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) April 18, 2017


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 first quarter 2017 results through March 31, 2017.  For a more detailed description of the announcement see the press release attached as Exhibit 99.1.  



Exhibits

--------


Exhibit 99.1

Press release dated April 18, 2017, announcing first quarter 2017 earnings through March 31, 2017.



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/Michael D. Lynch

Michael D. Lynch

SVP & CFO


Date: April 18, 2017







Exhibit 99.1


AMERISERV FINANCIAL REPORTS EARNINGS FOR THE FIRST QUARTER OF 2017   


JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) reported first quarter 2017 net income available to common shareholders of $1,348,000, or $0.07 per diluted common share.  This represents a significant improvement of $2.6 million from the first quarter of 2016 net loss available to common shareholders of $1,282,000, or ($0.07) per diluted common share.  The following table highlights the Company’s financial performance for the quarters ended March 31, 2017 and 2016:  

     

 

First Quarter 2017

First Quarter 2016

$ Change

% Change

 

 

 

 

 

Net income (loss)

$1,348,000

($1,267,000)

$2,615,000

206.4%

Net income (loss) available to common shareholders


$1,348,000


($1,282,000)


$2,630,000


205.1%

Diluted earnings per share

         $ 0.07

         ($ 0.07)

$ 0.14

200.0%


Jeffrey A. Stopko, President and Chief Executive Officer, commented on the first quarter 2017 financial results: “Our improved earnings in the first quarter of 2017 resulted from growth in total revenue, a reduction in non-interest expense and a controlled loan loss provision due to outstanding asset quality.  Our balance sheet is well positioned for higher interest rates and we began to see some of that benefit in the form of increased net interest income in the first quarter of 2017.  Additionally, I was pleased to see the tangible benefit from several profitability improvement initiatives that we executed last year as each of our reported non-interest expense categories favorably declined in the first quarter of 2017.”      


The Company’s net interest income in the first quarter of 2017 increased by $163,000, or 1.9%, when compared to the first quarter of 2016.  The Company’s net interest margin of 3.27% for the first quarter of 2017 was three basis points lower than the net interest margin of 3.30% for the first quarter 2016 but improved by nine basis points from the 3.18% margin reported for the more recent fourth quarter 2016 performance.  The improvement in net interest income is a result of a higher volume of total earning assets which more than offset the lower net interest margin.  The Company continues to grow earning assets while also controlling its cost of funds through disciplined deposit pricing.  Specifically, the earning asset growth occurred in, both, the investment securities portfolio and the loan portfolio.  Total investment securities averaged $168 million in the first quarter of 2017 which is $26.1 million or 18.4% higher than the $142 million average for the first quarter of 2016 while total loans averaged $890 million in the first quarter of 2017 which is $8.8 million, or 1.0%, higher than the $881 million average for the first quarter of 2016.  The growth in the investment securities portfolio is the result of management electing to diversify the mix of the investment securities portfolio through purchases of high quality corporate and taxable municipal securities.  This revised strategy for securities purchases was facilitated by the increase in national interest rates and the steepening yield curve that resulted in improved opportunities to purchase additional securities and grow the portfolio.  As a result, interest on investments increased between years by $235,000 or 24.6%.  The growth in the loan portfolio 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.  The year over year loan growth was lower in comparison to what the Company has recently experienced due to a slowdown in production during the second half of 2016 that was caused by uncertainty in the economy because of the Presidential election.  Loan production has since returned to more normal and higher levels.  Loan interest income increased by $91,000, or 1.0% even though prepayment fee income on early loan payoffs were approximately $110,000 lower in the first quarter of 2017 when compared to the first quarter of 2016.  Overall, total interest income increased by $326,000, or 3.1%, between years.  


