JOHNSTOWN, Pa., July 18, 2023 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported a second quarter 2023 net loss of $187,000, or $0.01 per diluted common share.  This earnings performance was a $2,168,000, or 109.4%, decrease from the second quarter of 2022 when net income totaled $1,981,000, or $0.12 per diluted common share.  For the six-month period ended June 30, 2023, the Company reported net income of $1,328,000, or $0.08 per diluted common share.  This represents a 69.2% decrease in earnings per share from the six-month period of 2022 when net income totaled $4,399,000, or $0.26 per diluted common share.  The following table highlights the Company's financial performance for both the three- and six-month periods ended June 30, 2023, and 2022: 



Second
Quarter 
2023


Second
Quarter 
2022


Six Months Ended
June 30, 2023


Six Months Ended
June 30, 2022










Net income (loss)


$

(187,000)


$

1,981,000


$

1,328,000


$

4,399,000

Diluted earnings per share


$

(0.01)


$

0.12


$

0.08


$

0.26

Jeffrey A. Stopko, President and Chief Executive Officer, commented on the 2023 second quarter financial results: "The net loss that AmeriServ Financial reported in the second quarter of 2023 was primarily attributable to legal and professional costs incurred to defend the company against an activist investor waging a proxy contest for Board seats. We continued to effectively operate our customer relationship focused community bank in a conservative manner during this period of external distraction as we took necessary steps to protect the best interests of all shareholders and stakeholders. Since the end of 2022, we have seen an increase of $19.0 million, or 1.7%, in deposits, which demonstrates customer confidence and the strength and loyalty of our core deposit base. Total loan balances are comparable with prior year-end and grew during the second quarter. Additionally, wealth management revenues have shown modest growth for the past two consecutive quarters. We believe that our Company is well positioned to withstand ongoing market volatility and potential industry-related challenges that we may face through the remainder of 2023."

All second quarter and six months of 2023 financial performance metrics within this document are compared to the second quarter and six months of 2022 unless otherwise noted.

The Company's net interest income in the second quarter of 2023 decreased by $1.0 million, or 10.0%, from the prior year's second quarter and, for the first six months of 2023, decreased by $1.3 million, or 6.3%, when compared to the first six months of 2022.  The Company's net interest margin of 2.89% for the second quarter of 2023 and 2.96% for the six-month timeframe represents a 34-basis point decrease for the quarter and a 23-basis point decline for the six-months.  The decrease in net interest income reflects total interest expense increasing to a higher level than the increase in total interest income.  The Company continues to benefit from increased yields on total loans and investment securities due to a higher U.S. Treasury yield curve and the Federal Reserve's action to tighten monetary policy in their effort to tame decades high inflation.  But, similar to what is occurring across the banking industry, the increased national interest rates have caused total deposit and borrowing costs to increase to a higher degree, resulting in net interest margin compression and lower net interest income.  Second quarter and six months 2023 financial results also reflect an increase in the Company's provision for credit losses after a provision benefit was recognized in both time periods last year.  Total non-interest income is lower for the second quarter of 2023 but improved for the six-month time period.  Total non-interest expense is higher for both time periods in 2023 compared to 2022, due to additional legal and professional services costs related to defending the Company against an activist shareholder.  Overall, the decrease to net interest income, along with a higher provision for credit losses and increased non-interest expense resulted in the lower level of earnings in both the second quarter and six months of 2023.

Total average loans in the second quarter of 2023 are higher than the 2022 second quarter average by $9.1 million, or 0.9%, while total average loans for the first six months of 2023 were $8.0 million, or 0.8%, higher than the 2022 six-month average.  Excluding PPP loans, which still existed on the balance sheet in 2022, the favorable comparisons for total average loans in both time periods of 2023 would increase to $13.8 million, or 1.4%, for the second quarter, and increase to $16.4 million, or 1.7%, for the six months.  Loan pipelines continue to be strong, but customers have delayed fundings given the uncertainty that exists in the economy and expectations regarding interest rates.  Therefore, loan production in 2023 has been slower so far this year than what was experienced in 2022.  However, the strong level of production experienced throughout 2022 resulted in total average loans in 2023 comparing favorably to both the second quarter and six-month time periods of 2022.  Growth in commercial & industrial loans (C&I) and home equity loans more than offset decreased commercial real estate (CRE), residential mortgage and consumer loans.  Overall, the higher interest rate environment along with the higher average volumes of C&I and home equity loans, resulted in total loan interest income improving by $2.9 million, or 29.7%, for the second quarter of 2023, and by $5.7 million, or 29.5%, for the six months of 2023 when compared to both time periods of last year.  This increase occurred despite a $376,000 total reduction in PPP loan related income in 2023.   

