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JOHNSTOWN, Pa., Oct. 20 /PRNewswire-FirstCall/ -- AmeriServ Financial, Inc. (NASDAQ:ASRV) reported a third quarter 2009 net loss of $2.8 million or $0.15 per diluted share. This represents a decrease of $4 million from the third quarter 2008 net income of $1.1 million or $0.05 per diluted share. For the nine month period ended September 30, 2009, the Company reported a net loss of $3.2 million or $0.19 per diluted share. This also represents a decrease of $7.1 million when compared to net income of $3.9 million or $0.18 per diluted share for the first nine months of 2008. The following table highlights the Company's financial performance for both the three and nine month periods ended September 30, 2009 and 2008: Third Quarter Third Quarter Nine Months Nine Months 2009 2008 Ended Ended ------------- ------------- September 30, September 30, 2009 2008 ------------- ------------- Net income (loss) ($2,810,000) $1,149,000 ($3,216,000) $3,894,000 ---------- ----------- ---------- ----------- ---------- Diluted earnings per share ($0.15) $0.05 ($0.19) $0.18 ---------------- ------ ----- ------ ----- Allan R. Dennison, retiring President and Chief Executive Officer, commented on the third quarter 2009 financial results, "AmeriServ Financial reported a loss for the third quarter of 2009 due to an increased provision for loan losses. The continued recessionary economy is now clearly impacting our commercial borrowers based in Western Pennsylvania. We appropriately increased our allowance for loan losses to respond to this deterioration in asset quality evidenced by higher levels of non-performing assets and classified loans. This higher provision unfortunately more than offset some strong fundamentals, such as, increased net interest income that resulted from solid loan and deposit growth experienced within our bank during 2009. Overall at September 30, 2009, our allowance for loan losses represented 2.66% of total loans outstanding and provided 94% coverage of non-performing loans. AmeriServ Financial is well capitalized to work through this challenging economic period with a tangible common equity ratio of 8.16% and an asset leverage ratio of 11.41% at the end of the third quarter 2009." The Company's net interest income in the third quarter of 2009 increased by $694,000 from the prior year's third quarter, and for the first nine months of 2009 increased by $3.3 million or 15.8% when compared to the first nine months of 2008. The Company's net interest margin of 3.65% for the first nine months of 2009 is also 16 basis points better than the 3.49% net interest margin achieved during the first nine months of 2008. The increased net interest income and margin resulted from a combination of good loan growth and the pricing benefits achieved from a steeper positively sloped yield curve. Specifically, total loans averaged $726 million in the first nine months of 2009, an increase of $94 million or 14.8% over the same period in 2008. This growth caused overall loan interest revenue to increase for both 2009 periods despite the lower interest rate environment in 2009. The loan growth was driven by increased commercial real-estate loan production as the majority of increased residential mortgage loan production has been sold into the secondary market. The Company's strong liquidity position has been supported by total deposits that averaged $756 million in the first nine months of 2009, an increase of $58 million or 8.3% over the same 2008 period. The Company believes that uncertainties in the financial markets and the economy have contributed to growth in both money market and demand deposits as consumers have looked for safety in well capitalized community banks like AmeriServ Financial. Additionally, the Company also benefited from a favorable decline in interest expense caused by the more rapid downward repricing of both deposits and Federal Home Loan Bank borrowings due to the market