Total interest expense for the first quarter of 2017 increased by $163,000, or 8.7%, due to a higher level of deposit interest expense.  The Company experienced growth in deposits which we believe reflects the loyalty of our core deposit base that provides a strong foundation upon 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 offer new loan customers deposit products were the primary reasons for this growth.  Specifically, total deposits averaged $976 million for the first quarter of 2017 which is $66.0 million, or 7.3%, higher than the $910 million average for the first quarter of 2016.  The Company is also pleased that a meaningful portion of this deposit growth occurred in non-interest bearing demand deposit accounts.  Deposit interest expense in 2017 increased by $182,000, or 14.5%, due to the higher balance of deposits along with certain money market accounts repricing upward after the Federal Reserve elected to increase the overnight fed funds interest rate in December of 2016 and again in March of 2017.  As a result of the strong deposit growth, the Company’s loan to deposit ratio averaged 91.2% in the first quarter of 2017 which indicates that the Company has ample room to further grow its loan portfolio in 2017.  The Company experienced a $19,000 decrease in the interest cost for borrowings in the first quarter of 2017 because there was a lower level of total borrowed funds due to the deposit growth.  Total borrowings decreased by $24.2 million or 24.4% and more than offset the immediate impact that the increases in the Federal Funds Rate had on the cost of borrowed funds.      


The Company recorded a $225,000 provision for loan losses in the first quarter of 2017 compared to a $3.1 million provision for loan losses in the first quarter of 2016, or a decrease of $2.875 million between periods.  Both, the loan loss provision and net charge-offs were at more typical levels this year than the substantially higher levels that were necessary last year to resolve a troubled loan exposure to the energy industry.  The provision recorded in the first quarter of 2017 supported the continuing loan growth and more than covered the low level of net loan charge-offs incurred in the first quarter of 2017.  The Company experienced net loan charge-offs of $77,000, or 0.04% of total loans, in the first quarter of 2017 compared to net loan charge-offs of $3.4 million, or 1.60% of total loans, in the first quarter of 2016.  Overall, the Company continued to maintain excellent asset quality as its non-performing assets totaled $1.5 million, or only 0.17% of total loans, at March 31, 2017.  In summary, the allowance for loan losses provided a strong 677% coverage of non-performing loans, and 1.12% of total loans, at March 31, 2017, compared to 612% coverage of non-performing loans, and 1.12% of total loans, at December 31, 2016.


Total non-interest income in the first quarter of 2017 increased by $125,000, or 3.6%, from the first quarter of 2016.  Trust and investment advisory fees increased by $91,000 due to a higher level of fee income that resulted from the effective management of client accounts as asset market values improved.  Other income was also higher due to an increase in income from our Financial Services business unit by $57,000 as wealth management continues to be an important strategic focus of the Company.  These positive items were partially offset by service charges on deposits declining by $41,000 due to a reduced level of overdraft fee income.  The Company did recognize a $27,000 gain from an investment security sale transaction in the first quarter of 2017.  However, the amount of the gain was $30,000 less than what was recognized last year.  


The Company’s total non-interest expense in the first quarter of 2017 decreased significantly by $626,000, or 5.8%, when compared to the first quarter of 2016.  This decrease was primarily attributable to two factors.  First, as noted in previously disclosed financial results, the Company incurred $366,000 of non-recurring costs for legal and accounting services that were necessary in 2016 to resolve a trust operations trading error.  There were no such costs in 2017.  Second, improved efficiencies contributed to the remainder of this positive comparison between quarters.  Specifically, salaries and employee benefits were down by $156,000, or 2.5%, as there were 10 fewer full time equivalent employees in the first quarter of 2017 due primarily to a branch consolidation and closure of an unprofitable loan production office.  This ongoing focus to reduce and control non-interest expense was also evident in net occupancy expense and equipment expense, which decreased by a combined $80,000, or 6.8% in the first quarter of 2017.  The Company also recorded an income tax expense of $625,000, or an effective tax rate of 31.7%, in the first quarter of 2017.  This compares to an income tax benefit of $549,000, or an effective tax rate of -30.2%, for the first quarter of 2016.


