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) October 15, 2013


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 third quarter and first nine month 2013 results through September 30, 2013.  For a more detailed description of the announcement see the press release attached as Exhibit #99.1.  


Exhibits

--------


Exhibit 99.1

Press release dated October 15, 2013, announcing the third quarter and first nine month 2013 results through September 30, 2013.



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

Executive Vice President

& CFO


Date: October 15, 2013







Exhibit 99.1

AMERISERV FINANCIAL REPORTS EARNINGS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2013     


JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) reported third quarter 2013 net income available to common shareholders of $1,173,000 or $0.06 per diluted common share.  This represented a 20% increase in earnings per share from the third quarter of 2012 where net income available to common shareholders totaled $1,056,000 or $0.05 per diluted common share.  For the nine month period ended September 30, 2013, the Company reported net income available to common shareholders of $3,195,000 or $0.17 per diluted share.  This represented a 5.6% decline in earnings per share from the same nine month period in 2012 where net income available to common shareholders totaled $3,528,000 or $0.18 per diluted common share.  The following table highlights the Company’s financial performance for both the three and nine month periods ended September 30, 2013 and 2012:  

     

 

Third Quarter 2013

Third Quarter 2012

 

Nine Months Ended

September 30, 2013

Nine Months Ended

September 30, 2012

 

 

 

 

 

 

Net income

$1,226,000

$1,307,000

 

$3,352,000

$4,304,000

Net income available to common shareholders


$1,173,000


$1,056,000

 


$3,195,000


$3,528,000

Diluted earnings per share

          $ 0.06

          $ 0.05

 

                   $ 0.17

$0.18


Glenn L. Wilson, President and Chief Executive Officer, commented on the third quarter 2013 financial results: “I was pleased that growth in total revenue, combined with effective capital management, caused the increase in earnings per share in the third quarter of 2013.  Specifically, an increase in net interest income resulted from continued strong growth of our loan portfolio, as total loans grew by $57 million, or 8.1% over the past twelve months.  Material loan growth occurred in loan categories that qualify for the Small Business Lending Fund (SBLF) and as a result we have now locked in for continued payment the lowest preferred dividend rate available under the program of 1% until the first quarter of 2016.  Non-interest income, the other key revenue component, also increased by $337,000 or over 9% between years, due largely to fee growth within our trust and wealth management businesses as a result of increased assets under management and continued good residential mortgage sales activity.”  


The Company’s net interest income in the third quarter of 2013 increased by $58,000 from the prior year’s third quarter, and for the first nine months of 2013 increased by $142,000 when compared to the first nine months of 2012.  The Company’s net interest margin of 3.52% for the first nine months of 2013 was 11 basis points lower than the net interest margin of 3.63% for the first nine months of 2012.  The lower net interest margin demonstrates the impact of Federal Reserve low interest rate policies which has pressured community banks interest revenue. The Company has sought to mitigate this net interest margin pressure and modestly increase net interest income by both reducing its cost of funds and growing its earning assets, particularly loans.  Specifically, these efforts have resulted in total loans averaging $737 million in the first nine months of 2013, which is $58 million or 8.5% higher than the $679 million average in the first nine months of 2012.  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 SBLF loans, particularly through its loan production offices.  As a result of this growth in SBLF qualified loans, the Company continues to pay the lowest preferred share dividend rate of 1% available under the SBLF program.  This lower rate has saved the Company $619,000 in preferred stock dividend payments so far in 2013.  Despite this solid growth in loans, total interest revenue still dropped by $899,000 between years and reflects the lower interest rate environment.  However, careful management of funding costs has allowed the Company to partially mitigate this drop in interest revenue during the past year.  Specifically, total interest expense for the first nine months of 2013 declined by $1.0 million from the same prior year period 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 its core deposit base and its ongoing efforts to cross sell new loan customers into deposit products.  Specifically, total deposits have averaged $844 million in the first nine months of 2013, which is $14 million or 1.7% higher than the $830 million average in the first nine months of 2012.  The company is pleased that the majority of the deposit growth has occurred in non-interest bearing demand deposit accounts.     


