AMERISERV FINANCIAL INC /PA/ [ASRV] Filings

10-Q 1 tmb-20220630x10q.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 June 30, 2022

☐ 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 August 1, 2022
Common Stock, par value $0.01		17,109,097

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AmeriServ Financial, Inc.

INDEX


	Page No.

PART I.
FINANCIAL INFORMATION
Item 1. Financial Statements	3
Consolidated Balance Sheets (Unaudited) – June 30, 2022 and December 31, 2021	3
Consolidated Statements of Operations (Unaudited) – Three and six months ended June 30, 2022 and 2021	4
Consolidated Statements of Comprehensive (Loss) Income (Unaudited) – Three and six months ended June 30, 2022 and 2021	5
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) – Three and six months ended June 30, 2022 and 2021	6
Consolidated Statements of Cash Flows (Unaudited) – Six months ended June 30, 2022 and 2021	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosure About Market Risk	54
Item 4. Controls and Procedures	55
PART II. OTHER INFORMATION	55
Item 1. Legal Proceedings	55
Item 1A. Risk Factors	55
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3. Defaults Upon Senior Securities	55
Item 4. Mine Safety Disclosures	55
Item 5. Other Information	55
Item 6. Exhibits	56

Table of Contents

Item 1. Financial Statements

AmeriServ Financial, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


	June 30, 2022		December 31, 2021
ASSETS
Cash and due from depository institutions	$	18,318	$	24,748
Interest bearing deposits		10,714		10,942
Short-term investments		—		5,411
Cash and cash equivalents		29,032		41,101
Investment securities:
Available for sale, at fair value		172,252		163,171
Held to maturity (fair value $55,115 on June 30, 2022 and $55,516 on December 31, 2021)		59,003		53,751
Loans held for sale		1,254		983
Loans		964,797		985,880
Less: Unearned income		464		826
Less: Allowance for loan losses		11,568		12,398
Net loans		952,765		972,656
Premises and equipment:
Operating lease right-of-use asset		666		667
Financing lease right-of-use asset		2,548		2,684
Other premises and equipment, net		14,275		14,082
Accrued interest income receivable		4,094		3,984
Intangible assets:
Goodwill		13,611		13,611
Core deposit intangible		142		158
Bank owned life insurance		39,475		38,842
Net deferred tax asset		2,779		—
Federal Home Loan Bank stock		2,388		2,692
Federal Reserve Bank stock		2,125		2,125
Other assets		24,993		25,053
TOTAL ASSETS	$	1,321,402	$	1,335,560
LIABILITIES
Non-interest bearing deposits	$	217,149	$	211,106
Interest bearing deposits		925,607		928,272
Total deposits		1,142,756		1,139,378
Short-term borrowings		—		—
Advances from Federal Home Loan Bank		34,028		42,653
Operating lease liabilities		679		682
Financing lease liabilities		2,791		2,899
Subordinated debt		26,624		26,603
Total borrowed funds		64,122		72,837
Net deferred tax liability		—		934
Other liabilities		8,132		5,862
TOTAL LIABILITIES		1,215,010		1,219,011
SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 26,737,916 shares issued and 17,109,097 shares outstanding on June 30, 2022; 26,710,319 shares issued and 17,081,500 shares outstanding on December 31, 2021		267		267
Treasury stock at cost, 9,628,819 shares on June 30, 2022 and December 31, 2021		(83,280)		(83,280)
Capital surplus		146,175		146,069
Retained earnings		63,463		60,005
Accumulated other comprehensive loss, net		(20,233)		(6,512)
TOTAL SHAREHOLDERS' EQUITY		106,392		116,549
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,321,402	$	1,335,560

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
INTEREST INCOME
Interest and fees on loans	$	9,725	$	10,283	$	19,221	$	20,610
Interest bearing deposits		1		3		2		4
Short-term investments		63		8		80		15
Investment securities:
Available for sale		1,304		1,171		2,427		2,259
Held to maturity		434		373		825		719
Total Interest Income		11,527		11,838		22,555		23,607
INTEREST EXPENSE
Deposits		956		1,306		1,752		2,708
Short-term borrowings		3		—		3		1
Advances from Federal Home Loan Bank		156		227		332		464
Financing lease liabilities		25		27		51		54
Guaranteed junior subordinated deferrable interest debentures		—		281		—		561
Subordinated debt		263		130		526		260
Total Interest Expense		1,403		1,971		2,664		4,048
Net Interest Income		10,124		9,867		19,891		19,559
Provision (credit) for loan losses		(325)		100		(725)		500
Net Interest Income after Provision (Credit) for Loan Losses		10,449		9,767		20,616		19,059
NON-INTEREST INCOME
Wealth management fees		2,976		3,022		6,141		5,894
Service charges on deposit accounts		263		224		535		425
Net gains on loans held for sale		35		122		130		617
Mortgage related fees		32		99		65		229
Net realized gains on investment securities		—		84		—		84
Bank owned life insurance		231		218		440		550
Other income		601		630		1,162		1,214
Total Non-Interest Income		4,138		4,399		8,473		9,013
NON-INTEREST EXPENSE
Salaries and employee benefits		6,963		6,867		14,368		13,808
Net occupancy expense		697		649		1,438		1,329
Equipment expense		415		403		812		793
Professional fees		1,510		1,396		2,834		2,710
Supplies, postage and freight		144		149		309		328
Miscellaneous taxes and insurance		349		312		672		604
Federal deposit insurance expense		130		155		275		310
Branch acquisition costs		—		193		—		303
Other expense		1,902		1,914		2,881		3,158
Total Non-Interest Expense		12,110		12,038		23,589		23,343