The Company had total assets of $1.17 billion, shareholders’ equity of $95.6 million, a book value of $5.12 per common share and a tangible book value of $4.48 per common share at March 31, 2017.  In accordance with the common stock buyback program announced on January 24, 2017, the Company returned $992,000 of capital to its shareholders through the repurchase of 251,800 shares of its common stock in the first quarter of 2017.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status.

 

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

March 31, 2017

(In thousands, except per share and ratio data)

(Unaudited)


2017

 

1QTR

 

 

 

 

 

 

 

 

 

 

PERFORMANCE DATA FOR THE PERIOD:

 

 

 

 

 

Net income

$1,348

 

 

 

 

Net income available to common shareholders

1,348

 

 

 

 

 

 

 

 

 

 

PERFORMANCE PERCENTAGES (annualized):

 

 

 

 

 

Return on average assets

0.47%

 

 

 

 

Return on average equity

5.74

 

 

 

 

Net interest margin

3.27

 

 

 

 

Net charge-offs as a percentage of average loans

0.04

 

 

 

 

Loan loss provision as a percentage of

    average loans


0.10

 

 

 

 

Efficiency ratio

82.04

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE:

 

 

 

 

 

Net income:

 

 

 

 

 

Basic

$0.07

 

 

 

 

Average number of common shares outstanding

18,814

 

 

 

 

Diluted

0.07

 

 

 

 

Average number of common shares outstanding

18,922

 

 

 

 

Cash dividends declared

$0.015

 

 

 

 


2016

 

1QTR

2QTR

3QTR

4QTR

YEAR

 

 

 

 

 

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

 

 

 

 

 

Net income (loss)

$(1,267)

$1,362

$1,065

$1,150

$2,310

Net income (loss) available to common shareholders

(1,282)

1,362

1,065

1,150

2,295

 

 

 

 

 

 

PERFORMANCE PERCENTAGES (annualized):

 

 

 

 

 

Return on average assets

(0.45)%

0.48%

0.37%

0.40%

0.20%

Return on average equity

(4.86)

5.60

4.27

4.58

2.30

Net interest margin

3.30

3.23

3.15

3.18

3.26

Net charge-offs as a percentage of average loans

1.60

0.01

0.14

0.04

0.44

Loan loss provision as a percentage of

    average loans


1.42


0.11


0.13


0.13


0.44

Efficiency ratio

89.24

82.05

85.07

84.82

85.27

 

 

 

 

 

 

PER COMMON SHARE:

 

 

 

 

 

Net income (loss):

 

 

 

 

 

Basic

$(0.07)

$0.07

$0.06

$0.06

$0.12

Average number of common shares outstanding

18,884

18,897

18,899

18,903

18,896

Diluted

(0.07)

0.07

0.06

0.06

0.12

Average number of common shares outstanding

18,884

18,948

18,957

18,990

18,955

Cash dividends declared

$0.010

$0.010

$0.015

$0.015

$0.050















AMERISERV FINANCIAL, INC.

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

(Unaudited)


2017

 

1QTR

 

 

 

FINANCIAL CONDITION  DATA AT PERIOD END

 

 

 

 

Assets

$1,172,127

 

 

 

Short-term investments/overnight funds

8,320

 

 

 

Investment securities

165,781

 

 

 

Loans and loans held for sale

899,456

 

 

 

Allowance for loan losses

10,080

 

 

 

Goodwill

11,944

 

 

 

Deposits

964,776

 

 

 

FHLB borrowings

79,718

 

 

 

Subordinated debt, net

7,447

 

 

 

Shareholders’ equity

95,604

 

 

 

Non-performing assets

1,488

 

 

 

Tangible common equity ratio

7.21

 

 

 

Total capital (to risk weighted assets) ratio

13.03

 

 

 

PER COMMON SHARE:

 

 

