Price | 4.20 | EPS | 0 | |
Shares | 18 | P/E | 10 | |
MCap | 74 | P/FCF | 55 | |
Net Debt | -33 | EBIT | 23 | |
TEV | 40 | TEV/EBIT | 2 | TTM 2019-09-30, in MM, except price, ratios |
10-Q | 2020-09-30 | Filed 2020-11-06 |
10-Q | 2020-06-30 | Filed 2020-08-10 |
10-Q | 2020-03-31 | Filed 2020-05-08 |
10-K | 2019-12-31 | Filed 2020-03-02 |
10-Q | 2019-09-30 | Filed 2019-11-08 |
10-Q | 2019-06-30 | Filed 2019-08-12 |
10-Q | 2019-03-31 | Filed 2019-05-10 |
10-K | 2018-12-31 | Filed 2019-03-05 |
10-Q | 2018-09-30 | Filed 2018-11-09 |
10-Q | 2018-06-30 | Filed 2018-08-10 |
10-Q | 2018-03-31 | Filed 2018-05-11 |
10-K | 2017-12-31 | Filed 2018-03-02 |
10-Q | 2017-09-30 | Filed 2017-11-03 |
10-Q | 2017-06-30 | Filed 2017-08-04 |
10-Q | 2017-03-31 | Filed 2017-05-05 |
10-K | 2016-12-31 | Filed 2017-03-03 |
10-Q | 2016-09-30 | Filed 2016-11-04 |
10-Q | 2016-06-30 | Filed 2016-08-05 |
10-Q | 2016-03-31 | Filed 2016-05-06 |
10-K | 2015-12-31 | Filed 2016-03-08 |
10-Q | 2015-09-30 | Filed 2015-11-06 |
10-Q | 2015-06-30 | Filed 2015-08-07 |
10-Q | 2015-03-31 | Filed 2015-05-08 |
10-K | 2014-12-31 | Filed 2015-03-06 |
10-Q | 2014-09-30 | Filed 2014-11-07 |
10-Q | 2014-06-30 | Filed 2014-08-08 |
10-Q | 2014-03-31 | Filed 2014-05-09 |
10-K | 2013-12-31 | Filed 2014-02-28 |
10-Q | 2013-09-30 | Filed 2013-11-13 |
10-Q | 2013-06-30 | Filed 2013-08-09 |
10-Q | 2013-03-31 | Filed 2013-05-10 |
10-K | 2012-12-31 | Filed 2013-03-08 |
10-Q | 2012-09-30 | Filed 2012-11-09 |
10-Q | 2012-06-30 | Filed 2012-08-09 |
10-Q | 2012-03-31 | Filed 2012-05-09 |
10-K | 2011-12-31 | Filed 2012-03-09 |
10-Q | 2011-09-30 | Filed 2011-11-10 |
10-Q | 2011-06-30 | Filed 2011-08-12 |
10-Q | 2011-03-31 | Filed 2011-05-06 |
10-K | 2010-12-31 | Filed 2011-03-07 |
10-Q | 2010-09-30 | Filed 2010-11-05 |
10-Q | 2010-06-30 | Filed 2010-08-06 |
10-Q | 2010-03-31 | Filed 2010-05-07 |
10-K | 2009-12-31 | Filed 2010-02-26 |
8-K | 2021-01-15 | Regulation FD, Exhibits |
8-K | 2020-12-31 | Earnings, Other Events, Exhibits |
8-K | 2020-09-30 | |
8-K | 2020-06-30 | |
8-K | 2020-05-08 | |
8-K | 2020-04-28 | |
8-K | 2020-04-06 | |
8-K | 2020-03-31 | |
8-K | 2019-12-31 | |
8-K | 2019-10-18 | |
8-K | 2019-10-17 | |
8-K | 2019-09-30 | |
8-K | 2019-07-19 | |
8-K | 2019-06-30 | |
8-K | 2019-04-23 | |
8-K | 2019-04-22 | |
8-K | 2019-04-18 | |
8-K | 2019-03-31 | |
8-K | 2019-01-24 | |
8-K | 2019-01-23 | |
8-K | 2018-12-31 | |
8-K | 2018-10-22 | |
8-K | 2018-09-30 | |
8-K | 2018-07-27 | |
8-K | 2018-07-20 | |
8-K | 2018-06-30 | |
8-K | 2018-06-21 | |
8-K | 2018-05-23 | |
8-K | 2018-04-24 | |
8-K | 2018-04-19 | |
8-K | 2018-03-31 | |
8-K | 2018-01-24 | |
8-K | 2018-01-23 | |
8-K | 2018-01-11 |
Item 1. Financial Statements |
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") |
Item 3…..Quantitative and Qualitative Disclosure About Market Risk….. |
Item 4…..Controls and Procedures….. |
Part II Other Information |
Item 1. Legal Proceedings |
Item 1A. Risk Factors |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. Defaults Upon Senior Securities |
Item 4. Mine Safety Disclosures |
Item 5. Other Information |
Item 6. Exhibits |
EX-15.1 | asrv-20200930ex151b0b23d.htm |
EX-15.2 | asrv-20200930ex152bf02e7.htm |
EX-31.1 | asrv-20200930ex3115301a7.htm |
EX-31.2 | asrv-20200930ex312b55ff0.htm |
EX-32.1 | asrv-20200930ex32148ba93.htm |
EX-32.2 | asrv-20200930ex3225e8fc7.htm |
Balance Sheet | Income Statement | Cash Flow |
---|---|---|
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, 2020
◻ 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 |
8.45% Beneficial Unsecured Securities, Series A (AmeriServ Financial Capital Trust I) | ASRVP | 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, 2020 | |
Common Stock, par value $0.01 | 17,058,644 | |
AmeriServ Financial, Inc.