The Company did not record a provision for loan losses in the third quarter of 2013 as compared to a $200,000 negative provision recorded in the third quarter of 2012.  For the nine month period in 2013, the Company recorded a negative loan loss provision of $100,000 compared to a $1,325,000 negative provision in the first nine months of 2012.  There has been $1,225,000 less earnings benefit from negative loan loss provisions in 2013.  Overall, sustained improvements in asset quality evidenced by low levels of non-performing assets and classified loans has allowed the Company to continue to benefit from negative or zero loan loss provisions in 2013 while still maintaining strong coverage ratios.  At September 30, 2013, non-performing assets totaled $5.0 million or 0.66% of total loans which is comparable with the level they have operated at in six of the last seven quarters.  The Company experienced modest net loan recoveries of $39,000 in the third quarter of 2013 compared to net charge-offs of $289,000 in the third quarter of 2012.  For the first nine months of 2013, actual credit losses realized through net charge-offs totaled $1.3 million or 0.23% of total loans which represents an increase from the first nine months of 2012 when net charge-offs totaled $470,000 or 0.09% of total loans.  The higher net charge-offs in 2013 reflect the resolution of a $2 million problem commercial real estate loan for which the Company had previously established specific reserves for in 2012.  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 268% coverage of non-performing loans, and was 1.46% of total loans, at September 30, 2013, compared to 210% of non-performing loans, and 1.74% of total loans, at December 31, 2012.


The Company’s growth in non-interest revenue has also been a financial performance highlight in 2013.  Total non-interest income in the third quarter of 2013 increased by $337,000 or 9.2% from the prior year’s third quarter and for the first nine months of 2013 increased by $821,000 or 7.4% when compared to the first nine months of 2012.  The 2013 non-interest income increase was primarily driven by increased revenue from our wealth management businesses.  Specifically, trust and investment advisory fees increased by $178,000 or 10.4% for the third quarter 2013 and $363,000 or 6.7% for the nine month period of 2013 due to increased assets under management which reflects both successful new business development activities and market appreciation of existing assets. Third quarter 2013 non-interest income also benefitted from a $66,000 investment security gain realized on the sale of certain rapidly prepaying mortgage backed securities and a $79,000 gain realized on the sale of an other real estate owned property which is included within other income.  Additionally, for the nine month period in 2013, non-interest income also benefitted from increased revenue from residential mortgage banking activities.  Specifically, gains realized on residential mortgage loan sales into the secondary market increased by $123,000 due to increased mortgage loan production in the first nine months of 2013.  The higher residential mortgage loan production reflected both increased refinance and purchase activity although refinance activity did begin to slow in the third quarter. Income from bank owned life insurance increased by $149,000 for the 2013 nine month period due to the receipt of a death claim payment.               


Total non-interest expense in the third quarter of 2013 increased by $326,000 or 3.2% from the prior year’s third quarter and for the first nine months of 2013 increased by $1.2 million or 4.0% when compared to the first nine months of 2012.  Salaries and employee benefits increased by $119,000 or 1.9% for the third quarter and $664,000 or 3.7% for the nine month period due to higher salaries expense and pension expense.  The higher pension expense relates to the Company’s defined benefit pension plan and reflects the negative impact that the low interest rate environment is having on the discount rate used to calculate the plan liabilities.  This increasing pension cost was a key factor causing the Company to implement a soft freeze of its defined benefit pension plan to provide that non-union employees hired on or after January 1, 2013 are not eligible to participate.  Instead, such employees are eligible to participate in a qualified 401(k) plan.  Professional fees also increased by $57,000 in the third quarter and $382,000 for the nine month period due largely to higher legal costs, recruitment fees, and increases in several other professional fee categories.  Also an increase in the reserve for unfunded commitments, which is reflected in the other expense category, increased 2013 third quarter expense by $111,000 and nine month expense by $126,000 due to increased loan approval activity.  Finally, the Company recorded an income tax expense of $1.4 million or an effective tax rate of 29.6% for the first nine months of 2013 compared to an income tax expense of $1.9 million or an effective tax rate of 30.9% for the first nine months of 2012. The lower income tax expense and effective rate in 2013 reflects the Company’s reduced pre-tax earnings combined with an increased amount of tax free earnings from bank owned life insurance.


