AmeriServ Financial Inc. (ASRV, Financial) filed Quarterly Report for the period ended 2009-03-31.
Ameriserv Financial Inc. a financial holding company is the parent of Ameriserv Financial and AmeriServ Trust & Financial Services in Johnstown Standard Mortgage Corporation in Atlanta AmeriServ Associates of State College and AmeriServ Life Insurance Company in Arizona. AmeriServ Financial Inc. has a market cap of $38.9 million; its shares were traded at around $1.84 with a P/E ratio of 9.2 and P/S ratio of 0.6.
The Companys net interest income in the first quarter of 2009 increased by $1.4 million or 20.9% from the prior years first quarter and the net interest margin rose by 40 basis points over the same comparative period. The increased net interest income and margin resulted from a combination of good balance sheet growth and the pricing benefits achieved from a steeper positively sloped yield curve. Specifically, total loans averaged $714 million in the first quarter of 2009, an increase of $80 million or 12.7% over the first quarter of 2008. The loan growth was driven by increased commercial and commercial real-estate production. Total deposits averaged $715 million in the first quarter of 2009, an increase of $20 million or 2.9% over the same 2008 quarter. We believe that uncertainties in the financial markets and the economy have contributed to growth in both money market and demand deposits as consumers have looked for safety in well capitalized community banks like AmeriServ Financial. Additionally, the Company also benefitted from a favorable decline in interest expense caused by the more rapid downward repricing of both deposits and FHLB borrowings due to the market decline in short-term interest rates.
..PROVISION FOR LOAN LOSSES..... The Company recorded a $1.8 million provision for loan losses in the first quarter of 2009 compared to a $150,000 provision in the first quarter of 2008, an increase of $1.65 million. When determining the provision for loan losses, the Company considers a number of factors, some of which include periodic credit reviews, delinquency and charge-off trends, concentrations of credit, loan volume trends and broader local and national economic trends. The higher loan provision in the first quarter of 2009 was caused by the Companys decision to strengthen its allowance for loan losses due to the downgrade of the rating classification of an $11 million performing commercial loan and uncertainties in the local and national economies. The Companys net charge-offs in the first quarter of 2009 amounted to only $49,000 or 0.03% of total loans. This amount was comparable with the net charge-offs of $93,000 or 0.06% of total loans experienced in the first quarter of 2008. Non-performing assets increased moderately to $5.1 million or 0.70% of total loans at March 31, 2009 compared to $4.6 million or 0.65% of total loans at December 31, 2008. Overall, the allowance for loan losses provided 209% coverage of non-performing assets and was 1.47% of total loans at March 31, 2009 compared to 195% of non-performing assets and 1.26% of total loans at December 31, 2008. Note also that the Company has no direct exposure to sub-prime mortgage loans in either its loan or investment portfolios.
.....NON-INTEREST EXPENSE.....Non-interest expense for the first quarter of 2009 totaled $9.2 million and increased by $383,000 or 4.4% from the prior years first quarter. Total salaries and benefits expense increased by $262,000 or 5.4% due to greater incentive compensation and health care costs. The other main factor causing the increase in non-interest expense was a $151,000 increase in professional fees. The increased professional fees resulted primarily from higher legal, consulting and other professional fees in the first quarter of 2009.
.....BALANCE SHEET.....The Company's total consolidated assets were $975 million at March 31, 2009, which was modestly up by $8.1 million or 0.8% from the $967 million level at December 31, 2008. The Companys loans totaled $727 million at March 31, 2009, an increase of $19.9 million or 2.8% as a result of continued growth in the commercial loan portfolio. Note that the Companys commercial loan pipelines remain good as we enter the second quarter of 2009 so we expect to see continued loan growth in the second quarter. Investment securities and short-term money market investments declined by $8.6 million so far in 2009 due to principal repayments in the mortgage backed securities portfolio and $3.4 million of investment security sales in the first quarter. The Company has elected to utilize this cash to fund loan growth.
The Companys deposits totaled $747 million at March 31, 2009, which was $51.9 million or 7.5% higher than December 31, 2008 due to an increase in money market deposits, certificates of deposit and demand deposit account balances. We believe that uncertainties in the financial markets and the economy have contributed to growth in our deposits as consumers have looked for safety in well capitalized community banks like AmeriServ Financial. As a result of this deposit growth, we were able to reduce short-term FHLB borrowings by $43.4 million during the first quarter of 2009. Total FHLB borrowings now represent 9.3% of total assets compared to 13.8% at December 31, 2008. The Companys total shareholders equity has increased by $1.0 million since year-end 2008, and the Company continues to be considered well capitalized for regulatory purposes with an asset leverage ratio at March 31, 2009 of 11.82%. The Companys tangible book value per common share at March 31, 2009 was $3.80 and its tangible common equity to tangible assets ratio was 8.35%.
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Ameriserv Financial Inc. a financial holding company is the parent of Ameriserv Financial and AmeriServ Trust & Financial Services in Johnstown Standard Mortgage Corporation in Atlanta AmeriServ Associates of State College and AmeriServ Life Insurance Company in Arizona. AmeriServ Financial Inc. has a market cap of $38.9 million; its shares were traded at around $1.84 with a P/E ratio of 9.2 and P/S ratio of 0.6.
