.  The overall net decrease in loans reflects continuing prepayment pressures caused by the historically low interest rate environment and the Company’s internal focus on improving asset quality.  The Company completed the restructuring of its lending division during the second quarter of 2003 and is now better positioned to generate increased new loan production in the second half of the year.  When analyzing more recent quarterly trends, both the net interest income and net interest margin declines were not as severe.  Specifically, between the first and second quarter of 2003, the Company’s net interest income declined by $213,000 and the net interest margin dropped by seven basis points.  


The Company’s total non-interest income in the second quarter of 2003 was slightly better than the prior year second quarter as it increased by $71,000 or 1.4%.  Items that favorably impacted second quarter 2003 performance were net realized gains from investment security sales, higher deposit service charges, and increased gains on residential mortgage loan sales into the secondary market.  Gains on the sale of investment securities increased by $106,000 as the Company took advantage of the volatility in the market to shorten the investment portfolio duration and also capture profits on certain securities that had risks of accelerated prepayment in today’s low interest rate environment.  A similar increase occurred in deposit service charges due to higher levels of overdraft fees and checking service charges.  These positive items more than offset a decline in other income resulting from the Company’s decision to exit the merchant card business in the fourth quarter of 2002.   


The Company’s total non-interest expense in the second quarter of 2003 decreased by $1.3 million or 11.5% from the second quarter of 2002 due to the Company’s continued focus on reducing and containing expenses.  This decline was the primary factor responsible for the Company’s increased earnings.  Salaries and employee benefits dropped by $411,000 as on average there were 42 fewer full-time equivalent employees when compared to the second quarter of 2002. Other expenses also declined by $481,000 due to cost cutting in numerous expense categories, some of the larger of which included advertising expense and merchant card expense.  The dramatic downsizing of the mortgage servicing asset in the first quarter of 2003 reduced the impact of lower mortgage rates on the Company’s performance.  Specifically, the Company’s impairment charge on mortgage servicing rights amounted to $254,000 in the second quarter of 2003; a reduction of $533,000 when compared to the $787,000 impairment charge recognized in the second quarter of 2002.  As a result of the sale of 69% of the Company’s mortgage servicing portfolio and the impairment charges recognized during the first half of 2003, the value of the Company’s mortgage servicing rights declined from $6.9 million at December 31, 2002 to $1.8 million at June 30, 2003.


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, including the risks detailed in the Company's Annual Report and Form 10-K to the Securities and Exchange Commission as defined in the Private Securities Litigation Reform Act of 1995.  Actual results may differ materially.

 


Nasdaq NMS: ASRV

SUPPLEMENTAL FINANCIAL PERFORMANCE DATA (A)

July 22, 2003

(In thousands, except per share and ratio data)

2003

 

1QTR

2QTR

YEAR

   

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

   

Net income (loss)

$(795)

$915

$120

    

PERFORMANCE PERCENTAGES (annualized):

   

Return on average equity

(4.17)%

4.84%

0.32%

Net interest margin

2.48

2.41

2.45

Net charge-offs as a percentage of average loans

0.20

0.02

0.11

Loan loss provision as a percentage of average loans

1.19

0.40

0.80

Net overhead expense as a percentage of tax equivalent net interest income


91.97


73.61


82.54

Efficiency ratio

94.98

84.81

89.69

    

PER COMMON SHARE:

   

Net income (loss):

   

Basic

$(0.06)

$0.07

$0.01

Average number of common shares outstanding

13,923,010

13,935,086

13,929,082

Diluted

(0.06)

0.07

0.01

Average number of common shares outstanding

13,923,010

13,940,460

13,933,861

Cash dividends declared

0.00

0.00

0.00

    




2002

 

1QTR

2QTR

YEAR

   

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

   

Net income

$626

$408

$1,034

    

PERFORMANCE PERCENTAGES (annualized):

   

Return on average equity

3.16%

2.04%

2.59%

Net interest margin

2.35

2.63

2.49

Net charge-offs as a percentage of average loans

0.06

1.09

0.58

Loan loss provision as a percentage of average loans

0.37

0.56

0.47

Net overhead expense as a percentage of tax equivalent net interest income


80.13


82.34


81.29

Efficiency ratio

88.34

89.52

88.96

    

PER COMMON SHARE:

   

Net income:

   

Basic

$0.05

$0.03

$0.08

Average number of common shares outstanding

13,689,478

13,748,179

13,718,990

Diluted

0.05

0.03

0.08

Average number of common shares outstanding

13,712,382

13,778,716

13,745,459

Cash dividends declared

0.09

0.09

0.18

    

    NOTES:

(A)

All quarterly data unaudited.