Total investment securities averaged $263.9 million for the first half of 2023 which is $32.8 million, or 14.2%, higher than the $231.0 million average for the first half of last year.  The increase reflects additional securities purchased primarily during 2022 as the increased U.S. Treasury yield curve resulted in a more favorable market for securities purchasing activity causing the Company to redeploy some of its short-term excess liquidity.  Overall, the higher rates resulted in yields for new federal agency mortgage-backed securities and federal agency bonds improving and exceeding the overall average yield of the existing securities portfolio causing interest income from investments to increase by $1.2 million, or 37.0%, through six months of this year.  So far in 2023, purchases of securities have slowed significantly as more funds have been allocated to the loan portfolio and the Company has been controlling the amount of overnight borrowed funds.  The rising national interest rates caused the rate on overnight borrowed funds to be in line with or exceed the yield on the typical types of federal agency mortgage-backed securities that are normally purchased.  While yields on new security purchases still exceed the overall average yield of the existing securities portfolio, the shrinking and in some cases negative spread between overnight borrowings and the yield on new securities caused the slowdown in purchasing activity.  Thus, the new investment security purchases have primarily been used to replace maturing securities cash flow in order to maintain appropriate balances for public funds pledging purposes. Overall, the 2023 first six-month average balance of total interest earning assets increased since last year's six-month average by $7.3 million, or 0.6%, while total interest income increased by $6.9 million, or 30.6%, since the first six months of 2022.

On the liability side of the balance sheet, through six months, total average deposits are $7.4 million, or 0.6%, lower compared to the first six months of 2022.  The modest decrease since last year is reflective of a portion of the funds from the government stimulus programs leaving the balance sheet and reflects greater pricing competition in the market to retain deposits because of the increasing national interest rates.  Since early March 2023 when two large bank failures occurred, customer fear of contagion within the industry caused deposit flight, especially uninsured deposits, from certain banks to other financial services providers.  Despite this turmoil, AmeriServ Financial's core deposit base continued to demonstrate the strength and stability that it has for many years.  Total deposits in fact grew during the first six months of 2023 by $19.0 million, or 1.7%, on an end of period basis since December 31, 2022, demonstrating customer confidence in our bank.  The Company does not utilize brokered deposits as a funding source.  In addition to its strong, loyal core deposit base, the Company has several other sources of liquidity, including a significant unused borrowing capacity at the Federal Home Loan Bank, overnight lines of credit at correspondent banks and access to the Federal Reserve Discount Window.  The loan to deposit ratio averaged 85.2% in the second quarter of 2023, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is strongly positioned to support our customers and our community during times of economic volatility.  

Total interest expense increased by $4.4 million, or 311.2%, for the second quarter of 2023, and by $8.2 million, or 306.2%, for the six months of 2023 when compared to both time periods of last year, due to higher deposit and short-term borrowings interest expense.  Deposit interest expense was higher by $7.5 million, or 425.6%, despite the first six months 2023 average volume of total interest bearing deposits remaining relatively consistent with the 2022 first six-month average, growing by $8.9 million, or 0.9%. The rising national interest rates resulted in certain deposit products, particularly public funds, that are tied to a market index, repricing upward with the move in national interest rates causing interest expense to increase.  Additionally, increased market competition has caused the Company to increase rates on certain shorter-term certificates of deposit in order to retain funds. For interest rate risk management purposes and to offset a portion of the unfavorable impact that rising funding costs are having on net interest income, management proactively executed a $50 million interest rate hedge in February 2023 and another $10 million interest rate hedge in April 2023 to fix the cost of certain deposits that are indexed and move with short-term interest rates.  These hedging transactions brought the Company's variability of net interest income to a more neutral position.  Overall, total deposit cost averaged 1.61% in the first half of 2023, which is 131 basis points higher than total deposit cost of 0.30% in the first half of 2022. 