1
AmeriServ Financial, Inc.
(In thousands except shares)
(Unaudited)
| | September 30, 2020 | | December 31, 2019 | ||
ASSETS |
| |
|
| |
|
Cash and due from depository institutions | | $ | 17,986 | | $ | 15,642 |
Interest bearing deposits | |
| 3,214 | |
| 2,755 |
Short-term investments | |
| 20,008 | |
| 3,771 |
Cash and cash equivalents | |
| 41,208 | |
| 22,168 |
Investment securities: | |
|
| |
|
|
Available for sale, at fair value | |
| 141,716 | |
| 141,749 |
Held to maturity (fair value $45,308 on September 30, 2020 and $41,082 on December 31, 2019) | |
| 42,636 | |
| 39,936 |
Loans held for sale | |
| 7,587 | |
| 4,868 |
Loans | |
| 943,246 | |
| 883,090 |
Less: Unearned income | |
| 1,466 | |
| 384 |
Less: Allowance for loan losses | |
| 10,284 | |
| 9,279 |
Net loans | |
| 931,496 | |
| 873,427 |
Premises and equipment: | |
| | |
| |
Operating lease right-of-use asset | | | 781 | | | 846 |
Financing lease right-of-use asset | | | 3,024 | | | 3,078 |
Other premises and equipment, net | | | 14,533 | | | 14,643 |
Accrued interest income receivable | |
| 5,722 | |
| 3,449 |
Goodwill | |
| 11,944 | |
| 11,944 |
Bank owned life insurance | |
| 39,354 | |
| 38,916 |
Net deferred tax asset | |
| 3,216 | |
| 3,976 |
Federal Home Loan Bank stock | |
| 4,153 | |
| 3,985 |
Federal Reserve Bank stock | |
| 2,125 | |
| 2,125 |
Other assets | |
| 8,636 | |
| 6,074 |
TOTAL ASSETS | | $ | 1,258,131 | | $ | 1,171,184 |
LIABILITIES | | | | | | |
Non-interest bearing deposits | | $ | 179,922 | | $ | 136,462 |
Interest bearing deposits | |
| 862,313 | |
| 824,051 |
Total deposits | |
| 1,042,235 | |
| 960,513 |
Short-term borrowings | |
| 5,894 | |
| 22,412 |
Advances from Federal Home Loan Bank | |
| 74,336 | |
| 53,668 |
Operating lease liabilities | | | 798 | | | 865 |
Financing lease liabilities | | | 3,161 | | | 3,163 |
Guaranteed junior subordinated deferrable interest debentures | |
| 12,966 | |
| 12,955 |
Subordinated debt | |
| 7,528 | |
| 7,511 |
Total borrowed funds | |
| 104,683 | |
| 100,574 |
Other liabilities | |
| 7,844 | |
| 11,483 |
TOTAL LIABILITIES | |
| 1,154,762 | |
| 1,072,570 |
SHAREHOLDERS' EQUITY | |
|
| |
|
|
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 26,687,463 shares issued and 17,058,644 shares outstanding on September 30, 2020; 26,650,728 shares issued and 17,057,871 shares outstanding on December 31, 2019 | |
| 267 | |
| 267 |
Treasury stock at cost, 9,628,819 shares on September 30, 2020 and 9,592,857 shares on December 31, 2019 | |
| (83,280) | |
| (83,129) |
Capital surplus | |
| 145,965 | |
| 145,888 |
Retained earnings | |
| 54,375 | |
| 51,759 |
Accumulated other comprehensive loss, net | |
| (13,958) | |
| (16,171) |
TOTAL SHAREHOLDERS' EQUITY | |
| 103,369 | |
| 98,614 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ | 1,258,131 | | $ | 1,171,184 |
See accompanying notes to unaudited consolidated financial statements.