AMERISERV FINANCIAL, INC.

(In thousands, except per share, statistical, and ratio data)


2003

 

1QTR

2QTR

PERFORMANCE DATA AT PERIOD END

  

Assets

$1,190,360

$1,167,610

Investment securities

546,427

544,967

Loans

555,335

525,591

Allowance for loan losses

11,415

11,916

Goodwill and core deposit intangibles

15,337

14,979

Mortgage servicing rights

2,214

1,784

Deposits

669,103

661,932

Stockholders’ equity

75,364

76,384

Trust assets

1,091,391

1,146,695

Non-performing assets

11,687

10,163

Asset leverage ratio

6.94%

7.10%

PER COMMON SHARE:

  

Book value (A)

$5.41

$5.48

Market value

3.50

3.80

Market price to book value

64.69%

69.35%

   

STATISTICAL DATA AT PERIOD END:

  

Full-time equivalent employees

416

427

Branch locations

23

23

Common shares outstanding

13,929,324

13,940,999


2002

 

1QTR

2QTR

3QTR

4QTR

PERFORMANCE DATA AT PERIOD END

    

Assets

$1,213,764

$1,202,086

$1,182,678

$1,175,550

Investment securities

532,349

493,322

491,861

505,778

Loans

587,624

600,778

594,285

572,977

Allowance for loan losses

6,286

5,518

5,757

10,035

Goodwill and core deposit intangibles

16,968

16,610

16,252

15,894

Mortgage servicing rights

8,315

7,566

5,146

6,917

Deposits

680,435

705,662

674,573

669,929

Stockholders’ equity

78,051

82,491

79,711

77,756

Trust assets

1,198,480

1,190,834

1,082,311

1,057,816

Non-performing assets

9,105

5,668

5,407

6,964

Asset leverage ratio

7.54%

7.46%

7.00%

6.84%

PER COMMON SHARE:

    

Book value (A)

$5.69

$6.00

$5.77

$5.59

Market value

4.96

4.58

2.45

2.85

Market price to book value

87.17%

76.37%

42.45%

50.98%

     

STATISTICAL DATA AT PERIOD END:

    

Full-time equivalent employees

468

464

445

422

Branch locations

24

24

24

23

Common shares outstanding

13,709,329

13,754,342

13,811,595

13,898,302


    NOTES:

    

    (A) Other comprehensive income had a positive impact of $0.30 on book value per share at June 30, 2003.

    

    

AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENT OF INCOME

(In thousands)

(Quarterly data unaudited)

2003

   

YEAR

INTEREST INCOME

1QTR

2QTR

TO DATE

Interest and fees on loans

$9,083

$8,595

$17,678

Total investment portfolio

5,660

5,631

11,291

Total Interest Income

14,743

14,226

28,969

    

INTEREST EXPENSE

   

Deposits

3,140

2,965

6,105

All other funding sources

4,956

4,827

9,783

Total Interest Expense

8,096

7,792

15,888

    

NET INTEREST INCOME

6,647

6,434

13,081

Provision for loan losses

1,659

534

2,193

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES


4,988


5,900


10,888

    

NON-INTEREST INCOME

   

Trust fees

1,253

1,253

2,506

Net realized gains on investment securities

    available for sale


1,278


1,420


2,698

Net realized gains on loans and loans held for sale

173

221

394

Service charges on deposit accounts

767

800

1,567

Net mortgage servicing fees

71

77

148

Gain (loss) on sale of mortgage servicing

(758)

-

(758)

Bank owned life insurance

298

307

605

Other income

913

1,017

1,930

Total Non-interest Income

3,995

5,095

9,090

    

NON-INTEREST EXPENSE

   

Salaries and employee benefits

4,789

4,717

9,506

Net occupancy expense

752

701

1,453

Equipment expense

817

750

1,567

Professional fees

903

1,058

1,961

FDIC deposit insurance expense

28

26

54

Amortization of core deposit intangibles

358

358

716

Impairment charge (credit)for mortgage servicing  

   rights


366


254


620

Goodwill impairment loss

199

-

199

Other expenses

1,908

1,922

3,830

Total Non-interest Expense

10,120

9,786

19,906

    

