SECURITIES AND EXCHANGE COMMISSION



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549


Form 8-K


Current Report

Pursuant to Section 13 or 15(d) of the Securities Act of 1934


Date of Report (Date of earliest event reported) October 19, 2010


AMERISERV FINANCIAL, Inc.

(exact name of registrant as specified in its charter)


Pennsylvania        0-11204        25-1424278

(State or other     (commission    (I.R.S. Employer

jurisdiction        File Number)   Identification No.)

of Incorporation)


Main and Franklin Streets, Johnstown, Pa.  15901

(address or 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-4c))













Form 8-K


Item 2.02 Results of operation and financial condition.


AMERISERV FINANCIAL Inc. (the "Registrant") announced third quarter and first nine months results through September 30, 2010.  For a more detailed description of the announcement see the press release attached as Exhibit #99.1.  


Exhibits

--------


Exhibit 99.1

Press release dated October 19, 2010, announcing the third quarter and first nine months results through September 30, 2010.



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.


By /s/Jeffrey A. Stopko

Jeffrey A. Stopko

Executive Vice President

& CFO


Date: October 19, 2010




Exhibit 99.1


AMERISERV FINANCIAL REPORTS EARNINGS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2010     


JOHNSTOWN, PA – AmeriServ Financial, Inc. (NASDAQ: ASRV) reported a second consecutive quarter of profitability in the third quarter of 2010 by posting net income of $609,000 or $0.02 per diluted common share.  This represents a significant improvement of $3.4 million from the third quarter 2009 net loss of $2.8 million or ($0.15) per diluted common share.  For the nine month period ended September 30, 2010, the Company reported net income of $168,000 or ($0.03) per diluted share which also represents an increase of $3.4 million when compared with the net loss of $3.2 million or ($0.19) per diluted common share reported for the same nine month period in 2009.  The following table highlights the Company’s financial performance for both the three and nine month periods ended September 30, 2010 and 2009:     


 

Third Quarter 2010

Third Quarter 2009

 

Nine Months Ended

September 30, 2010

Nine Months Ended

September 30, 2009

 

 

 

 

 

 

Net income (loss)

$609,000

($2,810,000)

 

$168,000

($3,216,000)

Diluted earnings per share

$ 0.02

($ 0.15)

 

($ 0.03)

($0.19)


Glenn L. Wilson, President and Chief Executive Officer, commented on the 2010 third quarter financial results, “Our disciplined approach to monitoring our loan portfolio continued this quarter as we aggressively identify and seek prompt resolution to problem credits in order to limit actual losses.  As a result of this proactive monitoring, we have been able to carefully adjust downward the provision for loan losses for four consecutive quarters while still maintaining solid loan loss reserve coverage ratios.  Specifically, the allowance for loan losses provided 85% coverage of non-performing loans at September 30, 2010 and represented 2.97% of total loans outstanding.  The continued growth of deposits throughout our community bank network was a positive factor contributing to our strong balance sheet liquidity and good net interest margin performance.  I was also pleased with our capital strength and the revenue contribution of our retail bank which benefitted from a strong quarter of residential mortgage loan production.  The recent opening of our 19th branch office on North Atherton Street in State College provides further evidence of our strategic commitment to community banking”        


The Company’s net interest income has improved modestly in 2010 increasing by $98,000 in the third quarter and $115,000 for the first nine months of 2010 compared to the same periods in 2009.  Careful management of funding costs during a period when interest revenues are declining has allowed the Company to increase its net interest margin by 12 basis points to average 3.77% for the first nine months of 2010.  This solid net interest margin performance is reflective of the Company’s strong liquidity position and its ability to reduce its funding costs during a period of deposit growth.  Specifically, total deposits averaged $801 million in the first nine months of 2010, an increase of $45 million or 5.9% over the same period in 2009.  The Company believes that uncertainties in the economy have contributed to growth in money market accounts, certificates of deposit and demand deposits as consumers and businesses have looked for safety in well capitalized community banks like AmeriServ Financial.  Overall, total loans have declined by $24 million or 3.3% since December 31, 2009 as the Company has focused on reducing its commercial real estate exposure during this period of economic weakness.