PRETAX INCOME		2,477		2,128		5,500		4,729
Provision for income taxes		496		420		1,101		940
NET INCOME	$	1,981	$	1,708	$	4,399	$	3,789
PER COMMON SHARE DATA:
Basic:
Net income	$	0.12	$	0.10	$	0.26	$	0.22
Average number of shares outstanding		17,109		17,073		17,102		17,068
Diluted:
Net income	$	0.12	$	0.10	$	0.26	$	0.22
Average number of shares outstanding		17,149		17,131		17,148		17,114

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
COMPREHENSIVE (LOSS) INCOME
Net income	$	1,981	$	1,708	$	4,399	$	3,789
Other comprehensive (loss) income
Pension obligation change for defined benefit plan		(5,681)		5,210		(4,518)		5,768
Income tax effect		1,193		(1,094)		949		(1,211)
Unrealized holding gains (losses) on available for sale securities arising during period		(5,433)		735		(12,851)		(773)
Income tax effect		1,141		(154)		2,699		163
Reclassification adjustment for net realized gains on available for sale securities included in net income		—		(84)		—		(84)
Income tax effect		—		18		—		18
Other comprehensive (loss) income		(8,780)		4,631		(13,721)		3,881
Comprehensive (loss) income	$	(6,799)	$	6,339	$	(9,322)	$	7,670

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands, except share and per share data)

(Unaudited)


	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
COMMON STOCK
Balance at beginning of period	$	267	$	267	$	267	$	267
New common shares issued for exercise of stock options (13 and 6,000 shares for the three months ended June 30, 2022 and 2021, respectively and 27,597 and 14,856 shares for the six months ended June 30, 2022 and 2021, respectively)		—		—		—		—
Balance at end of period		267		267		267		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		146,162		145,997		146,069		145,969
New common shares issued for exercise of stock options (13 and 6,000 shares for the three months ended June 30, 2022 and 2021, respectively and 27,597 and 14,856 shares for the six months ended June 30, 2022 and 2021, respectively)		—		15		80		39
Stock option expense		13		13		26		17
Balance at end of period		146,175		146,025		146,175		146,025
RETAINED EARNINGS
Balance at beginning of period		61,996		56,295		60,005		54,641
Net income		1,981		1,708		4,399		3,789
Cash dividend declared on common stock ($0.030 amd $0.025 per share for the three months ended June 30, 2022 and 2021, respectively and $0.055 amd $0.050 per share for the six months ended June 30, 2022 and 2021, respectively)		(514)		(426)		(941)		(853)
Balance at end of period		63,463		57,577		63,463		57,577
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET
Balance at beginning of period		(11,453)		(13,948)		(6,512)		(13,198)
Other comprehensive (loss) income		(8,780)		4,631		(13,721)		3,881
Balance at end of period		(20,233)		(9,317)		(20,233)		(9,317)
TOTAL SHAREHOLDERS’ EQUITY	$	106,392	$	111,272	$	106,392	$	111,272

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six months ended
	June 30,
	2022		2021
OPERATING ACTIVITIES
Net income	$	4,399	$	3,789
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses		(725)		500
Depreciation and amortization expense		1,029		1,021
Amortization expense of core deposit intangible		16		3
Amortization of fair value adjustment on acquired time deposits		(63)		(15)
Net amortization of investment securities		63		120
Net realized gains on investment securities — available for sale		—		(84)
Net gains on loans held for sale		(130)		(617)
Net amortization of deferred loan fees		(396)		(737)
Origination of mortgage loans held for sale		(7,518)		(10,620)
Sales of mortgage loans held for sale		7,377		17,334
(Increase) decrease in accrued interest receivable		(110)		183
Decrease in accrued interest payable		(346)		(604)
Earnings on bank-owned life insurance		(440)		(550)
Deferred income taxes		455		905
Stock compensation expense		26		17
Net change in operating leases		(48)		(47)
Other, net		(2,541)		(1,347)
Net cash provided by operating activities		1,048		9,251
INVESTING ACTIVITIES
Purchase of investment securities — available for sale		(34,396)		(45,456)
Purchase of investment securities — held to maturity		(7,114)		(11,275)
Proceeds from maturities of investment securities — available for sale		12,427		21,965
Proceeds from maturities of investment securities — held to maturity		1,836		1,905
Proceeds from sales of investment securities — available for sale		—		960
Purchase of regulatory stock		(1,100)		(738)
Proceeds from redemption of regulatory stock		1,404

AMERISERV FINANCIAL INC /PA/ [ASRV] Filings
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]