AMERISERV FINANCIAL INC /PA/ [ASRV] Filings

10-Q 1 tmb-20230930x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2023

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to_____________

Commission File Number 0-11204

AmeriServ Financial, Inc.

(Exact name of registrant as specified in its charter)


	Pennsylvania	25-1424278
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Main & Franklin Streets, P.O. Box 430, Johnstown, PA		15907-0430
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (814) 533-5300

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ◻	Accelerated Filer ◻	Non-accelerated Filer ⌧	Smaller Reporting Company ☒
			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. ◻

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at November 1, 2023
Common Stock, par value $0.01		17,147,270

Table of Contents

AmeriServ Financial, Inc.

INDEX


	Page No.

PART I.
FINANCIAL INFORMATION
Item 1. Financial Statements	3
Consolidated Balance Sheets (Unaudited) – September 30, 2023 and December 31, 2022	3
Consolidated Statements of Operations (Unaudited) – Three and nine months ended September 30, 2023 and 2022	4
Consolidated Statements of Comprehensive Loss (Unaudited) – Three and nine months ended September 30, 2023 and 2022	5
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) – Three and nine months ended September 30, 2023 and 2022	6
Consolidated Statements of Cash Flows (Unaudited) – Nine months ended September 30, 2023 and 2022	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3. Quantitative and Qualitative Disclosure About Market Risk	63
Item 4. Controls and Procedures	63
PART II. OTHER INFORMATION	63
Item 1. Legal Proceedings	63
Item 1A. Risk Factors	63
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3. Defaults Upon Senior Securities	64
Item 4. Mine Safety Disclosures	64
Item 5. Other Information	64
Item 6. Exhibits	65

Table of Contents

Item 1. Financial Statements

AmeriServ Financial, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


	September 30, 2023		December 31, 2022
ASSETS
Cash and due from depository institutions	$	14,430	$	18,830
Interest bearing deposits and short-term investments		3,598		4,132
Cash and cash equivalents		18,028		22,962
Investment securities, net of allowance for credit losses:
Available for sale, at fair value (allowance for credit losses $926 on September 30, 2023)		169,052		179,508
Held to maturity (fair value $52,391 on September 30, 2023 and $55,192 on December 31, 2022; allowance for credit losses $32 on September 30, 2023)		60,283		61,878
Loans held for sale		—		59
Loans (net of unearned income $401 on September 30, 2023 and $343 on December 31, 2022)		1,002,306		990,766
Less: Allowance for credit losses		12,313		10,743
Net loans		989,993		980,023
Premises and equipment:
Operating lease right-of-use asset		583		630
Financing lease right-of-use asset		2,353		2,413
Other premises and equipment, net		14,190		14,460
Accrued interest income receivable		5,650		4,804
Intangible assets:
Goodwill		13,611		13,611
Core deposit intangible		107		128
Bank owned life insurance		39,429		38,895
Net deferred tax asset		4,855		2,789
Federal Home Loan Bank stock		4,922		5,754
Federal Reserve Bank stock		2,125		2,125
Other assets		36,608		33,835
TOTAL ASSETS	$	1,361,789	$	1,363,874
LIABILITIES
Non-interest bearing deposits	$	178,458	$	195,123
Interest bearing deposits		950,832		913,414
Total deposits		1,129,290		1,108,537
Short-term borrowings		63,451		88,641
Advances from Federal Home Loan Bank		22,117		19,765
Operating lease liabilities		595		643
Financing lease liabilities		2,656		2,680
Subordinated debt		26,675		26,644
Total borrowed funds		115,494		138,373
Other liabilities		15,679		10,786
TOTAL LIABILITIES		1,260,463		1,257,696
SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 26,776,089 shares issued and 17,147,270 shares outstanding on September 30, 2023; 26,746,436 shares issued and 17,117,617 shares outstanding on December 31, 2022		268		267
Treasury stock at cost, 9,628,819 shares on September 30, 2023 and December 31, 2022		(83,280)		(83,280)
Capital surplus		146,354		146,225
Retained earnings		64,738		65,486
Accumulated other comprehensive loss, net		(26,754)		(22,520)
TOTAL SHAREHOLDERS' EQUITY		101,326		106,178
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,361,789	$	1,363,874