decline in short-term interest rates. The Company appropriately strengthened its allowance for loan losses in the third quarter and first nine months of 2009 in response to deterioration in asset quality. Specifically, non-performing assets increased by $9.0 million from $14.7 million or 1.98% of total loans at June 30, 2009 to $23.7 million or 3.28% of total loans at September 30, 2009. The following two credits were responsible for the increased level of non-performing assets: 1) In response to the Shared National Credit Examination, the Company transferred a $10 million commercial loan relationship to a borrower in the restaurant industry to non-accrual status. The Company restructured this loan at its maturity by entering into a forbearance agreement with the borrower to make reduced payments over a six-month period in an effort to give the borrower greater flexibility to restructure its operations to improve its cash flows during this difficult economic period. The Company has never had any payment delinquency with this borrower who is performing in accordance with the terms of the forbearance agreement. A $3.5 million specific reserve has been established against this credit. 2) A $3.1 million loan to a borrower in the heavy construction equipment rental business was transferred to non-accrual status. This borrower was experiencing cash flow difficulties that caused payment delinquency. A $622,000 reserve has been established against this credit. Overall, the Company recorded a $6.3 million provision for loan losses in the third quarter of 2009 compared to a $775,000 provision in the third quarter of 2008, or an increase of $5.5 million. For the nine month period ended September 30, 2009, the Company recorded an $11.4 million provision for loan losses compared to a $2.3 million provision for the first nine months of 2008, or an increase of $9.1 million. When determining the provision for loan losses, the Company considers a number of factors some of which include periodic credit reviews, non-performing, delinquency and charge-off trends, concentrations of credit, loan volume trends and broader local and national economic trends. In addition to the higher level of non-performing loans, the increased loan loss provision in 2009 was also caused by the Company's decision to strengthen its allowance for loan losses due to the downgrade of the rating classification of several performing commercial loans and uncertainties in the local and national economies. Actual credit losses realized through charge-off, however, are running fairly comparable with the prior year. For the nine month period ended September 30, 2009, net charge-offs have amounted to $1.1 million or 0.19% of total loans compared to net charge-offs of $875,000 or 0.18% of total loans for the same nine month period in 2008. In summary, the balance in the allowance for loan losses has increased from $8.9 million at December 31, 2008 to $19.3 million at September 30, 2009. The allowance provided 94% coverage of non-performing loans and was 2.66% of total loans at September 30, 2009, compared to 264% of non-performing loans and 1.26% of total loans at December 31, 2008. The Company's non-interest income in the third quarter of 2009 decreased by $313,000 from the prior year's third quarter and for the first nine months of 2009 decreased by $2.4 million when compared to the first nine months of 2008. The largest item responsible for the quarterly decline was a $323,000 decrease in trust and investment advisory fees as a result of reductions in the market value of assets managed due to lower equity and real estate values in 2009. The largest item causing the nine month decline was related to bank owned life insurance. Bank owned life insurance revenue returned to a more typical level in 2009 as the 2008 revenue was impacted by the payment of $1.6 million in death claims. Trust and investment advisory fees also declined by $1.0 million for the nine month period while