Highlight of Business Operations:
The Company reported net income of $533,000 or $0.01 per diluted common share for the first quarter of 2009. This represents a decrease of $696,000 or 57% from the first quarter 2008 net income of $1.2 million or $0.06 per diluted common share. Diluted earnings per share declined more significantly by 83% due to the preferred dividend requirement on the CPP preferred stock in 2009, which amounted to $259,000 and reduced the amount of net income available to common shareholders. Further strengthening of our allowance for loan losses was the primary factor causing the decline in earnings between periods. This higher provision for loan losses overshadowed strong growth in net interest income due to increased loans outstanding and effective balance sheet management in a declining interest rate environment.The Companys net interest income in the first quarter of 2009 increased by $1.4 million or 20.9% from the prior years first quarter and the net interest margin rose by 40 basis points over the same comparative period. The increased net interest income and margin resulted from a combination of good balance sheet growth and the pricing benefits achieved from a steeper positively sloped yield curve. Specifically, total loans averaged $714 million in the first quarter of 2009, an increase of $80 million or 12.7% over the first quarter of 2008. The loan growth was driven by increased commercial and commercial real-estate production. Total deposits averaged $715 million in the first quarter of 2009, an increase of $20 million or 2.9% over the same 2008 quarter. We believe that uncertainties in the financial markets and the economy have contributed to growth in both money market and demand deposits as consumers have looked for safety in well capitalized community banks like AmeriServ Financial. Additionally, the Company also benefitted from a favorable decline in interest expense caused by the more rapid downward repricing of both deposits and FHLB borrowings due to the market decline in short-term interest rates.
..PROVISION FOR LOAN LOSSES..... The Company recorded a $1.8 million provision for loan losses in the first quarter of 2009 compared to a $150,000 provision in the first quarter of 2008, an increase of $1.65 million. When determining the provision for loan losses, the Company considers a number of factors, some of which include periodic credit reviews, delinquency and charge-off trends, concentrations of credit, loan volume trends and broader local and national economic trends. The higher loan provision in the first quarter of 2009 was caused by the Companys decision to strengthen its allowance for loan losses due to the downgrade of the rating classification of an $11 million performing commercial loan and uncertainties in the local and national economies. The Companys net charge-offs in the first quarter of 2009 amounted to only $49,000 or 0.03% of total loans. This amount was comparable with the net charge-offs of $93,000 or 0.06% of total loans experienced in the first quarter of 2008. Non-performing assets increased moderately to $5.1 million or 0.70% of total loans at March 31, 2009 compared to $4.6 million or 0.65% of total loans at December 31, 2008. Overall, the allowance for loan losses provided 209% coverage of non-performing assets and was 1.47% of total loans at March 31, 2009 compared to 195% of non-performing assets and 1.26% of total loans at December 31, 2008. Note also that the Company has no direct exposure to sub-prime mortgage loans in either its loan or investment portfolios.
.....NON-INTEREST EXPENSE.....Non-interest expense for the first quarter of 2009 totaled $9.2 million and increased by $383,000 or 4.4% from the prior years first quarter. Total salaries and benefits expense increased by $262,000 or 5.4% due to greater incentive compensation and health care costs. The other main factor causing the increase in non-interest expense was a $151,000 increase in professional fees. The increased professional fees resulted primarily from higher legal, consulting and other professional fees in the first quarter of 2009.
.....BALANCE SHEET.....The Company's total consolidated assets were $975 million at March 31, 2009, which was modestly up by $8.1 million or 0.8% from the $967 million level at December 31, 2008. The Companys loans totaled $727 million at March 31, 2009, an increase of $19.9 million or 2.8% as a result of continued growth in the commercial loan portfolio. Note that the Companys commercial loan pipelines remain good as we enter the second quarter of 2009 so we expect to see continued loan growth in the second quarter. Investment securities and short-term money market investments declined by $8.6 million so far in 2009 due to principal repayments in the mortgage backed securities portfolio and $3.4 million of investment security sales in the first quarter. The Company has elected to utilize this cash to fund loan growth.
The Companys deposits totaled $747 million at March 31, 2009, which was $51.9 million or 7.5% higher than December 31, 2008 due to an increase in money market deposits, certificates of deposit and demand deposit account balances. We believe that uncertainties in the financial markets and the economy have contributed to growth in our deposits as consumers have looked for safety in well capitalized community banks like AmeriServ Financial. As a result of this deposit growth, we were able to reduce short-term FHLB borrowings by $43.4 million during the first quarter of 2009. Total FHLB borrowings now represent 9.3% of total assets compared to 13.8% at December 31, 2008. The Companys total shareholders equity has increased by $1.0 million since year-end 2008, and the Company continues to be considered well capitalized for regulatory purposes with an asset leverage ratio at March 31, 2009 of 11.82%. The Companys tangible book value per common share at March 31, 2009 was $3.80 and its tangible common equity to tangible assets ratio was 8.35%.
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