Total borrowings interest expense increased by $701,000, or 76.9%, in the first half 2023 compared to the first half of 2022.  The increase results from the impact that the higher national interest rates had on overnight borrowings cost as well as the Company utilizing more overnight borrowed funds so far in 2023.  Total overnight borrowings averaged $32.8 million in the first half of 2023 after only $750,000 of average overnight borrowings were utilized during the first half of 2022.  As mentioned previously, given the high cost of overnight borrowed funds, management has been effectively controlling the usage of this funding source.  As a result, average overnight borrowed funds in the second quarter of 2023 decreased by $15.8 million, or 38.7%, from the first quarter of 2023 average balance.  Borrowings interest expense was favorably impacted by reduced interest expense from Federal Home Loan Bank (FHLB) term borrowings, which declined by $122,000, or 36.7%, during the six months of 2023 compared to 2022.  The average balance of FHLB term borrowings was lower in the first half of 2023 by $20.7 million, or 53.6%, as the strength of the Company's liquidity position allowed management to let FHLB term advances mature during 2022 and not be replaced.  However, given the inversion in the yield curve, FHLB term advances have rates that are lower than the cost of overnight borrowed funds.  Therefore, management is replacing matured FHLB term advances in 2023. 

The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL), as of January 1, 2023.  The adoption of this accounting standard necessitated that a day one increase of $1.2 million be made to the allowance for credit losses on our loan portfolio.  Furthermore, ASU 2016-13 necessitated that the Company establish an allowance for expected credit losses for held to maturity (HTM) debt securities.  Based upon the credit quality of the Company's HTM debt securities portfolio, the day one allowance for credit losses on our HTM securities portfolio totaled $114,000.  Both day one adjustments were consistent with the estimates that management disclosed in the Company's 2022 Form 10-K. 

The Company recorded a $43,000 expense for the provision for credit losses in the second quarter of 2023 after recognizing a $325,000 benefit in the second quarter of 2022 resulting in a net unfavorable change of $368,000.  For the first six months of 2023, the Company recorded $1.2 million of expense for the provision for credit losses after recognizing a $725,000 benefit in the first six months of 2022 resulting in a net unfavorable change of $1.9 million.  Included in the six-month 2023 provision expense was the recognition of a $926,000 loss from a subordinated debt investment with Signature Bank which was closed by banking regulators on March 12, 2023.  This was described in the Company's first quarter 2023 press release.  The 2023 provision for credit losses for the loan portfolio in both time periods was necessary due to risk rating and non-accrual activity. Total classified and criticized loan levels exhibited a net increase during the first six months of 2023 due to the downgrade of three commercial real estate loan relationships.  Overall non-performing assets remain well controlled, totaling $5.7 million, or 0.57% of total loans, on June 30, 2023.  Through six months of 2023, the Company experienced net loan charge-offs of $61,000, or 0.01% of total average loans, which compares favorably to net charge-offs of $105,000, or 0.02% of total average loans, in the first half of 2022.  In summary, the allowance for credit losses on the loan portfolio provided 216% coverage of non-performing assets, and 1.24% of total loans, on June 30, 2023, compared to 207% coverage of non-performing assets, and 1.08% of total loans, on December 31, 2022.   

Total non-interest income in the second quarter of 2023 decreased by $276,000, or 6.7%, from the prior year's second quarter but improved by $896,000, or 10.6%, in the first half of 2023 when compared to the first half of 2022.  Wealth management fees decreased by $187,000, or 6.3%, for the second quarter of 2023 and are $614,000, or 10.0%, lower for the six months compared to 2022.  Unfavorable market conditions for both equity securities and bonds have reduced the market value of wealth management assets.  Also, new customer business growth has only partially offset the unfavorable impact of market conditions on fee income.  The fair market value of wealth management assets declined since December 31, 2021, by $266.1 million, or 9.8%, and totaled $2.4 billion at June 30, 2023.  Other income is $122,000, or 20.3%, lower for the second quarter of 2023 and $226,000, or 19.4%, lower for the six months due to the recognition of a credit valuation adjustment to the market value of the interest rate swap contracts that the Company executed to accommodate the needs of certain borrowers while managing our interest rate risk position.  The improvement to total non-interest income for the 2023 six-month time period was due to AmeriServ Financial Bank selling all 7,859 shares of the Class B common stock of Visa Inc. that the bank owned for a sale price of $1.7 million. The shares had no carrying value on the bank's balance sheet since there was no historical cost basis in the shares.  Therefore, the entire sale was recognized as a gain.  The Company elected to capture this gain in 2023 due to volatility and uncertainty in the financial markets. Finally, net realized gains on loans held for sale decreased by $66,000, or 50.8%, for the first half of 2023, as the limited housing supply along with sharply higher interest rates continues to unfavorably impact residential mortgage loan production. 