deposit service charges dropped by $217,000 due to fewer overdraft fees. These negative items were partially offset by increased gains on asset sales. Specifically, gains realized on residential mortgage sales into the secondary market in 2009 increased by $146,000 for the nine month period due to increased mortgage purchase and refinance activity in the Company's primary market. The Company also took advantage of market opportunities and generated $164,000 of gains on the sale of investment securities in 2009 compared to a $117,000 loss on a portfolio repositioning strategy executed in 2008. Total non-interest expense in the third quarter of 2009 increased by $782,000 from the prior year's third quarter and for the first nine months of 2009 increased by $1.8 million or 6.7% when compared to the first nine months of 2008. Higher FDIC deposit insurance expense is a key factor responsible for both the quarterly and year-to-date increase in non-interest expense in 2009. Specifically, the third quarter FDIC expense is up by $281,000 due to a higher basic assessment rate while the nine month expense is up by $962,000 due to the higher basic rate and the industry mandated special five basis point or $435,000 assessment realized in the second quarter of 2009. Total salaries and benefits expense in 2009 increased by $356,000 in the third quarter and $789,000 for the nine month period due to greater salary costs as a result of normal merit increases and higher sales related incentive compensation along with greater pension expense. Professional fees increased by $128,000 for the third quarter and $242,000 for the nine-month period due to increased legal fees and recruitment costs in 2009. Other expenses in both periods have also been negatively impacted by increased other real estate owned expense. These negative items were partially offset by a reduction in core deposit amortization expense of $217,000 for the third quarter and $541,000 for the nine month period as a branch core deposit intangible was fully amortized in the first quarter of 2009. ASRV had total assets of $959 million and shareholders' equity of $111 million or a book value of $4.25 per common share at September 30, 2009. The Company remained well capitalized with an asset leverage ratio of 11.41% and a tangible common equity to tangible assets ratio of 8.16% at September 30, 2009. 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. 2009 1QTR 2QTR 3QTR YEAR TO DATE PERFORMANCE DATA FOR THE PERIOD: Net income (loss) $533 $(939) $(2,810) $(3,216) Net income (loss) available to common shareholders 274 (1,202) (3,073) (4,001) PERFORMANCE PERCENTAGES (annualized): Return on average assets 0.22% (0.39)% (1.15)% (0.44)% Return on average equity 1.90 (3.29) (9.83) (3.77) Net interest margin 3.72 3.66 3.57 3.65 Net charge-offs as a percentage of average loans 0.03 0.19 0.35 0.19 Loan loss provision as a percentage of average loans 1.02 2.79 3.42 2.10 Efficiency ratio 78.22 82.56 84.00 81.57 PER COMMON SHARE: Net income (loss): Basic $0.01 $(0.06) $(0.15) $(0.19) Average number of common shares outstanding 21,137 21,151 21,178 21,156 Diluted 0.01 (0.06) (0.15) (0.19) Average number of common shares outstanding 21,137 21,152 21,182 21,159 2008 1QTR 2QTR 3QTR YEAR TO DATE PERFORMANCE DATA FOR THE PERIOD: Net income $1,229 $1,516 $1,149 $3,894 Net income available to common shareholders 1,229 1,516 1,149 3,894 PERFORMANCE PERCENTAGES (annualized): Return on average assets 0.55% 0.71% 0.52% 0.59% Return on average equity 5.43 6.64 4.93 5.66 Net interest margin 3.32 3.58 3.59 3.49 Net charge-offs as a percentage of average loans 0.06 0.46 0.04 0.18 Loan loss provision as a percentage of average loans 0.10 0.89 0.48 0.49 Efficiency ratio 82.87 73.20 79.72 78.33 PER COMMON SHARE: Net income: Basic $0.06 $0.07 $0.05 $0.18 Average number of common shares outstanding 22,060 21,847 21,855 21,921 Diluted 0.06 0.07 0.05 0.18 Average number of common shares outstanding 22,062 21,848 21,856 