 

 

Book value

$5.12

 

 

 

Tangible book value

4.48

 

 

 

Market value

3.75

 

 

 

Trust assets – fair market value (A)

$2,025,304

 

 

 

 

 

 

 

 

STATISTICAL DATA AT PERIOD END:

 

 

 

 

Full-time equivalent employees

307

 

 

 

Branch locations

16

 

 

 

Common shares outstanding

18,666,520

 

 

 


2016

 

1QTR

2QTR

3QTR

4QTR

FINANCIAL CONDITION  DATA AT PERIOD END

 

 

 

 

Assets

$1,121,701

$1,142,492

$1,145,655

$1,153,780

Short-term investments/overnight funds

5,556

6,836

8,279

8,966

Investment securities

139,000

145,753

145,609

157,742

Loans and loans held for sale

882,410

895,513

896,301

886,858

Allowance for loan losses

9,520

9,746

9,726

9,932

Goodwill

11,944

11,944

11,944

11,944

Deposits

906,773

940,931

962,736

967,786

FHLB borrowings

88,952

72,617

56,943

58,296

Subordinated debt, net

7,424

7,430

7,435

7,441

Shareholders’ equity

97,589

99,232

100,044

95,395

Non-performing assets

3,007

2,230

1,907

1,624

Tangible common equity ratio

7.72

7.72

7.77

7.31

Total capital (to risk weighted assets) ratio

13.11

13.04

13.17

13.15

PER COMMON SHARE:

 

 

 

 

Book value

$5.16

$5.25

$5.29

$5.05

Tangible book value

4.53

4.62

4.66

4.41

Market value

2.99

3.02

3.32

3.70

Trust assets – fair market value (A)

$1,974,180

$1,982,868

$2,011,344

$1,992,978

 

 

 

 

 

STATISTICAL DATA AT PERIOD END:

 

 

 

 

Full-time equivalent employees

317

311

310

305

Branch locations

16

16

16

16

Common shares outstanding

18,894,561

18,896,876

18,903,472

18,903,472

NOTES:

        (A) Not recognized on the consolidated balance sheets.




AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENT OF INCOME

(In thousands)

(Unaudited)


2017

 

1QTR

 

 

 

 

INTEREST INCOME

 

 

 

 

 

Interest and fees on loans

$9,556

 

 

 

 

Interest on investments

1,192

 

 

 

 

Total Interest Income

10,748

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

Deposits

1,436

 

 

 

 

All borrowings

591

 

 

 

 

Total Interest Expense

2,027

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

8,721

 

 

 

 

Provision for loan losses

225

 

 

 

 

NET INTEREST INCOME AFTER

   PROVISION FOR LOAN LOSSES


8,496

 

 

 

 

 

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

 

Trust and investment advisory fees

2,166

 

 

 

 

Service charges on deposit accounts

374

 

 

 

 

Net realized gains on loans held for sale

114

 

 

 

 

Mortgage related fees

75

 

 

 

 

Net realized gains on investment securities

27

 

 

 

 

Bank owned life insurance

141

 

 

 

 

Other income

665

 

 

 

 

Total Non-Interest Income

3,562

 

 

 

 

 

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

 

Salaries and employee benefits

6,010

 

 

 

 

Net occupancy expense

674

 

 

 

 

Equipment expense

419

 

 

 

 

Professional fees

1,200

 

 

 

 

FDIC deposit insurance expense

160

 

 

 

 

Other expenses

1,622

 

 

 

 

Total Non-Interest Expense

10,085

 

 

 

 

 

 

 

 

 

 

PRETAX INCOME

1,973

 

 

 

 

Income tax expense

625

 

 

 

 

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS


1,348

 

 

 

 



















2016

 

1QTR

2QTR

3QTR

4QTR

YEAR

INTEREST INCOME

 

 

 

 