2
AmeriServ Financial, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | Three months ended | | Nine months ended | | ||||||||
|
| September 30, | | September 30, |
| ||||||||
| | 2020 |
| 2019 |
| 2020 |
| 2019 | | ||||
| | | | | | | | | | | | | |
INTEREST INCOME |
| |
|
| |
|
| |
|
| |
|
|
Interest and fees on loans |
| $ | 9,724 |
| $ | 10,737 |
| $ | 30,504 |
| $ | 32,149 |
|
Interest bearing deposits | |
| 4 | |
| 6 | |
| 11 | |
| 19 | |
Short-term investments | |
| 51 | |
| 84 | |
| 219 | |
| 212 | |
Investment securities: | |
|
| |
|
| |
|
| |
|
| |
Available for sale | |
| 1,122 | |
| 1,265 | |
| 3,464 | |
| 3,898 | |
Held to maturity | |
| 336 | |
| 341 | |
| 1,044 | |
| 1,084 | |
Total Interest Income | |
| 11,237 | |
| 12,433 | |
| 35,242 | |
| 37,362 | |
INTEREST EXPENSE | |
|
| |
|
| |
|
| |
|
| |
Deposits | |
| 1,727 | |
| 2,895 | |
| 6,054 | |
| 8,492 | |
Short-term borrowings | |
| 1 | |
| 38 | |
| 17 | |
| 276 | |
Advances from Federal Home Loan Bank | |
| 280 | |
| 297 | |
| 840 | |
| 793 | |
Financing lease liabilities | | | 28 | | | 29 | | | 85 | | | 88 | |
Guaranteed junior subordinated deferrable interest debentures | |
| 280 | |
| 280 | |
| 841 | |
| 841 | |
Subordinated debt | |
| 130 | |
| 130 | |
| 390 | |
| 390 | |
Total Interest Expense | |
| 2,446 | |
| 3,669 | |
| 8,227 | |
| 10,880 | |
Net Interest Income | |
| 8,791 | |
| 8,764 | |
| 27,015 | |
| 26,482 | |
Provision (credit) for loan losses | |
| 675 | |
| 225 | |
| 1,300 | |
| (175) | |
Net Interest Income after Provision (Credit) for Loan Losses | |
| 8,116 | |
| 8,539 | |
| 25,715 | |
| 26,657 | |
NON-INTEREST INCOME | |
|
| |
|
| |
|
| |
|
| |
Wealth management fees | |
| 2,604 | |
| 2,431 | |
| 7,629 | |
| 7,246 | |
Service charges on deposit accounts | |
| 206 | |
| 321 | |
| 668 | |
| 948 | |
Net gains on loans held for sale | |
| 507 | |
| 405 | |
| 1,079 | |
| 574 | |
Mortgage related fees | |
| 161 | |
| 97 | |
| 432 | |
| 218 | |
Net realized gains on investment securities | |
| — | |
| 88 | |
| — | |
| 118 | |
Bank owned life insurance | |
| 161 | |
| 131 | |
| 438 | |
| 388 | |
Other income | |
| 665 | |
| 622 | |
| 1,657 | |
| 1,865 | |
Total Non-Interest Income | |
| 4,304 | |
| 4,095 | |
| 11,903 | |
| 11,357 | |
NON-INTEREST EXPENSE | |
|
| |
|
| |
|
| |
|
| |
Salaries and employee benefits | |
| 6,838 | |
| 6,324 | |
| 20,161 | |
| 18,973 | |
Net occupancy expense | |
| 608 | |
| 599 | |
| 1,885 | |
| 1,879 | |
Equipment expense | |
| 374 | |
| 333 | |
| 1,158 | |
| 1,081 | |
Professional fees | |
| 1,373 | |
| 1,276 | |
| 3,858 | |
| 3,645 | |
Supplies, postage and freight | |
| 150 | |
| 142 | |
| 551 | |
| 455 | |
Miscellaneous taxes and insurance | |
| 291 | |
| 280 | |
| 855 | |
| 851 | |
Federal deposit insurance expense | |
| 140 | |
| — | |
| 296 | |
| 160 | |
Other expense | |
| 1,333 | |
| 1,549 | |
| 3,982 | |
| 4,208 | |
Total Non-Interest Expense | |
| 11,107 | |
| 10,503 | |
| 32,746 | |
| 31,252 | |
| | | | | | | | | | | | | |
PRETAX INCOME | | | 1,313 | | | 2,131 | | | 4,872 | | | 6,762 | |
Provision for income taxes | | | 235 | | | 442 | | | 966 | | | 1,403 | |
NET INCOME | | $ | 1,078 | | $ | 1,689 | | $ | 3,906 | | $ | 5,359 | |
PER COMMON SHARE DATA: | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | |
Net income | | $ | 0.06 | | $ | 0.10 | | $ | 0.23 | | $ | 0.31 | |
Average number of shares outstanding | | | 17,059 | | | 17,278 | | | 17,051 | | | 17,443 | |
Diluted: | | | | | | | | | | | | | |
Net income | | $ | 0.06 | | $ | 0.10 | | $ | 0.23 | | $ | 0.31 | |
Average number of shares outstanding | | | 17,062 | | | 17,360 | | | 17,063 | | | 17,524 | |
See accompanying notes to unaudited consolidated financial statements.