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
INTEREST INCOME
Interest and fees on loans	$	13,154	$	10,691	$	38,039	$	29,912
Interest bearing deposits and short-term investments		56		72		186		154
Investment securities:
Available for sale		1,745		1,490		5,237		3,917
Held to maturity		484		447		1,430		1,272
Total Interest Income		15,439		12,700		44,892		35,255
INTEREST EXPENSE
Deposits		5,653		1,720		14,861		3,472
Short-term borrowings		512		36		1,341		39
Advances from Federal Home Loan Bank		188		127		398		459
Financing lease liabilities		24		25		72		76
Subordinated debt		263		263		789		789
Total Interest Expense		6,640		2,171		17,461		4,835
Net Interest Income		8,799		10,529		27,431		30,420
Provision (credit) for credit losses		189		500		1,411		(225)
Net Interest Income after Provision (Credit) for Credit Losses		8,610		10,029		26,020		30,645
NON-INTEREST INCOME
Wealth management fees		2,845		2,813		8,372		8,954
Service charges on deposit accounts		311		289		857		824
Net gains on loans held for sale		59		53		123		183
Mortgage related fees		41		27		108		92
Gain on sale of Visa Class B shares		—		—		1,748		—
Bank owned life insurance		321		329		802		769
Other income		679		815		1,615		1,977
Total Non-Interest Income		4,256		4,326		13,625		12,799
NON-INTEREST EXPENSE
Salaries and employee benefits		7,358		7,071		22,261		21,439
Net occupancy expense		719		698		2,204		2,136
Equipment expense		376		393		1,213		1,205
Professional fees		1,146		948		4,361		2,416
Data processing and IT expense		1,139		1,036		3,297		2,926
Supplies, postage and freight		144		172		487		481
Miscellaneous taxes and insurance		321		350		983		1,022
Federal deposit insurance expense		195		125		495		400
Other expense		697		934		1,934		3,291
Total Non-Interest Expense		12,095		11,727		37,235		35,316

PRETAX INCOME		771		2,628		2,410		8,128
Provision for income taxes		124		526		435		1,627
NET INCOME	$	647	$	2,102	$	1,975	$	6,501
PER COMMON SHARE DATA:
Basic:
Net income	$	0.04	$	0.12	$	0.12	$	0.38
Average number of shares outstanding		17,147		17,111		17,142		17,105
Diluted:
Net income	$	0.04	$	0.12	$	0.12	$	0.38
Average number of shares outstanding		17,147		17,145		17,146		17,146

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
COMPREHENSIVE LOSS
Net income	$	647	$	2,102	$	1,975	$	6,501
Other comprehensive loss
Pension obligation change for defined benefit plan		—		(59)		—		(4,577)
Income tax effect		—		12		—		961
Unrealized holding losses on available for sale securities arising during period		(3,418)		(8,064)		(6,091)		(20,915)
Income tax effect		718		1,694		1,280		4,393
Fair value change for interest rate hedge		400		—		733		—
Income tax effect		(84)		—		(156)		—
Other comprehensive loss		(2,384)		(6,417)		(4,234)		(20,138)
Comprehensive loss	$	(1,737)	$	(4,315)	$	(2,259)	$	(13,637)

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands, except share and per share data)

(Unaudited)


	Three months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
COMMON STOCK
Balance at beginning of period	$	268	$	267	$	267	$	267
New common shares issued for exercise of stock options (3,520 shares for the three months ended September 30, 2022 and 29,653 and 31,117 shares for the nine months ended September 30, 2023 and 2022, respectively)		—		—		1		—
Balance at end of period		268		267		268		267
TREASURY STOCK
Balance at beginning of period		(83,280)		(83,280)		(83,280)		(83,280)
Treasury stock purchased		—		—		—		—
Balance at end of period		(83,280)		(83,280)		(83,280)		(83,280)
CAPITAL SURPLUS
Balance at beginning of period		146,343		146,175		146,225		146,069
New common shares issued for exercise of stock options (3,520 shares for the three months ended September 30, 2022 and 29,653 and 31,117 shares for the nine months ended September 30, 2023 and 2022, respectively)		—		11		94		91
Stock option expense		11		12		35		38
Balance at end of period		146,354		146,198		146,354		146,198
RETAINED EARNINGS
Balance at beginning of period		64,604		63,463		65,486		60,005
Net income		647		2,102		1,975		6,501
Cash dividend declared on common stock ($0.030 for the three months ended September 30, 2023 and 2022 and $0.090 and $0.085 for the nine months ended September 30, 2023 and 2022, respectively)		(513)		(513)		(1,542)		(1,454)
Cumulative effect adjustment for adoption of ASU 2016-13		—		—		(1,181)		—
Balance at end of period		64,738		65,052		64,738		65,052
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET
Balance at beginning of period		(24,370)		(20,233)		(22,520)		(6,512)
Other comprehensive loss		(2,384)		(6,417)		(4,234)		(20,138)
Balance at end of period		(26,754)		(26,650)		(26,754)		(26,650)
TOTAL SHAREHOLDERS’ EQUITY	$	101,326	$	101,587	$	101,326	$	101,587