ASRV had total assets of $1.038 billion, shareholders’ equity of $110 million, a book value of $4.76 per common share and a tangible book value of $4.09 per common share at September 30, 2013.  The Company continued to maintain strong capital ratios that considerably exceed the regulatory defined well capitalized status with a risk based capital ratio of 15.35, an asset leverage ratio of 11.44% and a tangible common equity to tangible assets ratio of 7.48% at September 30, 2013.  


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

September 30, 2013

(In thousands, except per share and ratio data)

(Unaudited)


2013

 

1QTR

2QTR

3QTR

YEAR

 

 

 

 

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

 

 

 

 

Net income

$1,056

$1,070

$1,226

$3,352

Net income available to common shareholders

1,004

1,018

1,173

3,195

 

 

 

 

 

PERFORMANCE PERCENTAGES (annualized):

 

 

 

 

Return on average assets

0.43%

0.43%

0.47%

0.44%

Return on average equity

3.86

3.86

4.44

4.05

Net interest margin

3.59

3.50

3.46

3.52

Net charge-offs (recoveries) as a percentage

    of average loans


0.76


(0.02)


(0.02)


0.23

Loan loss provision (credit) as a percentage of

    average loans


(0.14)


0.08


-


(0.02)

Efficiency ratio

89.52

86.28

85.41

87.05

 

 

 

 

 

PER COMMON SHARE:

 

 

 

 

Net income:

 

 

 

 

Basic

$0.05

$0.05

$0.06

$0.17

Average number of common shares

    outstanding


19,168


19,039


18,784


18,995

Diluted

0.05

0.05

0.06

0.17

Average number of common shares

    outstanding


19,257


19,128


18,878


19,086

Cash dividends declared

$0.00

$0.01

$0.01

$0.02


2012

 

1QTR

2QTR

3QTR

YEAR

 

 

 

 

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

 

 

 

 

Net income

$1,565

$1,432

$1,307

$4,304

Net income available to common shareholders

1,302

1,170

1,056

3,528

 

 

 

 

 

PERFORMANCE PERCENTAGES (annualized):

 

 

 

 

Return on average assets

0.65%

0.59%

0.52%

0.59%

Return on average equity

5.60

5.19

4.66

5.15

Net interest margin

3.70

3.59

3.59

3.63

Net charge-offs (recoveries) as a percentage

    of average loans


0.13


(0.02)


0.16


0.09

Loan loss provision (credit) as a percentage of

    average loans


(0.38)


(0.30)


(0.11)


(0.26)

Efficiency ratio

86.17

86.34

85.50

86.00

 

 

 

 

 

PER COMMON SHARE:

 

 

 

 

Net income:

 

 

 

 

Basic

$0.06

$0.06

$0.05

$0.18

Average number of common shares

    outstanding


20,679


19,584


19,275


19,844

Diluted

0.06

0.06

0.05

0.18

Average number of common shares

    outstanding


20,722


19,652


19,351


19,904

Cash dividends declared

$0.00

$0.00

$0.00

$0.00


AMERISERV FINANCIAL, INC.

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

(Unaudited)


2013

 

1QTR

2QTR

3QTR

 

FINANCIAL CONDITION  DATA AT PERIOD END

 

 

 

 

Assets

$999,718

$1,025,084

$1,038,144

 

Short-term investments/overnight funds

23,995

9,291

8,646

 

Investment securities

162,866

168,284

167,110

 

Loans and loans held for sale

717,852

751,522

763,681

 

Allowance for loan losses

10,960

11,145

11,183

 

Goodwill

12,613

12,613

12,613

 

Deposits

847,189

840,272

852,211

 

FHLB borrowings

16,000

50,292

52,096

 

Shareholders’ equity

111,445

109,282

110,370

 

Non-performing assets

4,387

5,027

5,037

 

Asset leverage ratio

11.58%

11.52%

11.44%

 