3
AmeriServ Financial, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
| | Three months ended | | Nine months ended | | ||||||||
|
| September 30, | | September 30, |
| ||||||||
| | 2020 |
| 2019 |
| 2020 |
| 2019 | | ||||
COMPREHENSIVE INCOME |
| |
|
| |
|
| |
|
| |
|
|
Net income | | $ | 1,078 | | $ | 1,689 | | $ | 3,906 | | $ | 5,359 | |
Other comprehensive income, before tax: | |
|
| |
|
| |
|
| |
|
| |
Pension obligation change for defined benefit plan | |
| — | |
| 403 | |
| 528 | |
| (1,030) | |
Income tax effect | |
| — | |
| (85) | |
| (111) | |
| 216 | |
Unrealized holding gains on available for sale securities arising during period | |
| 143 | |
| 608 | |
| 2,272 | |
| 4,191 | |
Income tax effect | |
| (30) | |
| (128) | |
| (476) | |
| (880) | |
Reclassification adjustment for gains on available for sale securities included in net income | |
| — | |
| (88) | |
| — | |
| (118) | |
Income tax effect | |
| — | |
| 19 | |
| — | |
| 25 | |
Other comprehensive income | |
| 113 | |
| 729 | |
| 2,213 | |
| 2,404 | |
Comprehensive income | | $ | 1,191 | | $ | 2,418 | | $ | 6,119 | | $ | 7,763 | |
See accompanying notes to unaudited consolidated financial statements.
4
AmeriServ Financial, Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
| | Three months ended | | Nine months ended | | ||||||||
|
| September 30, | | September 30, |
| ||||||||
| | 2020 |
| 2019 |
| 2020 |
| 2019 | | ||||
COMMON STOCK | |
|
| |
|
| |
|
| |
|
| |
Balance at beginning of period | | $ | 267 | | $ | 266 | | $ | 267 | | $ | 266 | |
New common shares issued for exercise of stock options (36,735 and 38,917 shares for the nine months ended September 30, 2020 and 2019, respectively) | |
| — | |
| — | |
| — | |
| — | |
Balance at end of period | |
| 267 | |
| 266 | |
| 267 | |
| 266 | |
TREASURY STOCK | |
|
| |
|
| |
|
| |
|
| |
Balance at beginning of period | |
| (83,280) | |
| (81,741) | |
| (83,129) | |
| (80,579) | |
Treasury stock, purchased at cost (237,641 shares for the three months ended September 30, 2019 and 35,962 and 511,506 shares for the nine months ended September 30, 2020 and 2019, respectively) | |
| — | |
| (1,004) | |
| (151) | |
| (2,166) | |
Balance at end of period | |
| (83,280) | |
| (82,745) | |
| (83,280) | |
| (82,745) | |
CAPITAL SURPLUS | |
|
| |
|
| |
|
| |
|
| |
Balance at beginning of period | |
| 145,965 | |
| 145,883 | |
| 145,888 | |
| 145,782 | |
New common shares issued for exercise of stock options (36,735 and 38,917 shares for the nine months ended September 30, 2020 and 2019, respectively) | |
| — | |
| — | |
| 75 | |
| 96 | |
Stock option expense | |
| — | |
| 1 | |
| 2 | |
| 6 | |
Balance at end of period | |
| 145,965 | |
| 145,884 | |
| 145,965 | |
| 145,884 | |
RETAINED EARNINGS | |
|
| |
|
| |
|
| |
|
| |
Balance at beginning of period | |
| 53,723 | |
| 49,618 | |
| 51,759 | |
| 46,733 | |
Net income | |
| 1,078 | |
| 1,689 | |
| 3,906 | |
| 5,359 | |
Cash dividend declared on common stock ($0.025 per share for the three months ended September 30, 2020 and 2019 and $0.075 and $0.070 per share for the nine months ended September 30, 2020 and 2019, respectively) | |
| (426) | |
| (431) | |
| (1,290) | |
| (1,216) | |
Balance at end of period | |
| 54,375 | |
| 50,876 | |
| 54,375 | |
| 50,876 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET | |
|
| |
|
| |
|
| |
|
| |
Balance at beginning of period | |
| (14,071) | |
| (12,550) | |
| (16,171) | |
| (14,225) | |
Other comprehensive income | |
| 113 | |
| 729 | |
| 2,213 | |
| 2,404 | |
Balance at end of period | |
| (13,958) | |
| (11,821) | |
| (13,958) | |
| (11,821) | |
TOTAL STOCKHOLDERS’ EQUITY | | $ | 103,369 | | $ | 102,460 | | $ | 103,369 | | $ | 102,460 | |
See accompanying notes to unaudited consolidated financial statements.