21,922 AMERISERV FINANCIAL, INC. (In thousands, except per share, statistical, and ratio data) (All quarterly and 2009 data unaudited) 2009 1QTR 2QTR 3QTR PERFORMANCE DATA AT PERIOD END: Assets $975,062 $978,899 $959,344 Short-term investment in money market funds 10,817 7,516 6,565 Investment securities 138,853 136,119 138,715 Loans 726,961 739,649 722,540 Allowance for loan losses 10,661 13,606 19,255 Goodwill and core deposit intangibles 13,498 13,498 12,950 Deposits 746,813 783,807 779,185 FHLB borrowings 90,346 57,702 44,451 Shareholders' equity 114,254 112,880 110,706 Non-performing assets 5,099 14,670 23,689 Asset leverage ratio 11.82% 11.61% 11.41% Tangible common equity ratio 8.35 8.17 8.16 PER COMMON SHARE: Book value (A) $4.44 $4.37 $4.25 Market value 1.67 1.85 1.80 Trust assets - fair market value (B) $1,432,375 $1,376,272 $1,340,119 STATISTICAL DATA AT PERIOD END: Full-time equivalent employees 355 352 350 Branch locations 18 18 18 Common shares outstanding 21,144,700 21,156,801 21,215,115 2008 1QTR 2QTR 3QTR 4QTR PERFORMANCE DATA AT PERIOD END: Assets $902,349 $877,230 $911,306 $966,929 Short-term investment in money market funds 5,682 6,952 7,147 15,578 Investment securities 146,285 141,867 141,630 142,675 Loans 632,934 623,798 663,996 707,108 Allowance for loan losses 7,309 7,963 8,677 8,910 Goodwill and core deposit intangibles 14,254 14,038 13,821 13,605 Deposits 682,459 722,913 688,998 694,956 FHLB borrowings 106,579 40,214 106,897 133,778 Shareholders' equity 91,558 92,248 93,671 113,252 Non-performing assets 3,050 3,717 4,390 4,572 Asset leverage ratio 9.78% 10.47% 10.37% 12.15% Tangible common equity ratio 8.70 9.06 8.90 8.31 PER COMMON SHARE: Book value (A) $4.19 $4.22 $4.29 $4.39 Market value 2.79 2.98 2.51 1.99 Trust assets - fair market value (B) $1,838,029 $1,813,231 $1,678,398 $1,554,351 STATISTICAL DATA AT PERIOD END: Full-time equivalent employees 350 353 352 353 Branch locations 19 18 18 18 Common shares outstanding 21,842,691 21,850,773 21,859,409 21,128,831 Note: (A) Preferred stock received through the Capital Purchase Program is excluded from the book value per common share calculation. (B) Not recognized on the balance sheet 2009 1QTR 2QTR 3QTR YEAR TO DATE INTEREST INCOME Interest and fees on loans $10,349 $10,544 $10,247 $31,140 Total investment portfolio 1,586 1,511 1,451 4,548 ----- ----- ----- ----- Total Interest Income 11,935 12,055 11,698 35,688 INTEREST EXPENSE Deposits 3,255 3,405 3,316 9,976 All borrowings 539 479 457 1,475 --- --- --- ----- Total Interest Expense 3,794 3,884 3,773 11,451 ----- ----- ----- ------ NET INTEREST INCOME 8,141 8,171 7,925 24,237 Provision for loan losses 1,800 3,300 6,300 11,400 ----- ----- ----- ------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,341 4,871 1,625 12,837 NON-INTEREST INCOME Trust fees 1,559 1,438 1,377 4,374 Net realized gains on investment securities available for sale 101 63 - 164 Net realized gains on loans held for sale 118 163 213 494 Service charges on deposit accounts 673 710 712 2,095 Investment advisory fees 137 152 176 465 Bank owned life insurance 250 254 258 762 Other income 723 711 718 2,152 --- --- --- ----- Total Non-Interest Income 3,561 3,491 3,454 10,506 NON-INTEREST EXPENSE Salaries and employee benefits 5,092 4,983 5,114 15,189 Net occupancy expense 722 641 602 1,965 Equipment expense 415 442 398 1,255 Professional fees 920 873 1,050 2,843 FDIC deposit insurance expense 32 691 311 1,034 Amortization of core deposit intangibles 108 - - 108 Other expenses 1,873 2,006 2,091 5,970 ----- ----- ----- ----- Total Non-Interest Expense 9,162 9,636 9,566 28,364 ----- ----- ----- ------ PRETAX INCOME (LOSS) 740 (1,274) (4,487) (5,021) Income tax expense (benefit) 207 (335) (1,677) (1,805) --- ---- ------ ------ NET INCOME (LOSS) 533 (939) (2,810) (3,216) Preferred stock dividends 259 263 263 785 --- --- --- --- NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $274 $(1,202) $(3,073) $(4,001) ---- ------- ------- ------- 