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine months ended
	September 30,
	2023		2022
OPERATING ACTIVITIES
Net income	$	1,975	$	6,501
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses		1,411		(225)
Depreciation and amortization expense		1,543		1,531
Amortization expense of core deposit intangible		21		23
Amortization of fair value adjustment on acquired time deposits		(29)		(83)
Net amortization of investment securities		43		98
Net amortization of deferred loan fees		(83)		(486)
Net gains on loans held for sale		(123)		(183)
Origination of mortgage loans held for sale		(6,441)		(8,239)
Sales of mortgage loans held for sale		6,623		9,405
Increase in accrued interest receivable		(846)		(636)
Increase (decrease) in accrued interest payable		2,069		(571)
Earnings on bank-owned life insurance		(802)		(769)
Deferred income taxes		(166)		601
Stock compensation expense		35		38
Net change in operating leases		(48)		(69)
Other, net		(4)		(5,082)
Net cash provided by operating activities		5,178		1,854
INVESTING ACTIVITIES
Purchase of investment securities — available for sale		(11,771)		(49,372)
Purchase of investment securities — held to maturity		(2,943)		(11,104)
Proceeds from maturities of investment securities — available for sale		15,216		15,755
Proceeds from maturities of investment securities — held to maturity		4,457		2,244
Proceeds from sales of investment securities — available for sale		—		1,519
Purchase of regulatory stock		(15,747)		(4,405)
Proceeds from redemption of regulatory stock		16,579		3,190
Long-term loans originated		(140,065)		(163,679)
Principal collected on long-term loans		128,421		168,215
Purchases of premises and equipment		(1,010)		(1,621)
Proceeds from sale of other real estate owned and repossessed assets		39		14
Proceeds from life insurance policies		387		670
Net cash used in investing activities		(6,437)		(38,574)
FINANCING ACTIVITIES
Net increase in deposit balances		20,782		13,518
Net (decrease) increase in other short-term borrowings		(25,190)		26,274
Principal borrowings on advances from Federal Home Loan Bank		17,920		—
Principal repayments on advances from Federal Home Loan Bank		(15,568)		(14,131)
Principal payments on financing lease liabilities		(171)		(163)
Stock options exercised		94		91
Common stock dividend paid		(1,542)		(1,454)
Net cash (used in) provided by financing activities		(3,675)

AMERISERV FINANCIAL INC /PA/ [ASRV] Filings
10-Q	[2023-11-09]
10-Q	[2023-08-10]
10-Q	[2023-05-12]
10-K	[2023-03-27]
10-Q	[2022-11-10]
10-Q	[2022-08-10]
10-Q	[2022-05-11]
10-K	[2022-03-14]
10-Q	[2021-11-08]
10-Q	[2021-08-09]
10-Q	[2021-05-10]
10-K	[2021-03-10]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-03-02]
10-Q	[2019-11-08]
10-Q	[2019-08-12]
10-Q	[2019-05-10]
10-K	[2019-03-05]
10-Q	[2018-11-09]
10-Q	[2018-08-10]
10-Q	[2018-05-11]
10-K	[2018-03-02]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-03-03]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-03-08]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-03-06]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-02-28]
10-Q	[2013-11-13]
10-Q	[2013-08-09]
10-Q	[2013-05-10]
10-K	[2013-03-08]
10-Q	[2012-11-09]
10-Q	[2012-08-09]
10-Q	[2012-05-09]
10-K	[2012-03-09]