Total non-interest expense in the second quarter of 2023 increased by $1.1 million, or 8.8%, when compared to the second quarter of 2022 and increased by $1.6 million, or 6.6%, during the first half of 2023 when compared to the first half of 2022.  The rise in total non-interest expense for both time periods is primarily due to increased legal and professional fees related to the Company's recent annual meeting proxy contest and defense against an activist investor. These costs amounted to $1.1 million in the second quarter of 2023 and $1.7 million for the six-month period. Given that the Company's shareholders voted to elect the Board's slate of director candidates, the Company expects costs related to the activist issue to decline significantly in the second half of 2023. Salaries & employee benefits increased by $535,000, or 3.7%, in the first half of 2023.  The increase is attributed to the annual employee merit increases, a greater level of full-time equivalent employees (FTE) as the Company filled certain open positions that were vacant last year, and the impact that inflationary pressures are having on the cost of new hires.  Partially offsetting the higher level of salaries was lower incentive compensation and pension expense as there are fewer employees in the defined benefit pension plan due to numerous retirements over the past few years. Data processing and IT expense increased by $268,000, or 14.2%, in the six months of 2023 due to increased software costs from our core data provider and additional expenses related to monitoring our computing and network environment. These negative items were partially offset by a $1.1 million, or 32.8%, reduction in other expense for the six months of 2023 as the Company did not have to recognize a pension settlement charge in the first half of 2023.  Finally, the Company recorded an income tax credit of $61,000, in the second quarter of 2023, which compares to income tax expense of $496,000, or an effective tax rate of 20.0%, for the second quarter of 2022. For the six-month period in 2023, the Company's effective tax rate of 19.0% is lower than the 20.0% effective tax rate in 2022 due to the reduced level of pre-tax income this year.  

The Company had total assets of $1.346 billion, shareholders' equity of $103.6 million, a book value of $6.04 per common share and a tangible book value(1) of $5.24 per common share on June 30, 2023.  The decline in the Company's book value and tangible book value per share at June 30, 2023 compared to December 31, 2022 reflects a decrease in the fair value of the Company's available for sale investment securities by $2.7 million due to higher interest rates. Note that this caused a greater accumulated other comprehensive loss within total equity since December 31, 2022, as the decline in market value of the Company's available for sale investment securities portfolio more than offset a positive market value adjustment for the interest rate hedges. There was no required revaluation of the net pension liability during the first half of 2023.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status as of June 30, 2023.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology, market conditions, dividend program, and future payment obligations. These statements may be identified by such forward-looking terminology as "continuing," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy," or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets, the level of inflation, and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; unanticipated effects of our banking platform; risks and uncertainties relating to the duration of the COVID-19 pandemic, and actions that may be taken by governmental authorities to contain the pandemic or to treat its impact; expense and reputational impact on the Company as a result of litigation related to its proxy contest; and the inability to successfully implement or expand new lines of business or new products and services.  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 are 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, 2022. 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.








(1) Non-GAAP Financial Information.  See "Reconciliation of Non-GAAP Financial Measures" at end of release.

 

AMERISERV FINANCIAL, INC.
NASDAQ: ASRV
SUPPLEMENTAL FINANCIAL PERFORMANCE DATA
June 30, 2023
(Dollars in thousands, except per share and ratio data)
(Unaudited)

 

2023 














1QTR


2QTR



YEAR
TO
DATE


PERFORMANCE DATA FOR THE PERIOD:












Net income (loss)


$

1,515


$

(187)



$

1,328














PERFORMANCE PERCENTAGES (annualized):












Return on average assets



0.45

%


(0.06)

%



0.20

%

Return on average equity



5.85



(0.72)




2.55


Return on average tangible common equity (1)



6.73



(0.82)




2.93


Net interest margin



3.03



2.89




2.96


Net charge-offs (recoveries) as a percentage of average loans



0.05



(0.02)




0.01


Efficiency ratio (3)



79.58



101.55




89.76














EARNINGS PER COMMON SHARE:












Basic


$

0.09


$

(0.01)