2008 1QTR 2QTR 3QTR YEAR TO DATE INTEREST INCOME Interest and fees on loans $10,462 $9,862 $10,015 $30,339 Total investment portfolio 1,820 1,588 1,717 5,125 ----- ----- ----- ----- Total Interest Income 12,282 11,450 11,732 35,464 INTEREST EXPENSE Deposits 4,499 3,861 3,774 12,134 All borrowings 1,048 623 727 2,398 ----- --- --- ----- Total Interest Expense 5,547 4,484 4,501 14,532 ----- ----- ----- ------ NET INTEREST INCOME 6,735 6,966 7,231 20,932 Provision for loan losses 150 1,375 775 2,300 --- ----- --- ----- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,585 5,591 6,456 18,632 NON-INTEREST INCOME Trust fees 1,790 1,737 1,691 5,218 Net realized gains (losses) on investment securities available for sale - (137) 20 (117) Net realized gains on loans held for sale 89 121 138 348 Service charges on deposit accounts 734 807 771 2,312 Investment advisory fees 226 218 185 629 Bank owned life insurance 249 1,923 260 2,432 Other income 750 674 702 2,126 --- --- --- ----- Total Non-Interest Income 3,838 5,343 3,767 12,948 NON-INTEREST EXPENSE Salaries and employee benefits 4,830 4,812 4,758 14,400 Net occupancy expense 661 653 586 1,900 Equipment expense 431 414 402 1,247 Professional fees 769 910 922 2,601 FHLB prepayment penalty - 91 - 91 FDIC deposit insurance expense 22 20 30 72 Amortization of core deposit intangibles 216 216 217 649 Other expenses 1,850 1,909 1,869 5,628 ----- ----- ----- ----- Total Non-Interest Expense 8,779 9,025 8,784 26,588 ----- ----- ----- ------ PRETAX INCOME 1,644 1,909 1,439 4,992 Income tax expense 415 393 290 1,098 --- --- --- ----- NET INCOME 1,229 1,516 1,149 3,894 Preferred stock dividends - - - - - - - - NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $1,229 $1,516 $1,149 $3,894 ====== ====== ====== ====== AMERISERV FINANCIAL, INC. CONSOLIDATED STATEMENT OF INCOME (In thousands) (All quarterly and 2009 data unaudited) 2009 2008 NINE NINE 3QTR MONTHS 3QTR MONTHS Interest earning assets: Loans and loans held for sale, net of unearned income $730,152 $725,657 $637,841 $631,948 Deposits with banks 1,746 1,762 399 403 Short-term investment in money market funds 7,388 9,804 7,983 6,922 Federal funds 413 156 32 152 Total investment securities 145,109 146,146 152,476 154,342 ------- ------- ------- ------- Total interest earning assets 884,808 883,525 798,731 793,767 Non-interest earning assets: Cash and due from banks 14,135 14,543 16,574 17,188 Premises and equipment 9,052 9,207 9,593 9,193 Other assets 73,296 72,124 68,613 69,382 Allowance for loan losses (13,658) (11,301) (8,088) (7,582) ------- ------- ------ ------ Total assets 967,633 968,098 885,423 881,948 ======= ======= ======= ======= Interest bearing liabilities: Interest bearing deposits: Interest bearing demand 62,479 62,050 65,704 65,169 Savings 72,864 72,537 71,520 70,388 Money market 182,735 165,065 108,181 92,907 Other time 352,584 342,076 341,455 359,255 ------- ------- ------- ------- Total interest bearing deposits 670,662 641,728 586,860 587,719 Borrowings: Federal funds purchased, securities sold under agreements to repurchase, and other short-term borrowings 29,851 59,037 60,635 57,818 Advanced from Federal Home Loan Bank 13,828 13,840 10,258 11,266 Guaranteed junior subordinated deferrable interest debentures 13,085 13,085 13,085 13,085 ------ ------ ------ ------ Total interest bearing liabilities 727,426 727,690 670,838 669,888 Non-interest bearing liabilities: Demand deposits 114,548 114,365 111,136 110,366 Other liabilities 12,234 12,137 10,763 9,836 Shareholders' equity 113,425 113,906 92,686 91,858 ------- ------- ------ ------ Total liabilities and shareholders' equity $967,633 $968,098 $885,423 $881,948 ======== ======== ======== ======== DATASOURCE: AmeriServ Financial, Inc. CONTACT: Jeffrey A. Stopko, Executive Vice President & Chief Financial Officer of AmeriServ Financial, Inc., +1-814-533-5310 Web Site: http://www.ameriservfinancial.com/

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