5
AmeriServ Financial, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | Nine months ended | | ||||
|
| September 30, |
| ||||
|
| 2020 |
| 2019 |
| ||
OPERATING ACTIVITIES | | | | | | | |
Net income | | $ | 3,906 | | $ | 5,359 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |
|
| |
|
| |
Provision (credit) for loan losses | |
| 1,300 | |
| (175) | |
Depreciation and amortization expense | |
| 1,472 | |
| 1,360 | |
Net amortization of investment securities | |
| 206 | |
| 203 | |
Net realized gains on investment securities — available for sale | |
| — | |
| (118) | |
Net gains on loans held for sale | |
| (1,079) | |
| (574) | |
Amortization of deferred loan fees | |
| (339) | |
| (91) | |
Origination of mortgage loans held for sale | |
| (71,330) | |
| (28,232) | |
Sales of mortgage loans held for sale | |
| 69,690 | |
| 23,704 | |
Increase in accrued interest receivable | |
| (2,273) | |
| (276) | |
Increase (decrease) in accrued interest payable | |
| (499) | |
| 307 | |
Earnings on bank-owned life insurance | |
| (438) | |
| (388) | |
Deferred income taxes | |
| 609 | |
| 623 | |
Stock compensation expense | |
| 2 | |
| 6 | |
Net change in operating leases | | | (67) | | | (46) | |
Other, net | |
| (5,564) | |
| (323) | |
Net cash provided by (used in) operating activities | |
| (4,404) | |
| 1,339 | |
INVESTING ACTIVITIES | |
|
| |
|
| |
Purchase of investment securities — available for sale | |
| (23,706) | |
| (11,701) | |
Purchase of investment securities — held to maturity | |
| (6,648) | |
| (1,000) | |
Proceeds from maturities of investment securities — available for sale | |
| 25,871 | |
| 15,704 | |
Proceeds from maturities of investment securities — held to maturity | |
| 3,883 | |
| 2,403 | |
Proceeds from sales of investment securities — available for sale | |
| — | |
| 3,374 | |
Purchase of regulatory stock | |
| (6,252) | |
| (11,254) | |
Proceeds from redemption of regulatory stock | |
| 6,084 | |
| 12,144 | |
Long-term loans originated | |
| (207,028) | |
| (163,343) | |
Principal collected on long-term loans | |
| 147,958 | |
| 156,357 | |
Proceeds from sale of other real estate owned | |
| 21 | |
| 198 | |
Purchases of premises and equipment | |
| (1,094) | |
| (2,550) | |
Net cash provided by (used in) investing activities | |
| (60,911) | |
| 332 | |
FINANCING ACTIVITIES | |
|
| |
|
| |
Net increase in deposit balances | |
| 81,722 | |
| 20,818 | |
Net decrease in other short-term borrowings | |
| (16,518) | |
| (29,754) | |
Principal borrowings on advances from Federal Home Loan Bank | |
| 34,210 | |
| 16,909 | |
Principal repayments on advances from Federal Home Loan Bank | |
| (13,542) | |
| (8,000) | |
Principal payments on financing lease liabilities | | | (151) | | | (126) | |
Stock options exercised | |
| 75 | |
| 96 | |
Purchases of treasury stock | |
| (151) | |
| (2,166) | |
Common stock dividend paid | |
| (1,290) | |
| (1,216) | |
Net cash provided by (used in) financing activities | |
| 84,355 | |
| (3,439) | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | |
| 19,040 | |
| (1,768) | |
CASH AND CASH EQUIVALENTS AT JANUARY 1 | |
| 22,168 | |
| 34,894 | |
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 | | $ | 41,208 | | $ | 33,126 | |
See accompanying notes to unaudited consolidated financial statements.
6
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of AmeriServ Financial, Inc. (the Company) and its wholly-owned subsidiaries, AmeriServ Financial Bank (the Bank), AmeriServ Trust and Financial Services Company (the Trust Company), and AmeriServ Life Insurance Company (AmeriServ Life). The Bank is a Pennsylvania state-chartered full service bank with 15 locations in Pennsylvania and 1 location in Maryland. The Trust Company offers a complete range of trust and financial services and administers assets valued at $2.3 billion that are not reported on the Company’s Consolidated Balance Sheets at September 30, 2020. AmeriServ Life was a captive insurance company that engaged in underwriting as a reinsurer of credit life and disability insurance. New business ceased being generated by AmeriServ Life in 2005. Since that time, the outstanding insurance policies have been running off, and the final policy has expired. On September 30, 2020, the Arizona Corporation Commission approved the Articles of Dissolution for AmeriServ Life.
In addition, the Parent Company is an administrative group that provides support in such areas as audit, finance, investments, loan review, general services, and marketing. Intercompany accounts and transactions have been eliminated in preparing the Consolidated Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (generally accepted accounting principles, or GAAP) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from these estimates and the differences may be material to the Consolidated Financial Statements. The Company’s most significant estimates relate to the allowance for loan losses, goodwill, income taxes, investment securities, pension, and the fair value of financial instruments.
