ASRV AmeriServ Financial Inc

JOHNSTOWN, Pa., Jan. 19, 2016 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported fourth quarter 2015 net income available to common shareholders of $1,321,000, or $0.07 per diluted common share.  This represented a significant increase when compared to net income available to common shareholders of $697,000, or $0.04 per diluted common share, reported for the fourth quarter of 2014.  For the year ended December 31, 2015, the Company reported net income available to common shareholders of $5,787,000, or $0.31 per diluted share.  This represented a 107% increase in earnings per share from the full year 2014 where net income available to common shareholders totaled $2,813,000, or $0.15 per diluted common share.  The following table highlights the Company's financial performance for both quarters and years ended December 31, 2015 and 2014:           

Jeffrey A. Stopko, President and Chief Executive Officer, commented on the year ended December 31, 2015 financial results: "We were able to meaningfully improve the earnings power of AmeriServ Financial Inc. in 2015 through a combination of revenue growth and non-interest expense reduction.  Specifically, solid loan and deposit growth in our community banking business contributed to an increase of $1.3 million, or 3.9%, in net interest income while increasing revenue from our trust and wealth management business contributed to 6.6% growth in non-interest income in 2015.  Additionally, operating expenses declined by $1.7 million, or 3.9%, as we improved the ongoing efficiency of the Company by successfully executing several profitability improvement initiatives."

The Company's net interest income in the fourth quarter of 2015 decreased by $140,000 from the prior year's fourth quarter but increased by $1,317,000, or 3.9%, for the full year of 2015 when compared to the full year 2014.  The decrease in net interest income between the fourth quarter of 2015 and the prior year's fourth quarter is due to net interest margin compression as well as the 2015 fourth quarter reversal of previously recognized interest income from a loan that was transferred into non-accrual status.  The impact of the net interest margin compression is evident in the Company's net interest margin ratio which was 3.30% for the fourth quarter of 2015 and was 19 basis points lower than the net interest margin of 3.49% for the fourth quarter of 2014.  Total earning assets averaged $1.028 billion in the fourth quarter of this year, or 3.9% higher than the $990 million average in the prior year's fourth quarter.  On an annual basis, the Company's net interest income increased in 2015 when compared to 2014 as net interest margin compression was more than fully mitigated by earning asset growth, a greater level of prepayment fees on early loan payoffs and an increased dividend from the FHLB of Pittsburgh.  The Company's net interest margin of 3.49% for the full year 2015 was three basis points lower than the net interest margin of 3.52% for the full year 2014.  The earning asset growth occurred in the loan portfolio as total loans averaged $857 million for the full year of 2015 which is $52 million, or 6.5% higher than the $805 million average for the full year of 2014.  This loan growth reflects the successful results of the Company's sales calling efforts, with an emphasis on generating commercial loans and owner occupied commercial real estate loans particularly through its loan production offices in the stronger growth markets of Pittsburgh and Altoona in Pennsylvania, and Hagerstown, Maryland.  Overall, total interest income decreased by $62,000, or 0.6%, in the fourth quarter of 2015 but increased by $1.4 million, or 3.6%, for the full year 2015.

Total interest expense has been well controlled in 2015 as it increased by $78,000 in the fourth quarter and $123,000, or 1.9%, for the full year of 2015 due to tight control of our cost of funds through disciplined deposit pricing.  Total deposit interest expense decreased by $137,000, or 2.8%, in 2015 when compared to last year.  Even with this reduction in deposit costs, the Company continues to have a strong loyal core deposit base and success in cross-selling new loan customers into deposit products.  Specifically, total deposits averaged $893 million for full year of 2015 which is $21 million, or 2.4%, higher than the $872 million average in 2014.  The Company is pleased that a meaningful portion of this deposit growth occurred in non-interest bearing demand deposit accounts.  This decreased interest expense for deposits has been offset by a $260,000 increase in the interest cost for borrowings as the Company has utilized more FHLB term advances to extend borrowings and provide protection against rising interest rates.  