The Company has appropriately strengthened its allowance for loan losses over the past year in response to ongoing careful monitoring of the commercial loan and commercial real estate portfolios in this weak economic environment.  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. Overall, the Company recorded a $1.0 million provision for loan losses in the third quarter of 2010 compared to a $6.3 million provision in the third quarter of 2009, or a decrease of $5.3 million.  For the nine month period ended September 30, 2010, the Company recorded a $5.3 million provision for loan losses compared to an $11.4 million provision for the first nine months of 2009, or a decrease of $6.2 million.  Actual credit losses realized through charge-offs in 2010, however, are running below the provision level but are higher than the prior year.  For the first nine months of 2010, net charge-offs amounted to $4.2 million or 0.79% of total loans compared to net charge-offs of $1.1 million or 0.19% of total loans for the first nine months of 2009.  The higher charge-offs in 2010 primarily relate to two non-performing commercial real-estate loans, one of which was completely resolved in the first quarter ($1.2 million charge-off) and the second of which relates to a student housing project ($2.3 million charge-off) which the Company is striving to resolve through a note sale by the end of 2010.  During the third quarter, total non-performing assets increased by $5.5 million to $25.3 million or 3.61% of total loans as certain commercial borrowers continue to be impacted by the weak economy.  Of the total $5.5 million increase, $3.5 million relates to three commercial real estate loans that are each current on their payments but we still elected to transfer to non-performing status given our concern regarding the borrowers’ ultimate ability to service the debt.   In summary, the allowance for loan losses provided 85% coverage of non-performing loans and was 2.97% of total loans at September 30, 2010, compared to 115% of non-performing loans and 2.72% of total loans at December 31, 2009.


The Company’s non-interest income in the third quarter of 2010 increased by $59,000 from the prior year’s third quarter and for the first nine months of 2010 decreased by $305,000 when compared to the first nine months of 2009.  The largest item negatively impacting both periods was a reduced level of deposit service charges which were down $147,000 in the third quarter and $347,000 for the first nine months of 2010.  Customers have maintained higher balances in their checking accounts which have resulted in fewer overdraft fees in 2010.  Additionally, the third quarter 2010 deposit service charges were also impacted by regulatory changes which took effect in mid-August and are designed to limit customer overdraft fees on debit card transactions.  Non-interest income has also been negatively impacted by a decrease in trust fees as a result of reductions in the market value of certain real estate assets we manage in our specialty real estate funds in 2010.  The impact was less significant on the quarterly results as trust fees were $20,000 lower in the third quarter but $190,000 lower for the nine month period.  These negative items were partially offset by increased revenue generated on residential mortgage loan sales into the secondary market.  As a result of increased mortgage loan production, the realized gain on loan sales was $65,000 higher in the third quarter of 2010 and $74,000 higher for the first nine months of 2010.  This increased residential mortgage loan production also contributed to the increase in other income due to higher underwriting and document preparation fees.


Total non-interest expense in the third quarter of 2010 increased by $208,000 or 2.2% from the prior year’s third quarter and for the first nine months of 2010 increased by $960,000 or 3.4% when compared to the first nine months of 2009.  Total salaries and benefits were up by $301,000 for the third quarter and $661,000 for the nine month period as a result of higher medical insurance costs, increased pension expense, and modest merit salary increases in 2010.  Professional fees were down modestly in the third quarter but up $407,000 for the nine month period due to increased consulting expenses and recruitment costs in the Trust company and higher legal fees and workout costs at the Bank in 2010.  Overall, the total level of non-interest expense has been relatively consistent for each of the three quarters in 2010.      


ASRV had total assets of $963 million and shareholders’ equity of $108 million or a book value of $4.13 per common share at September 30, 2010.  The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status with a risk based capital ratio of 15.97%, an asset leverage ratio of 11.07% and a tangible common equity to tangible assets ratio of 7.86% at September 30, 2010.  


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.   