TO DATE

Interest and fees on loans

$9,465

$9,409

$9,462

$9,525

$37,861

Interest on investments

957

980

1,014

1,057

4,008

Total Interest Income

10,422

10,389

10,476

10,582

41,869

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

Deposits

1,254

1,330

1,391

1,425

5,400

All borrowings

610

573

579

573

2,335

Total Interest Expense

1,864

1,903

1,970

1,998

7,735

 

 

 

 

 

 

NET INTEREST INCOME

8,558

8,486

8,506

8,584

34,134

Provision for loan losses

3,100

250

300

300

3,950

NET INTEREST INCOME AFTER

   PROVISION  FOR LOAN LOSSES


5,458


8,236


8,206


8,284


30,184

 

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

 

Trust and investment advisory fees

2,075

2,124

2,035

2,099

8,333

Service charges on deposit accounts

415

404

433

422

1,674

Net realized gains on loans held for sale

107

185

260

332

884

Mortgage related fees

63

98

132

74

367

Net realized gains (losses) on investment

   securities

57

60

60

-

177

Bank owned life insurance

167

169

169

170

675

Other income

553

702

572

701

2,528

Total Non-Interest Income

3,437

3,742

3,661

3,798

14,638

 

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

 

Salaries and employee benefits

6,166

5,868

5,901

6,099

24,034

Net occupancy expense

737

690

656

699

2,782

Equipment expense

436

409

419

424

1,688

Professional fees

1,465

1,192

1,330

1,293

5,280

FDIC deposit insurance expense

179

188

189

153

709

Other expenses

1,728

1,692

1,861

1,841

7,122

Total Non-Interest Expense

10,711

10,039

10,356

10,509

41,615

 

 

 

 

 

 

PRETAX INCOME (LOSS)

(1,816)

1,939

1,511

1,573

3,207

Income tax expense (benefit)

(549)

577

446

423

897

NET INCOME (LOSS)

(1,267)

1,362

1,065

1,150

2,310

Preferred stock dividends

15

-

-

-

15

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS


$(1,282)


$1,362


$1,065


$1,150


$2,295






















AMERISERV FINANCIAL, INC.

NASDAQ: ASRV

Average Balance Sheet Data (In thousands)

(Unaudited)


2017                                                 2016

 

 

 

 

 

 

1QTR

 

1QTR

 

Interest earning assets:

 

 

 

 

Loans and loans held for sale, net of unearned income

$889,908

 

$881,063

 

Short-term investment in money market funds

7,940

 

3,484

 

Deposits with banks

1,030

 

7,955

 

Total investment securities

168,261

 

142,161

 

Total interest earning assets

1,067,139

 

1,034,663

 

 

 

 

 

 

Non-interest earning assets:

 

 

 

 

Cash and due from banks

22,330

 

18,739

 

Premises and equipment

11,804

 

12,090

 

Other assets

67,794

 

67,751

 

Allowance for loan losses

(10,053)

 

(9,886)

 

 

 

 

 

 

Total assets

$1,159,014

 

$1,123,357

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

Interest bearing deposits:

 

 

 

 

Interest bearing demand

$127,531

 

$ 101,293

 

Savings

97,254

 

95,303

 

Money market

278,811

 

264,433

 

Other time

288,830

 

267,805

 

Total interest bearing deposits

792,426

 

728,834

 

Borrowings:

 

 

 

 

Federal funds purchased and other short-term borrowings

8,863

 

29,449

 

Advances from Federal Home Loan Bank

45,535

 

49,135

 

Guaranteed junior subordinated deferrable interest debentures

13,085

 

13,085

 

Subordinated debt

7,650

 

7,650

 

Total interest bearing liabilities

867,559

 

828,153

 

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

  Demand deposits

183,532

 

181,096

 

  Other liabilities

12,613

 

9,370

 

Shareholders’ equity

95,310

 

104,738

 

Total liabilities and shareholders’ equity

$1,159,014

 

$1,123,357