2. Basis of Preparation
The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. In the opinion of management, all adjustments consisting of normal recurring entries considered necessary for a fair presentation have been included. They are not, however, necessarily indicative of the results of consolidated operations for a full-year.
For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
3. Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted.
In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies to fiscal years beginning
7
after December 15, 2022, including interim periods within those fiscal years. The Company, as a smaller reporting company, continues to evaluate the impact that the Update will have on our consolidated financial statements. We are currently working with an industry leading third-party consultant and software provider to assist us in the implementation of this standard. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements. The overall impact of the amendment will be affected by the portfolio composition and quality at the adoption date as well as economic conditions and forecasts at that time.
In January 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications to ease the financial reporting burdens of the expected market transition from LIBOR to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company has identified its LIBOR exposure across product categories and is analyzing the risks associated with the LIBOR transition. However, it is too early to predict whether a new rate index replacement and the adoption of this ASU will have a material impact on the Company’s financial statements.
4. Revenue Recognition
ASU 2014-09, Revenue from Contracts with Customers – Topic 606, requires the Company to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers at the time the transfer of goods or services takes place. Management determined that the primary sources of revenue associated with financial instruments, including interest and fee income on loans and interest on investments, along with certain noninterest revenue sources including net realized gains (losses) on investment securities, mortgage related fees, net gains on loans held for sale, and bank owned life insurance are not within the scope of Topic 606. These sources of revenue cumulatively comprise 79.7% of the total revenue of the Company.
Non-interest income within the scope of Topic 606 are as follows:
● | Wealth management fees - Wealth management fee income is primarily comprised of fees earned from the management and administration of trusts and customer investment portfolios. The Company’s performance obligation is generally satisfied over a period of time and the resulting fees are billed monthly or quarterly, based upon the month end market value of the assets under management. Payment is generally received after month end through a direct charge to customers’ accounts. Due to this delay in payment, a receivable of $825,000 has been established as of September 30, 2020 and is included in other assets on the Consolidated Balance Sheets in order to properly recognize the revenue earned but not yet received. Other performance obligations (such as delivery of account statements to customers) are generally considered immaterial to the overall transactions’ price. Commissions on transactions are recognized on a trade-date basis as the performance obligation is satisfied at the point in time in which the trade is processed. Also included within wealth management fees are commissions from the sale of mutual funds, annuities, and life insurance products. Commissions on the sale of mutual funds, annuities, and life insurance products are recognized when sold, which is when the Company has satisfied its performance obligation. |
● | Service charges on deposit accounts - The Company has contracts with its deposit account customers where fees are charged for certain items or services. Service charges include account analysis fees, monthly service fees, overdraft fees, and other deposit account related fees. Revenue related to account analysis fees and service fees is recognized on a monthly basis as the Company has an unconditional right to the fee consideration. Fees |
8
attributable to specific performance obligations of the Company (i.e. overdraft fees, etc.) are recognized at a defined point in time based on completion of the requested service or transaction. |
● | Other non-interest income - Other non-interest income consists of other recurring revenue streams such as safe deposit box rental fees, gain (loss) on sale of other real estate owned, ATM and VISA debit card fees, and other miscellaneous revenue streams. Safe deposit box rental fees are charged to the customer on an annual basis and recognized when billed. However, if the safe deposit box rental fee is prepaid (i.e. paid prior to issuance of annual bill), the revenue is recognized upon receipt of payment. The Company has determined that since rentals and renewals occur consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Gains and losses on the sale of other real estate owned are recognized at the completion of the property sale when the buyer obtains control of the real estate and all the performance obligations of the Company have been satisfied. The Company offers ATM and VISA debit cards to deposit account holders which allows our customers to access their account electronically at ATMs and POS terminals. Fees related to ATM and VISA debit card transactions are recognized when the transactions are completed and the Company has satisfied its performance obligation. |
The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine month periods ending September 30, 2020 and 2019 (in thousands).