Nasdaq: ASRV

SUPPLEMENTAL FINANCIAL PERFORMANCE DATA

October 19, 2010

(In thousands, except per share and ratio data)

(All quarterly and 2010 data unaudited)

2010

 

1QTR

2QTR

3QTR

YEAR

 

 

 

 

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

 

 

 

 

Net income (loss)

$(918)

$477

$609

$168

Net income (loss) available to common

    shareholders


(1,181)


215


346


(620)

 

 

 

 

 

PERFORMANCE PERCENTAGES (annualized):

 

 

 

 

Return on average assets

(0.39)%

0.20%

0.25%

0.02%

Return on average equity

(3.47)

1.79

2.24

0.21

Net interest margin

3.78

3.83

3.70

3.77

Net charge-offs as a percentage of average loans

0.69

1.13

0.56

0.79

Loan loss provision as a percentage of

    average loans


0.72


0.68


0.57


0.99

Efficiency ratio

85.42

84.33

84.67

84.81

 

 

 

 

 

PER COMMON SHARE:

 

 

 

 

Net income (loss):

 

 

 

 

Basic

$(0.06)

$0.01

$0.02

$(0.03)

Average number of common shares outstanding

21,224

21,224

21,224

21,224

Diluted

(0.06)

0.01

0.02

(0.03)

Average number of common shares outstanding

21,224

21,245

21,225

21,229

 

 

 

 

 


2009

 

1QTR

2QTR

3QTR

YEAR

 

 

 

 

TO DATE

PERFORMANCE DATA FOR THE PERIOD:

 

 

 

 

Net income

$533

$(939)

$(2,810)

$(3,216)

Net income 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


1.81


3.42


2.10

Efficiency ratio

78.22

82.56

84.00

81.57

 

 

 

 

 

PER COMMON SHARE:

 

 

 

 

Net income:

 

 

 

 

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

 

 

 

 

 


AMERISERV FINANCIAL, INC.

(In thousands, except per share, statistical, and ratio data)

(All quarterly and 2010 data unaudited)


2010

 

1QTR

2QTR

3QTR

 

PERFORMANCE DATA AT PERIOD END

 

 

 

 

Assets

$960,817

$962,282

$963,169

 

Short-term investment in money

    market funds


2,105


4,216


3,611

 

Investment securities

150,073

157,057

165,291

 

Loans

712,929

693,988

699,394

 

Allowance for loan losses

21,516

20,737

20,753

 

Goodwill

12,950

12,950

12,950

 

Deposits

802,201

809,177

818,150

 

FHLB borrowings

25,296

17,777

13,119

 

Shareholders’ equity

106,393

108,023

108,391

 

Non-performing assets

20,322

19,815

25,267

 

Asset leverage ratio

11.01%

11.08%

11.07%

 

Tangible common equity ratio

7.70

7.83

7.86

 

PER COMMON SHARE:

 

 

 

 

Book value (A)

$4.04

$4.11

$4.13

 

Market value

1.67

1.61

1.81

 

Trust assets – fair market value (B)

$1,398,215

$1,329,495

$1,341,699

 

 

 

 

 

 

STATISTICAL DATA AT PERIOD END:

 

 

 

 

Full-time equivalent employees

353

355

355

 

Branch locations

18

18

19

 

Common shares outstanding

21,223,942

21,223,942

21,223,942

 


2009

 

1QTR

2QTR

3QTR

4QTR

PERFORMANCE DATA AT PERIOD END

 

 

 

 

Assets

$975,062

$978,899

$959,344

$970,026

Short-term investment in money

    market funds


10,817


7,516


6,565


3,766

Investment securities

138,853

136,119

138,715

142,883

Loans

726,961

739,649

722,540

722,904

Allowance for loan losses

10,661

13,606

19,255

19,685

Goodwill and core deposit intangibles

13,498

13,498

12,950

12,950

Deposits

746,813

783,807

779,185

786,011

FHLB borrowings

90,346

57,702

44,451

51,579

Shareholders’ equity

114,254

112,880

110,706

107,254

Non-performing assets

5,099

14,670

23,689

18,337

Asset leverage ratio

11.82%

11.61%

11.41%

11.06%

Tangible common equity ratio

8.35

8.17

8.16

7.71

PER COMMON SHARE:

 

 

 

 

Book value (A)

$4.44

$4.37

$4.25

$4.09

Market value

1.67

1.85

1.80

1.67

Trust assets – fair market value (B)

$1,432,375

$1,376,272

$1,340,119

$1,358,570

 

 

 

 

 

STATISTICAL DATA AT PERIOD END:

 

 

 

 

Full-time equivalent employees

355

352

350

345

Branch locations

18

18

18

18

Common shares outstanding

21,144,700

21,156,801

21,215,115

21,221,909

NOTES:

(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.



AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENT OF INCOME

(In thousands)

(All quarterly and 2010 data unaudited)

2010

 

1QTR

2QTR

3QTR

YEAR

INTEREST INCOME

 

 

 

TO DATE

Interest and fees on loans

$10,020

$9,984

$9,592

$29,596

Total investment portfolio

1,445

1,466

1,468

4,379

Total Interest Income

11,465

11,450

11,060

33,975

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

Deposits

2,927

2,833

2,668

8,428

All borrowings

417

409

369

1,195

Total Interest Expense

3,344

3,242

3,037

9,623

 

 

 

 

 

NET INTEREST INCOME

8,121

8,208

8,023

24,352

Provision for loan losses

3,050

1,200

1,000

5,250

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES


5,071


7,008


7,023


19,102

 

 

 

 

 

NON-INTEREST INCOME

 

 

 

 

Trust fees

1,454

1,373

1,357

4,184

Net realized gains on investment securities

65

42

50

157

Net realized gains on loans held for sale

131

159

278

568

Service charges on deposit accounts

572

611

565

1,748

Investment advisory fees

187

167

171

525

Bank owned life insurance

254

258

260

772

Other income

637

778

832

2,247

Total Non-interest Income

3,300

3,388

3,513

10,201

 

 

 

 

 

NON-INTEREST EXPENSE

 

 

 

 

Salaries and employee benefits

5,199

5,236

5,415

15,850

Net occupancy expense

736

639

620

1,995

Equipment expense

418

427

401

1,246

Professional fees

1,102

1,114

1,034

3,250

FDIC deposit insurance expense

331

341

430

1,102

Other expenses

1,978

2,029

1,874

5,881

Total Non-interest Expense

9,764

9,786

9,774

29,324

 

 

 

 

 

PRETAX INCOME (LOSS)

(1,393)

610

762

(21)

Income tax expense (benefit)

(475)

133

153

(189)

NET INCOME (LOSS)

(918)

477

609

168

Preferred stock dividends

263

262

263

788

NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS


$(1,181)


$215


$346


$(620)




2009

 

1QTR

2QTR

3QTR

YEAR

INTEREST INCOME

 

 

 

TO DATE

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

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)


AMERISERV FINANCIAL, INC.

Nasdaq: ASRV

Average Balance Sheet Data (In thousands)

(All quarterly and 2010 data unaudited)


2010

2009

 

 

NINE

 

NINE

 

3QTR

MONTHS

3QTR

MONTHS

Interest earning assets:

 

 

 

 

Loans and loans held for sale, net of unearned

    income


$694,432


$705,656


$730,152


$725,657

Deposits with banks

1,781

1,785

1,746

1,762

Short-term investment in money market funds

5,075

4,301

7,388

9,804

Federal funds sold

6,184

3,754

413

156

Total investment securities

167,892

157,894

145,109

146,146

 

 

 

 

 

Total interest earning assets

875,364

873,390

884,808

883,525

 

 

 

 

 

Non-interest earning assets:

 

 

 

 

Cash and due from banks

14,889

14,952

14,135

14,543

Premises and equipment

10,645

10,011

9,052

9,207

Other assets

80,888

80,141

73,296

72,124

Allowance for loan losses

(21,173)

(21,347)

(13,658)

(11,301)

 

 

 

 

 

Total assets

$960,613

$957,147

$967,633

$968,098

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

Interest bearing deposits:

 

 

 

 

Interest bearing demand

$59,014

$58,247

$62,479

$62,050

Savings

79,038

77,701

72,864

72,537

Money market

187,563

186,229

182,735

165,065

Other time

363,327

357,165

352,584

342,076

Total interest bearing deposits

688,942

679,342

670,662

641,728

Borrowings:

 

 

 

 

Federal funds purchased, securities sold under

    agreements to repurchase, and other short-

    term borrowings



1,258



2,963



29,851



59,037

Advanced from Federal Home Loan Bank

13,434

21,419

13,828

13,840

Guaranteed junior subordinated deferrable interest debentures


13,085


13,085


13,085


13,085

Total interest bearing liabilities

716,719

716,809

727,426

727,690

 

 

 

 

 

Non-interest bearing liabilities:

 

 

 

 

Demand deposits

125,117

121,712

114,548

114,365

Other liabilities

10,624

11,290

12,234

12,137

Shareholders’ equity

108,153

107,336

113,425

113,906

Total liabilities and shareholders’ equity

$960,613

$957,147

$967,633

$968,098