$

0.08


Average number of common shares outstanding



17,131



17,147




17,139


Diluted



0.09



(0.01)




0.08


Average number of common shares outstanding



17,155



17,147




17,148


Cash dividends paid per share


$

0.030


$

0.030



$

0.060



2022




 


1QTR


2QTR



YEAR
TO
DATE


PERFORMANCE DATA FOR THE PERIOD:












Net income (loss)


$

2,418


$

1,981



$

4,399














PERFORMANCE PERCENTAGES (annualized):












Return on average assets



0.73

%


0.59

%



0.66

%

Return on average equity



8.48



7.10




7.80


Return on average tangible common equity (1)



9.62



8.10




8.87


Net interest margin



3.14



3.23




3.19


Net charge-offs (recoveries) as a percentage of average loans



0.03



0.01




0.02


Efficiency ratio (3)



81.38



84.89




83.14














EARNINGS PER COMMON SHARE:












Basic


$

0.14


$

0.12



$

0.26


Average number of common shares outstanding



17,094



17,109




17,102


Diluted



0.14



0.12




0.26


Average number of common shares outstanding



17,146



17,149




17,148


Cash dividends paid per share


$

0.025


$

0.030



$

0.055


 

AMERISERV FINANCIAL, INC.
NASDAQ: ASRV
--CONTINUED--
(Dollars in thousands, except per share, statistical, and ratio data)
(Unaudited)

 

2023





1QTR



2QTR


FINANCIAL CONDITION DATA AT PERIOD END:








Assets


$

1,345,957


$

1,345,721


Short-term investments/overnight funds



4,116



3,366


Investment securities, net of allowance for credit losses - securities



238,613



232,259


Total loans and loans held for sale, net of unearned income



980,877



988,221


Paycheck Protection Program (PPP) loans (4)



19



18


Allowance for credit losses - loans



12,132



12,221


Intangible assets



13,731



13,724


Deposits



1,131,789



1,127,569


Short-term and FHLB borrowings



69,124



72,793


Subordinated debt, net



26,654



26,665


Shareholders' equity



105,899



103,565


Non-performing assets



4,599



5,650


Tangible common equity ratio (1)



6.92

%


6.74

%

Total capital (to risk weighted assets) ratio



14.17



14.00


PER COMMON SHARE:








Book value


$

6.18


$

6.04


Tangible book value (1)



5.38



5.24


Market value (2)



3.05



2.54


Wealth management assets – fair market value (5)


$

2,354,498


$

2,446,639










STATISTICAL DATA AT PERIOD END:








Full-time equivalent employees



308



315


Branch locations



17



17


Common shares outstanding



17,147,270



17,147,270


 

2022




1QTR


2QTR


3QTR


4QTR


FINANCIAL CONDITION DATA AT PERIOD END:










Assets


$

1,331,265


$

1,321,402


$

1,350,048


$

1,363,874


Short-term investments/overnight funds



13,588



10,714



4,133



4,132


Investment securities, net of allowance for credit losses - securities



223,286



231,255



236,867



241,386


Total loans and loans held for sale, net of unearned income



978,692



965,587



979,450



990,825


Paycheck Protection Program (PPP) loans (4)



7,835



2,242



24



22


Allowance for credit losses - loans



11,922



11,568



10,672



10,743


Intangible assets



13,761



13,753



13,746



13,739


Deposits



1,140,889



1,142,756



1,152,813



1,108,537


Short-term and FHLB borrowings



37,863



34,028



54,796



108,406


Subordinated debt, net



26,613



26,624



26,634



26,644


Shareholders' equity



113,692



106,392



101,587



106,178


Non-performing assets



3,401



3,240



4,596



5,200


Tangible common equity ratio (1)



7.58

%


7.08

%


6.57

%


6.85

%

Total capital (to risk weighted assets) ratio



14.01



14.33



13.92



13.87


PER COMMON SHARE:














Book value


$

6.65


$

6.22


$

5.94


$

6.20


Tangible book value (1)



5.84



5.41



5.13



5.40


Market value (2)



4.04



3.94



3.80



3.94


Wealth management assets – fair market value (5)


$

2,633,096


$

2,372,772


$

2,290,678


$

2,314,414
















STATISTICAL DATA AT PERIOD END:














Full-time equivalent employees



301



310



306



315


Branch locations



17



17



17



17


Common shares outstanding



17,109,084



17,109,097



17,112,617



17,117,617










NOTES:

(1)

Non-GAAP Financial Information.  See "Reconciliation of Non-GAAP Financial Measures" at end of release.