|
| Three months ended |
| Nine months ended |
| ||||||||
|
| September 30, | | September 30, |
| ||||||||
| | 2020 |
| 2019 |
| 2020 |
| 2019 | | ||||
Non-interest income: | | | | | | | | | | | | | |
In-scope of Topic 606 |
| |
|
| |
|
| |
|
| |
|
|
Wealth management fees | | $ | 2,604 | | $ | 2,431 | | $ | 7,629 | | $ | 7,246 | |
Service charges on deposit accounts | |
| 206 | |
| 321 | |
| 668 | |
| 948 | |
Other | |
| 485 | |
| 471 | |
| 1,271 | |
| 1,325 | |
Non-interest income (in-scope of topic 606) | |
| 3,295 | |
| 3,223 | |
| 9,568 | |
| 9,519 | |
Non-interest income (out-of-scope of topic 606) | |
| 1,009 | |
| 872 | |
| 2,335 | |
| 1,838 | |
Total non-interest income | | $ | 4,304 | | $ | 4,095 | | $ | 11,903 | | $ | 11,357 | |
5. Earnings Per Common Share
Basic earnings per share include only the weighted average common shares outstanding. Diluted earnings per share include the weighted average common shares outstanding and any potentially dilutive common stock equivalent shares in the calculation. Treasury shares are excluded for earnings per share purposes. For the three month periods ending September 30, 2020 and 2019, options to purchase 189,259 common shares, with an exercise price of $2.96 to $4.22, and options to purchase 12,000 common shares, with an exercise price of $4.19 to $4.22, respectively, were outstanding but were not included in the computation of diluted earnings per common share because to do so would be antidilutive. For the nine month periods ending September 30, 2020 and 2019, options to purchase 69,759 common shares, with an exercise price of $3.20 to $4.22, and options to purchase 12,000 common shares, with an exercise price of $4.19 to 4.22,
9
respectively, were outstanding but were not included in the computation of diluted earnings per common share because to do so would be antidilutive.
| | Three months ended | | Nine months ended | ||||||||
| | September 30, | | September 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
| | (In thousands, except per share data) | ||||||||||
Numerator: |
| |
|
| |
| | | |
| |
|
Net income | | $ | 1,078 | | $ | 1,689 | | $ | 3,906 | | $ | 5,359 |
Denominator: | |
|
| |
|
| |
|
| |
|
|
Weighted average common shares outstanding (basic) | |
| 17,059 | |
| 17,278 | |
| 17,051 | |
| 17,443 |
Effect of stock options | |
| 3 | |
| 82 | |
| 12 | |
| 81 |
Weighted average common shares outstanding (diluted) | |
| 17,062 | |
| 17,360 | |
| 17,063 | |
| 17,524 |
Earnings per common share: | |
|
| |
|
| |
|
| |
|
|
Basic | | $ | 0.06 | | $ | 0.10 | | $ | 0.23 | | $ | 0.31 |
Diluted | |
| 0.06 | |
| 0.10 | |
| 0.23 | |
| 0.31 |
6. Consolidated Statement of Cash Flows
On a consolidated basis, cash and cash equivalents include cash and due from depository institutions, interest bearing deposits and short-term investments in both money market funds and commercial paper. The Company made $315,000 in income tax payments in the first nine months of 2020 and $785,000 in the same 2019 period. The Company made total interest payments of $8,726,000 in the first nine months of 2020 compared to $10,573,000 in the same 2019 period. The Company had $40,000 non-cash transfers to other real estate owned (OREO) in the first nine months of 2020 compared to $75,000 non-cash transfers in the same 2019 period. During the first nine months of 2020, the Company entered into two new financing leases, one related to office equipment and the other to a branch location, and recorded a right-of-use asset and lease liability of $149,000. As a result of the adoption of ASU 2016-02, Leases (Topic 842) as of January 1, 2019, the Company had non-cash transactions associated with the recognition of the right-of-use assets and lease liabilities. Specifically, the Company recognized a right-of-use asset and lease liability of $932,000 related to operating leases and a right-of-use asset and lease liability of $3.3 million related to financing leases during the first nine months of 2019.
7. Investment Securities
The cost basis and fair values of investment securities are summarized as follows:
Investment securities available for sale (AFS):
| | SEPTEMBER 30, 2020 | ||||||||||
| | | | | GROSS | | GROSS | | | | ||
| | | | | UNREALIZED | | UNREALIZED | | FAIR | |||
|
| COST BASIS |
| GAINS |
| LOSSES |
| VALUE | ||||
| | (IN THOUSANDS) | ||||||||||
U.S. Agency | | $ | 3,079 | | $ | 197 | | $ | — | | $ | 3,276 |