The Company recorded a $500,000 provision for loan losses in the fourth quarter of 2015 compared to a $375,000 provision in the fourth quarter of 2014.  The higher provision that was needed this year was largely due to the transfer into non-accrual status of a $4.1 million loan to a customer in the fracking industry that filed for bankruptcy protection in the fourth quarter.  This is the Company's only meaningful direct loan exposure to the energy industry.  For the full year 2015, the Company recorded a $1,250,000 provision for loan losses which represented an increase of $875,000 when compared to the 2014 full year provision of $375,000.  The higher provision recorded in 2015 was also needed to support the continuing growth of the loan portfolio and cover net loan charge-offs.  The Company experienced net loan charge-offs of $351,000, or 0.16% of total loans, in the fourth quarter of 2015 which was comparable to net loan charge-offs of $334,000, or 0.16% of total loans, in the fourth quarter of 2014.  For the full years, there were net loan charge-offs of $952,000, or 0.11% of total loans, in 2015 compared to net loan charge-offs of $856,000, or 0.11% of total loans, in 2014.  Overall, even with the fourth quarter increase in non-performing assets, the Company continued to maintain strong asset quality in 2015.  At December 31, 2015, non-performing assets totaled $6.3 million, or 0.71% of total loans.  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 159% coverage of non-performing loans, and 1.13% of total loans, at December 31, 2015, compared to 400% coverage of non-performing loans, and 1.16% of total loans, at December 31, 2014.

Total non-interest income in the fourth quarter of 2015 increased by $288,000 from the prior year's fourth quarter and for the full year of 2015 increased by $944,000, or 6.6%, when compared to the full year of 2014.  Increased revenue from trust and investment advisory fees and bank owned life insurance were two factors contributing to both the quarterly and annual non-interest income increase.  Specifically, trust and investment advisory fees increased by $90,000, or 4.6%, for the quarter and $579,000, or 7.5%, annually due to increased assets under management which reflects successful new business development activities as well as effective management of existing customer accounts in this volatile market environment.  Trust assets under administration totaled $1.97 billion as of December 31, 2015.  Revenue from bank owned life insurance increased by $210,000 for the quarter and $868,000 for the full year due to the receipt of four death claims in 2015.  These increases were partially offset by a reduction in deposit service charges in 2015 of $10,000 for the quarter and $207,000 for the full year due to fewer overdraft fees.  Mortgage related fees also dropped by $43,000 in the fourth quarter and $199,000 for the full year due to less mortgage refinance activity in 2015.  Finally, for the full year 2015 there was a decrease of $106,000 in revenue from investment security sale transactions as the Company recognized a lower level of gains on the sale of securities with low balances in 2015 compared to gains realized on the sale of rapidly pre-paying mortgage backed securities in 2014.

Total non-interest expense in the fourth quarter of 2015 decreased by $600,000, or 5.6%, from the prior year's fourth quarter and for the full year of 2015 decreased by $2,333,000, or 5.4%, when compared to the full year of 2014.  Salaries and employee benefits were down by $454,000 in the fourth quarter and by $918,000, or 3.7%, for the full year of 2015, due to 21 fewer average full time equivalent employees as certain employees who elected to participate in an early retirement program in late 2014 were not replaced in order to achieve efficiencies identified as part of a profitability improvement program.  As part of this early retirement program, the Company recognized a $400,000 pension charge in the fourth quarter of 2014.  Professional fees increased modestly by $34,000 in the fourth quarter of 2015 but were $406,000, or 7.5% lower for the year.  The annual decrease results from lower legal fees, director's fees and consulting costs in 2015.  Additionally, the Company recognized a $669,000 goodwill impairment charge related to its investment advisory subsidiary in the third quarter of 2014.  There was no such charge in 2015.  The remainder of the key non-interest expense categories were relatively consistent or down between years reflecting the Company's continuing focus on reducing and controlling costs.  Finally, the Company recorded an income tax expense of $2,343,000, or an effective tax rate of 28.1%, in 2015 compared to the income tax expense of $1,598,000, or an effective tax rate of 34.6%, for 2014.  The higher income tax expense is due to the Company's increased earnings in 2015 as the Company's effective tax rate is lower than 2014 due to an increase in tax free revenue from bank owned life insurance.  The higher effective tax rate in 2014 was also due to the non-deductibility of the goodwill impairment charge for tax purposes.

The Company had total assets of $1.15 billion, shareholders' equity of $119 million, a book value of $5.19 per common share and a tangible book value of $4.56 per common share at December 31, 2015.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status and had a tangible common equity to tangible assets ratio of 7.57% at December 31, 2015.

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.    

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ameriserv-financial-reports-increased-earnings-for-the-fourth-quarter-and-full-year-of-2015-300206149.html

SOURCE AmeriServ Financial, Inc.