Tangible common equity ratio

7.88

7.47

7.48

 

PER COMMON SHARE:

 

 

 

 

Book value (A)

$4.72

$4.70

$4.76

 

Tangible book value (A)

4.06

4.03

4.09

 

Market value

3.13

2.74

3.15

 

Trust assets – fair market value (B)

$1,566,236

$1,562,366

$1,599,402

 

 

 

 

 

 

STATISTICAL DATA AT PERIOD END:

 

 

 

 

Full-time equivalent employees

357

360

358

 

Branch locations

18

18

18

 

Common shares outstanding

19,168,188

18,784,188

18,784,188

 


2012

 

1QTR

2QTR

3QTR

4QTR

FINANCIAL CONDITION  DATA AT PERIOD END

 

 

 

 

Assets

$967,401

$997,102

$1,002,281

$1,000,991

Short-term investments/overnight funds

7,398

14,158

14,210

9,012

Investment securities

190,089

191,791

181,319

165,261

Loans and loans held for sale

671,328

690,815

706,624

731,741

Allowance for loan losses

13,778

13,317

12,829

12,571

Goodwill

12,613

12,613

12,613

12,613

Deposits

820,105

854,017

850,125

835,734

FHLB borrowings

6,390

3,000

12,000

28,660

Shareholders’ equity

112,270

110,810

112,311

110,468

Non-performing assets

4,801

5,077

5,372

7,224

Asset leverage ratio

11.83%

11.60%

11.45%

11.44%

Tangible common equity ratio

8.24

7.84

7.95

7.78

PER COMMON SHARE:

 

 

 

 

Book value (A)

$4.46

$4.66

$4.74

$4.67

Tangible book value (A)

3.84

4.00

4.09

4.01

Market value

2.74

2.82

2.97

3.01

Trust assets – fair market value (B)

$1,469,789

$1,447,877

$1,511,012

$1,512,387

 

 

 

 

 

STATISTICAL DATA AT PERIOD END:

 

 

 

 

Full-time equivalent employees

353

353

355

350

Branch locations

18

18

18

18

Common shares outstanding

20,465,521

19,284,521

19,255,221

19,164,721

NOTES:

(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

(In thousands)

(Unaudited)


2013

 

1QTR

2QTR

3QTR

YEAR

INTEREST INCOME

 

 

 

TO DATE

Interest and fees on loans

$8,628

$8,590

$8,765

$25,983

Interest on investments

1,074

1,037

1,046

3,157

Total Interest Income

9,702

9,627

9,811

29,140

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

Deposits

1,350

1,288

1,274

3,912

All borrowings

310

318

337

965

Total Interest Expense

1,660

1,606

1,611

4,877

 

 

 

 

 

NET INTEREST INCOME

8,042

8,021

8,200

24,263

Provision (credit) for loan losses

(250)

150

-

(100)

NET INTEREST INCOME AFTER

   PROVISION (CREDIT) FOR LOAN

   LOSSES



8,292



7,871



8,200



24,363

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

Trust fees

1,667

1,779

1,668

5,114

Investment advisory fees

214

220

225

659

Net realized gains on investment securities

71

-

66

137

Net realized gains on loans held for sale

386

241

285

912

Service charges on deposit accounts

511

538

560

1,609

Bank owned life insurance

201

388

204

793

Other income

766

909

978

2,653

Total Non-Interest Income

3,816

4,075

3,986

11,877

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

Salaries and employee benefits

6,331

6,176

6,251

18,758

Net occupancy expense

773

751

694

2,218

Equipment expense

455

455

429

1,339

Professional fees

1,035

1,150

1,034

3,219

FDIC deposit insurance expense

134

151

152

437

Other expenses

1,894

1,759

1,853

5,506

Total Non-Interest Expense

10,622

10,442

10,413

31,477

 

 

 

 

 

PRETAX INCOME

1,486

1,504

1,773

4,763

Income tax expense

430

434

547

1,411

NET INCOME

1,056

1,070

1,226

3,352

Preferred stock dividends

52

52

53

157

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS


$1,004


$1,018


$1,173


$3,195


2012

 

