JOHNSTOWN, Pa., Sept. 25, 2014 /PRNewswire/ -- AmeriServ
Financial, Inc. (NASDAQ: ASRV) announced that it expects to record
a third quarter non-cash goodwill impairment charge of
approximately $675,000 related to
West Chester Capital Advisors (WCCA), its registered investment
advisor subsidiary. As previously disclosed in our filings
with the Securities and Exchange Commission, the voluntary
departure of WCCA's former CEO and the related litigation against
him for violations of his employment agreement, caused disruption
within the WCCA customer base during 2014. This disruption
ultimately led to the loss of certain clients and a reduction in
the projected earnings capacity of WCCA which caused the goodwill
impairment charge. The Company remains strategically
committed to its asset management subsidiary. WCCA is well
integrated into our wealth management businesses and is expected to
improve its earnings power with new business development in future
periods.
The Company's financial results for the third quarter of 2014
will also include approximately $150,000 of non-recurring expenses related to a
profitability improvement project. The Company engaged a
consulting firm that specializes in the areas of expense
rationalization and profit improvement for community banks.
This firm completed a thorough analysis of our business operations
and practices during the third quarter. As a result of this
project, the firm provided the Company with recommendations to
reduce expenses and improve future profitability that we will
evaluate and prioritize for implementation beginning in the fourth
quarter of 2014 and continuing into 2015. The Company expects
that its payback on this project will be significant.
The Company also recently offered an early retirement incentive
program to employees that were at least age 60 with 15 years of
pension benefit service. A total of 46 employees, or
approximately 13% of our workforce, are eligible for the
program. The Company expects to incur a one-time charge in
the fourth quarter of 2014 to record a special termination benefit
for those employees that elect to participate in this early
retirement incentive program. We currently anticipate that
the maximum amount of such charge would be approximately
$550,000 if all 46 eligible employees
elect to participate in this early retirement incentive
program. The final amount of the charge, however, will not be
determined until the fourth quarter when participant election
decisions are due. The Company offered this program in an
attempt to reduce future employee costs particularly the expenses
associated with its defined benefit pension plan. The ongoing
future savings resulting from this program also cannot be finalized
until the fourth quarter of 2014 when participant elections are
made. However, the Company initially expects that between the
profitability improvement project and the early retirement
incentive program, we should be able to reduce future non-interest
expenses by $1.5 million annually
once these programs are fully implemented.
AmeriServ Financial, Inc. is the parent of AmeriServ Financial
Bank and AmeriServ Trust and Financial Services Company in
Johnstown. The Company's subsidiaries provide full-service
banking and trust and wealth management services through seventeen
community offices in southwestern Pennsylvania. At
June 30, 2014, AmeriServ had total
assets of $1.06 billion, a book value
of $5.05 per common share and a
tangible book value of $4.38 per
common share.
Forward-Looking Statements
This news release contains forward-looking statements as defined
in the Securities Exchange Act of 1934 and is subject to the safe
harbors created therein. These forward-looking statements involve
risks and uncertainties that could cause AmeriServ's results to
differ materially from management's current expectations. Such
risks and uncertainties include those related to the Company's
ability to realize the non-interest and other expense savings
described in this press release and are also detailed in
AmeriServ's filings with the Securities and Exchange Commission,
including our Annual Report on Form 10-K for the year ended
December 31, 2013. Forward-looking
statements are based on the beliefs and assumptions of AmeriServ's
management and on currently available information. The statements
in this press release are made as of the date of this press
release, even if subsequently made available by AmeriServ on its
website or otherwise. AmeriServ undertakes no responsibility to
publicly update or revise any forward-looking statement.
SOURCE AmeriServ Financial, Inc.