0000707605false00007076052023-07-182023-07-18

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 18, 2023

AMERISERV FINANCIAL, Inc.

(exact name of registrant as specified in its charter)

Pennsylvania

0-11204

25-1424278

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

Main and Franklin Streets, Johnstown, PA

15901

(address of 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-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class

    

Trading Symbol

    

Name of Each Exchange On Which Registered

Common Stock

ASRV

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Form 8-K

Item 2.02 Results of operation and financial condition.

AMERISERV FINANCIAL, Inc. (the "Registrant") announced second quarter and first six months of 2023 results through June 30, 2023.  For a more detailed description of the announcement see the press release attached as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

99.1

    

Press release dated July 18, 2023, announcing second quarter and first six months of 2023 earnings through June 30, 2023.

104

    

Cover Page Interactive Data File (embedded within the Inline XBRL document).

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.

Date: July 18, 2023

By

/s/Michael D. Lynch

Michael D. Lynch

EVP & CFO

Exhibit 99.1

AMERISERV FINANCIAL REPORTS EARNINGS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF 2023

JOHNSTOWN, PA - 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 Companys 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