INCOME (LOSS) BEFORE INCOME TAXES

(1,137)

1,209

72

Provision  (benefit) for income taxes

(342)

294

(48)

NET INCOME (LOSS)

$(795)

$915

$120

    



2002

   

YEAR

INTEREST INCOME

1QTR

2QTR

TO DATE

Interest and fees on loans

$10,562

$10,434

$20,996

Total investment portfolio

6,698

6,637

13,335

Total Interest Income

17,260

17,071

34,331

    

INTEREST EXPENSE

   

Deposits

4,288

4,215

8,503

All other funding sources

6,389

5,549

11,938

Total Interest Expense

10,677

9,764

20,441

    

NET INTEREST INCOME

6,583

7,307

13,890

Provision for loan losses

540

815

1,355

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES


6,043


6,492


12,535

    

NON-INTEREST INCOME

   

Trust fees

1,279

1,235

2,514

Net realized gains on investment securities

     available for sale


637


1,314


1,951

Net realized gains on loans and loans held for sale

124

141

265

Service charges on deposit accounts

674

694

1,368

Net mortgage servicing fees

92

123

215

Bank owned life insurance

554

317

871

Other income

1,288

1,200

2,488

Total Non-interest Income

4,648

5,024

9,672

    

NON-INTEREST EXPENSE

   

Salaries and employee benefits

5,145

5,128

10,273

Net occupancy expense

739

750

1,489

Equipment expense

783

768

1,551

Professional fees

750

847

1,597

FDIC deposit insurance expense

29

29

58

Amortization of core deposit intangibles

358

358

716

Impairment charge for mortgage servicing rights

(123)

787

664

Wholesale mortgage production exit costs

(26)

(14)

(40)

Other expenses

2,280

2,403

4,683

Total Non-interest Expense

9,935

11,056

20,991

    

INCOME BEFORE INCOME TAXES

756

460

1,216

Provision for income taxes

130

52

182

NET INCOME

$626

$408

$1,034

    


AMERISERV FINANCIAL, INC.

Nasdaq NMS: ASRV

Average Balance Sheet Data (In thousands)

(Quarterly Data Unaudited)


    Note:  2002 data appears before 2003.


2002

2003

  

SIX

 

SIX

 

2QTR

MONTHS

2QTR

MONTHS

Interest earning assets:

    

Loans and loans held for sale, net of unearned income

$584,090

$584,258

$525,935

$541,528

Deposits with banks

16,544

17,511

4,002

5,621

Federal funds sold

277

990

35

18

Total investment securities

502,245

500,043

531,834

514,836

     

Total interest earning assets

1,103,156

1,102,802

1,061,806

1,062,003

     

Non-interest earning assets:

    

Cash and due from banks

22,683

22,348

21,533

22,545

Premises and equipment

13,219

13,343

12,123

12,300

Other assets

67,554

68,045

69,670

70,453

Allowance for loan losses

(6,246)

(6,174)

(11,703)

(10,988)

     

Total assets

$1,200,366

$1,200,364

$1,153,429

$1,156,313

     

Interest bearing liabilities:

    

Interest bearing deposits:

    

Interest bearing demand

$49,680

$49,118

$52,491

$51,520

Savings

102,287

98,602

103,238

102,678

Money market

131,349

133,117

124,827

126,529

Other time

303,327

303,266

284,879

287,046

Total interest bearing deposits

586,643

584,103

565,435

567,773

Borrowings:

    

Federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings



48,603



34,924



102,264



97,958

Advanced from Federal Home Loan Bank

333,488

351,226

264,861

266,509

Guaranteed junior subordinated deferrable interest debentures


34,500


34,500


34,500


34,500

Total interest bearing liabilities

1,003,234

1,004,753

967,060

966,740

     

Non-interest bearing liabilities:

    

Demand deposits

107,429

105,031

104,057

105,952

Other liabilities

9,238

10,150

6,473

7,082

Stockholders’ equity

80,465

80,430

75,839

76,539

Total liabilities and stockholders’ equity

$1,200,366

$1,200,364

$1,153,429

$1,156,313