(2)

Based on closing price reported by the principal market on which the share is traded on the last business day of the corresponding reporting period.

(3)

Ratio calculated by dividing total non-interest expense by tax equivalent net interest income plus total non-interest income.

(4)

Paycheck Protection Program (PPP) loans are included in total loans and loans held for sale, net of unearned income.

(5)

Not recognized on the consolidated balance sheets.

 

AMERISERV FINANCIAL, INC.
NASDAQ: ASRV
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands)
(Unaudited)

 

2023




1QTR


2QTR


YEAR
TO
DATE

INTEREST INCOME











Interest and fees on loans


$


12,276


$

12,609


$

24,885

Interest on investments




2,298



2,270



4,568

Total Interest Income




14,574



14,879



29,453












INTEREST EXPENSE











Deposits




4,189



5,019



9,208

All borrowings




863



750



1,613

Total Interest Expense




5,052



5,769



10,821












NET INTEREST INCOME




9,522



9,110



18,632

Provision (credit) for credit losses




1,179



43



1,222

NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR
   CREDIT LOSSES




8,343



9,067



17,410












NON-INTEREST INCOME











Wealth management fees




2,738



2,789



5,527

Service charges on deposit accounts




266



280



546

Net realized gains on loans held for sale




26



38



64

Mortgage related fees




33



34



67

Gain on sale of Visa Class B shares




1,748



0



1,748

Bank owned life insurance




239



242



481

Other income




457



479



936

Total Non-Interest Income




5,507



3,862



9,369












NON-INTEREST EXPENSE











Salaries and employee benefits




7,175



7,728



14,903

Net occupancy expense




772



713



1,485

Equipment expense




415



422



837

Professional fees




1,308



1,907



3,215

Data processing and IT expense




1,078



1,080



2,158

FDIC deposit insurance expense




125



175



300

Other expenses




1,090



1,152



2,242

Total Non-Interest Expense




11,963



13,177



25,140












PRETAX INCOME (LOSS)




1,887



(248)



1,639

Income tax expense (benefit)




372



(61)



311

NET INCOME (LOSS)


$


1,515


$

(187)


$

1,328


2022




1QTR


2QTR



YEAR
TO
DATE

INTEREST INCOME











Interest and fees on loans


$


9,496


$

9,725


$

19,221

Interest on investments




1,532



1,802



3,334

Total Interest Income




11,028



11,527



22,555












INTEREST EXPENSE











Deposits




796



956



1,752

All borrowings




465



447



912

Total Interest Expense




1,261



1,403



2,664












NET INTEREST INCOME




9,767



10,124



19,891

Provision (credit) for credit losses




(400)



(325)



(725)

NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR
   CREDIT LOSSES




10,167



10,449



20,616












NON-INTEREST INCOME











Wealth management fees




3,165



2,976



6,141

Service charges on deposit accounts




272



263



535

Net realized gains on loans held for sale




95



35



130

Mortgage related fees




33



32



65

Gain on sale of Visa Class B shares




0



0



0

Bank owned life insurance




209



231



440

Other income




561



601



1,162

Total Non-Interest Income




4,335



4,138



8,473












NON-INTEREST EXPENSE











Salaries and employee benefits




7,405



6,963



14,368

Net occupancy expense




741



697



1,438

Equipment expense




397



415



812

Professional fees




630



838



1,468

Data processing and IT expense




953



937



1,890

FDIC deposit insurance expense




145



130



275

Other expenses




1,208



2,130



3,338

Total Non-Interest Expense




11,479



12,110



23,589












PRETAX INCOME (LOSS)




3,023



2,477



5,500

Income tax expense (benefit)




605



496



1,101

NET INCOME (LOSS)


$


2,418


$

1,981


$

4,399

 

AMERISERV FINANCIAL, INC.
NASDAQ: ASRV
AVERAGE BALANCE SHEET DATA
(Dollars in thousands)
(Unaudited)




2023


2022



2QTR


SIX
MONTHS


2QTR


SIX
MONTHS

Interest earning assets:













Loans and loans held for sale, net of unearned income


$

986,111


$

986,302


$

976,995


$

978,272

Short-term investments and bank deposits



3,727



4,051



28,684



37,608

Total investment securities



261,769



263,882



240,615



231,037

Total interest earning assets



1,251,607



1,254,235



1,246,294



1,246,917














Non-interest earning assets:













Cash and due from banks



16,612



16,512



17,882



17,824

Premises and equipment



17,299



17,394



17,395



17,386

Other assets



74,608



74,853



80,729



81,145

Allowance for credit losses



(13,332)



(12,739)



(12,070)



(12,291)

Total assets


$

1,346,794


$

1,350,255


$

1,350,230


$

1,350,981














Interest bearing liabilities:













Interest bearing deposits:













Interest bearing demand


$

225,260


$

225,993


$

229,394


$

229,333

Savings



129,672



131,096



139,963



137,925

Money market



303,950



300,776



291,998



291,569

Other time



299,913



297,215



284,935



287,340

Total interest bearing deposits



958,795



955,080



946,290



946,167

Borrowings:













Federal funds purchased and other short-term borrowings



24,967



32,843



1,500



750

Advances from Federal Home Loan Bank



18,209



17,949



36,190



38,691

Subordinated debt



27,000



27,000



27,000



27,000

Lease liabilities



3,206



3,241



3,475



3,504

Total interest bearing liabilities



1,032,177



1,036,113



1,014,455



1,016,112














Non-interest bearing liabilities:













Demand deposits



198,984



198,431



216,596



214,745

Other liabilities



10,720



10,709



7,281



6,346

Shareholders' equity



104,913



105,002



111,898



113,778

Total liabilities and shareholders' equity


$

1,346,794


$

1,350,255


$

1,350,230


$

1,350,981

 

AMERISERV FINANCIAL, INC.
NASDAQ: ASRV
CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)

 

2023




COMMON
STOCK


TREASURY
STOCK


SURPLUS


RETAINED
EARNINGS


ACCUMULATED
OTHER
COMPREHENSIVE
(LOSS) INCOME


TOTAL

Balance at December 31, 2022


$

267


$

(83,280)


$

146,225


$

65,486


$

(22,520)


$

106,178

Net income



0



0



0



1,515



0



1,515

Exercise of stock options and stock
  option expense



1



0



106



0



0



107

Adjustment for defined benefit pension
  plan



0



0



0



0



0



0

Adjustment for unrealized gain on
  available for sale securities



0



0



0



0



449



449

Market value adjustment for interest rate
  hedge



0



0



0



0



(655)



(655)

Cumulative effect adjustment for change
  in accounting principal



0



0



0



(1,181)



0



(1,181)

Common stock cash dividend



0



0



0



(514)



0



(514)

Balance at March 31, 2023


$

268


$

(83,280)


$

146,331


$

65,306


$

(22,726)


$

105,899

Net loss



0



0



0



(187)



0



(187)

Exercise of stock options and stock
  option expense



0



0



12



0



0



12

Adjustment for defined benefit pension
  plan



0



0



0



0



0



0

Adjustment for unrealized loss on
  available for sale securities



0



0



0



0



(2,560)



(2,560)

Market value adjustment for interest rate
  hedge



0



0



0



0



916



916

Common stock cash dividend



0



0



0



(515)



0



(515)

Balance at June 30, 2023


$

268


$

(83,280)


$

146,343


$

64,604


$

(24,370)


$

103,565


2022




COMMON
STOCK


TREASURY
STOCK


SURPLUS


RETAINED
EARNINGS


ACCUMULATED
OTHER
COMPREHENSIVE
(LOSS) INCOME


TOTAL

Balance at December 31, 2021


$

267


$

(83,280)


$

146,069


$

60,005


$

(6,512)


$

116,549

Net income



0



0



0



2,418



0



2,418

Exercise of stock options and stock
  option expense



0



0



93



0



0



93

Adjustment for defined benefit pension
  plan



0



0



0



0



919



919

Adjustment for unrealized loss on
  available for sale securities



0



0



0



0



(5,860)



(5,860)

Common stock cash dividend



0



0



0



(427)



0



(427)

Balance at March 31, 2022


$

267


$

(83,280)


$

146,162


$

61,996


$

(11,453)


$

113,692

Net income



0



0



0



1,981



0



1,981

Exercise of stock options and stock
  option expense



0



0



13



0



0



13

Adjustment for defined benefit pension
  plan



0



0



0



0



(4,488)



(4,488)