1QTR

2QTR

3QTR

YEAR

INTEREST INCOME

 

 

 

TO DATE

Interest and fees on loans

$8,729

$8,552

$8,807

$26,088

Interest on investments

1,395

1,333

1,223

3,951

Total Interest Income

10,124

9,885

10,030

30,039

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

Deposits

1,762

1,668

1,587

5,017

All borrowings

304

296

301

901

Total Interest Expense

2,066

1,964

1,888

5,918

 

 

 

 

 

NET INTEREST INCOME

8,058

7,921

8,142

24,121

Provision (credit) for loan losses

(625)

(500)

(200)

(1,325)

NET INTEREST INCOME AFTER

   PROVISION (CREDIT) FOR LOAN

   LOSSES



8,683



8,421



8,342



25,446

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

Trust fees

1,697

1,628

1,533

4,858

Investment advisory fees

193

177

182

552

Net realized gains on investment securities

-

12

-

12

Net realized gains on loans held for sale

276

251

262

789

Service charges on deposit accounts

535

517

567

1,619

Bank owned life insurance

215

212

217

644

Other income

758

936

888

2,582

Total Non-Interest Income

3,674

3,733

3,649

11,056

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

Salaries and employee benefits

5,986

5,976

6,132

18,094

Net occupancy expense

729

702

698

2,129

Equipment expense

451

473

395

1,319

Professional fees

923

937

977

2,837

FDIC deposit insurance expense

129

114

104

347

Other expenses

1,896

1,865

1,781

5,542

Total Non-Interest Expense

10,114

10,067

10,087

30,268

 

 

 

 

 

PRETAX INCOME

2,243

2,087

1,904

6,234

Income tax expense

678

655

597

1,930

NET INCOME

1,565

1,432

1,307

4,304

Preferred stock dividends

263

262

251

776

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS


$1,302


$1,170


$1,056


$3,528


AMERISERV FINANCIAL, INC.

Nasdaq: ASRV

Average Balance Sheet Data (In thousands)

(Unaudited)


2013

2012

 

 

 

 

 

 

3QTR

NINE

3QTR

NINE

Interest earning assets:

 

MONTHS

 

MONTHS

Loans and loans held for sale, net of unearned income

$754,996

$736,896

$701,104

$678,995

Deposits with banks

6,542

8,541

5,265

8,870

Short-term investment in money market funds

2,632

3,437

4,717

4,567

Fed funds sold

318

106

-

-

Total investment securities

172,880

168,666

187,474

190,662

Total interest earning assets

937,368

917,646

898,560

883,094

 

 

 

 

 

Non-interest earning assets:

 

 

 

 

Cash and due from banks

16,469

16,720

17,090

16,775

Premises and equipment

13,018

12,656

11,019

10,925

Other assets

72,125

76,683

81,526

81,793

Allowance for loan losses

(11,177)

(11,571)

(13,167)

(13,830)

 

 

 

 

 

Total assets

$1,027,803

$1,012,134

$995,028

$978,757

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

Interest bearing deposits:

 

 

 

 

Interest bearing demand

$79,224

$72,308

$63,321

$59,703

Savings

88,270

88,128

86,373

85,152

Money market

211,725

210,993

216,644

208,414

Other time

315,890

313,075

328,410

330,073

Total interest bearing deposits

695,109

684,504

694,748

683,342

Borrowings:

 

 

 

 

Federal funds purchased and other short-term borrowings

18,711

13,590

3,808

2,827

Advances from Federal Home Loan Bank

20,193

16,537

4,417

5,683

Guaranteed junior subordinated deferrable interest debentures

13,085

13,085

13,085

13,085

Total interest bearing liabilities

747,098

727,716

716,058

704,937

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

  Demand deposits

159,627

159,550

150,844

146,229

  Other liabilities

11,622

14,298

16,467

15,970

Shareholders’ equity

109,456

110,570

111,659

111,621

Total liabilities and shareholders’ equity

$1,027,803

$1,012,134

$995,028

$978,757