U.S. Agency mortgage-backed securities | |
| 66,198 | |
| 2,850 | |
| (6) | |
| 69,042 |
Municipal | |
| 17,409 | |
| 1,242 | |
| — | |
| 18,651 |
Corporate bonds | |
| 50,586 | |
| 557 | |
| (396) | |
| 50,747 |
Total | | $ | 137,272 | | $ | 4,846 | | $ | (402) | | $ | 141,716 |
10
Investment securities held to maturity (HTM):
| | SEPTEMBER 30, 2020 | ||||||||||
| | | | | GROSS | | GROSS | | | | ||
| | | | | UNREALIZED | | UNREALIZED | | FAIR | |||
|
| COST BASIS |
| GAINS |
| LOSSES |
| VALUE | ||||
| | (IN THOUSANDS) | ||||||||||
U.S. Agency mortgage-backed securities | | $ | 7,719 | | $ | 394 | | $ | — | | $ | 8,113 |
Municipal | |
| 28,889 | |
| 2,225 | |
| (51) | |
| 31,063 |
Corporate bonds and other securities | |
| 6,028 | |
| 108 | |
| (4) | |
| 6,132 |
Total | | $ | 42,636 | | $ | 2,727 | | $ | (55) | | $ | 45,308 |
Investment securities available for sale (AFS):
| | DECEMBER 31, 2019 | ||||||||||
| | | | | GROSS | | GROSS | | | | ||
| | | | | UNREALIZED | | UNREALIZED | | FAIR | |||
|
| COST BASIS |
| GAINS |
| LOSSES |
| VALUE | ||||
| | (IN THOUSANDS) | ||||||||||
U.S. Agency | | $ | 5,084 | | $ | 32 | | $ | — | | $ | 5,116 |
U.S. Agency mortgage-backed securities | |
| 80,046 | |
| 1,681 | |
| (94) | |
| 81,633 |
Municipal | |
| 14,678 | |
| 509 | |
| (17) | |
| 15,170 |
Corporate bonds | |
| 39,769 | |
| 342 | |
| (281) | |
| 39,830 |
Total | | $ | 139,577 | | $ | 2,564 | | $ | (392) | | $ | 141,749 |
Investment securities held to maturity (HTM):
| | DECEMBER 31, 2019 | ||||||||||
| | | | | GROSS | | GROSS | | | | ||
| | | | | UNREALIZED | | UNREALIZED | | FAIR | |||
| | COST BASIS |
| GAINS |
| LOSSES |
| VALUE | ||||
| | (IN THOUSANDS) | ||||||||||
U.S. Agency mortgage-backed securities |
| $ | 9,466 | | $ | 251 | | $ | (4) | | $ | 9,713 |
Municipal | |
| 24,438 | |
| 941 | |
| (53) | |
| 25,326 |
Corporate bonds and other securities | |
| 6,032 | |
| 58 | |
| (47) | |
| 6,043 |
Total | | $ | 39,936 | | $ | 1,250 | | $ | (104) | | $ | 41,082 |
Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At September 30, 2020, 43.5% of the portfolio was rated “AAA” as compared to 53.4% at December 31, 2019. Approximately 14.8% of the portfolio was either rated below “A” or unrated at September 30, 2020 as compared to 9.1% at December 31, 2019.
The Company sold no AFS securities during the third quarter or first nine months of 2020. Total proceeds from the sale of AFS securities for the third quarter and first nine months of 2019 were $2.8 million and $3.4 million, respectively, resulting in $88,000 and $118,000, respectively, of gross investment security gains.
The carrying value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits was $113,126,000 at September 30, 2020 and $117,076,000 at December 31, 2019.
11
The following tables present information concerning investments with unrealized losses as of September 30, 2020 and December 31, 2019 (in thousands):
Total investment securities:
| | SEPTEMBER 30, 2020 | ||||||||||||||||
| | LESS THAN 12 MONTHS | | 12 MONTHS OR LONGER | | TOTAL | ||||||||||||
| | FAIR | | UNREALIZED | | FAIR | | UNREALIZED | | FAIR | | UNREALIZED | ||||||
|
| VALUE |
| LOSSES |
| VALUE |
| LOSSES |
| VALUE |
| LOSSES | ||||||
U.S. Agency | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — |
U.S. Agency mortgage-backed securities | |
| 1,438 | | | (5) | | | 138 | | | (1) | | | 1,576 | | | (6) |
Municipal | |
| 1,044 | | | (1) | | | 752 | | | (50) | | | 1,796 | | | (51) |
Corporate bonds and other securities | |
| 15,741 | | | (259) | | | 6,859 | | | (141) | | | 22,600 | | | (400) |
Total | | $ | 18,223 | | $ | (265) | | $ | 7,749 | | $ | (192) | | $ | 25,972 | | $ | (457) |
Total investment securities:
| | DECEMBER 31, 2019 | ||||||||||||||||
| | LESS THAN 12 MONTHS | | 12 MONTHS OR LONGER | | TOTAL | ||||||||||||
| | FAIR | | UNREALIZED | | FAIR | | UNREALIZED | | FAIR | | UNREALIZED | ||||||
|
| VALUE |
| LOSSES |
| VALUE |
| LOSSES |
| VALUE |
| LOSSES | ||||||
U.S. Agency | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — |
U.S. Agency mortgage-backed securities | |
| 7,084 | |
| (23) | |
| 8,562 | |
| (75) | |
| 15,646 | | | (98) |
Municipal | |
| 2,269 | |
| (18) | |
| 1,123 | |
| (52) | |
| 3,392 | | | (70) |
Corporate bonds and other securities | |
| 7,797 | |
| (85) | |
| 11,783 | |
| (243) | |
| 19,580 | | | (328) |
Total | | $ | 17,150 | | $ | (126) | | $ | 21,468 | | $ | (370) | |