SECURITIES AND EXCHANGE COMMISSION






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