Adjustment for unrealized loss on
  available for sale securities



0



0



0



0



(4,292)



(4,292)

Common stock cash dividend



0



0



0



(514)



0



(514)

Balance at June 30, 2022


$

267


$

(83,280)


$

146,175


$

63,463


$

(20,233)


$

106,392

Net income



0



0



0



2,102



0



2,102

Exercise of stock options and stock
  option expense



0



0



23



0



0



23

Adjustment for defined benefit pension
  plan



0



0



0



0



(47)



(47)

Adjustment for unrealized loss on
  available for sale securities



0



0



0



0



(6,370)



(6,370)

Common stock cash dividend



0



0



0



(513)



0



(513)

Balance at September 30, 2022


$

267


$

(83,280)


$

146,198


$

65,052


$

(26,650)


$

101,587

Net income



0



0



0



947



0



947

Exercise of stock options and stock
  option expense



0



0



27



0



0



27

Adjustment for defined benefit pension
  plan



0



0



0



0



3,932



3,932

Adjustment for unrealized gain on
  available for sale securities



0



0



0



0



198



198

Common stock cash dividend



0



0



0



(513)



0



(513)

Balance at December 31, 2022


$

267


$

(83,280)


$

146,225


$

65,486


$

(22,520)


$

106,178

AMERISERV FINANCIAL, INC.
NASDAQ: ASRV
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
RETURN ON AVERAGE TANGIBLE COMMON EQUITY, TANGIBLE COMMON EQUITY RATIO, AND TANGIBLE BOOK
VALUE PER SHARE
(Dollars in thousands, except per share and ratio data)
(Unaudited)

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP).  These non-GAAP financial measures are "return on average tangible common equity", "tangible common equity ratio", and "tangible book value per share".  This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.  These non-GAAP measures are used by management in their analysis of the Company's performance or, management believes, facilitate an understanding of the Company's performance.  We also believe that presenting non-GAAP financial measures provides additional information to facilitate comparison of our historical operating results and trends in our underlying operating results.  We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. 

2023




1QTR



2QTR


YEAR
TO
DATE


RETURN ON AVERAGE TANGIBLE COMMON EQUITY












Net income (loss)


$

1,515



$

(187)


$

1,328














Average shareholders' equity



105,092




104,913



105,002


Less: Average intangible assets



13,734




13,727



13,731


Average tangible common equity



91,358




91,186



91,271














Return on average tangible common equity (annualized)



6.73

%



(0.82)

%


2.93

%

 



1QTR



2QTR


TANGIBLE COMMON EQUITY









Total shareholders' equity


$

105,899



$

103,565


Less: Intangible assets



13,731




13,724


Tangible common equity



92,168




89,841











TANGIBLE ASSETS









Total assets



1,345,957




1,345,721


Less: Intangible assets



13,731




13,724


Tangible assets



1,332,226




1,331,997











Tangible common equity ratio



6.92

%



6.74

%










Total shares outstanding



17,147,270




17,147,270











Tangible book value per share


$

5.38



$

5.24


 

2022




1QTR



2QTR



YEAR
TO
DATE


RETURN ON AVERAGE TANGIBLE COMMON EQUITY












Net income (loss)


$

2,418



$

1,981


$

4,399














Average shareholders' equity



115,658




111,898



113,778


Less: Average intangible assets



13,766




13,757



13,761


Average tangible common equity



101,892




98,141



100,017














Return on average tangible common equity (annualized)



9.62

%



8.10

%


8.87

%

 



1QTR


2QTR


3QTR


4QTR


TANGIBLE COMMON EQUITY














Total shareholders' equity


$

113,692


$

106,392


$

101,587


$

106,178


Less: Intangible assets



13,761



13,753



13,746



13,739


Tangible common equity



99,931



92,639



87,841



92,439
















TANGIBLE ASSETS














Total assets



1,331,265



1,321,402



1,350,048



1,363,874


Less: Intangible assets



13,761



13,753



13,746



13,739


Tangible assets



1,317,504



1,307,649



1,336,302



1,350,135
















Tangible common equity ratio



7.58

%


7.08

%


6.57

%


6.85

%















Total shares outstanding



17,109,084



17,109,097



17,112,617



17,117,617
















Tangible book value per share


$

5.84


$

5.41


$

5.13


$

5.40


 

AmeriServ Financial, Inc. logo

 

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SOURCE AmeriServ Financial, Inc.

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