Ameriserv Financial Inc. · NASDAQ:ASRV
Ameriserv Financial — Shareholder Meeting (April 2019)
68 slides from Ameriserv Financial's shareholder meeting presentation, Apr 25, 2019
Slide 1: Banking for Today. Banking for Tomorrow. Banking for Life.
BANKING FOR TODAY. BANKING FOR TOMORROW. BANKING FOR LIFE. AMERISERV FINANCIAL,ING.
Slide 2: 2019 Annual Shareholders' Meeting
2019 Annual Shareholders' Meeting
Slide 3: Kerri Mueller, Senior Vice President – Retail Banking
Kerri Mueller Senior Vice President – Retail Banking 3
Slide 4: Meeting transmitted via webcast
4 This meeting is being transmitted in its entirety beyond this room via webcast to all interested shareholders and prospective investors.
Slide 5: Banking for Today. Banking for Tomorrow. Banking for Life.
BANKING FOR TODAY. BANKING FOR TOMORROW. BANKING FOR LIFE. AMERISERV FINANCIAL,ING.
Slide 6: Allan R. Dennison, Chairman
Allan R. Dennison Chairman AmeriServ Financial, Inc. 6
Slide 7: Welcome to our Annual Shareholder Meeting
Welcome to our Annual Shareholder Meeting. We appreciate your ongoing loyalty and support. Welcome! 7
Slide 8: Agenda
Agenda • Proxy Items • Chief Financial Officer Presentation • President & CEO Comments • Final Report on Proxy Items • Question & Answer Period 8
Slide 9: Election of Class III Directors
Election of Class III Directors Craig G. Ford Kim W. Kunkle Jeffrey A. Stopko 9
Slide 10: Ratification of Auditor Appointment; Waiver of Director Age Restriction
Ratification of Appointment of S.R. Snodgrass – Audit financial records for fiscal year ending 12 - 31 - 19 Waiver of Director Age Restriction – Craig G. Ford 10
Slide 11: Advisory Votes on Executive Compensation
Advisory (Non - Binding) Vote – Compensation of Named Executive Officers of AmeriServ Financial, Inc. Advisory Vote – Frequency of Future Advisory Votes on the Compensation of Named Executive Officers of AmeriServ Financial, Inc. 11
Slide 12: Honored Guests
Honored Guests • Elected Officials • Labor Officials • Distinguished Guests 12 • Past Directors • Present Directors • AmeriServ Employees • Our Shareholders
Slide 13: Banking for Today. Banking for Tomorrow. Banking for Life.
BANKING FOR TODAY. BANKING FOR TOMORROW. BANKING FOR LIFE. AMERISERV FINANCIAL,ING.
Slide 14: Michael D. Lynch, Chief Financial Officer
Michael D. Lynch Senior Vice President Chief Financial Officer Chief Investment Officer Chief Risk Officer 14
Slide 15: Forward-Looking Statements
Forward - Looking Statements 15 This presentation contains various forward - looking statements and includes assumptions concerning the Company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions, operations, future results, and prospects, including s tat ements t
Slide 16: Annual Financial Results Through 2018
Annual Financial Results Through 2018 16
Slide 17: Net Income
Net Income (Thousands) 17 $0 $2,000 $4,000 $6,000 $8,000 2014 2015 2016 2017 2018 3,023 5,997 2,310 3,293 7,768
Slide 18: Earnings Per Share
Earnings Per Share 18 $0.00 $0.15 $0.30 $0.45 2014 2015 2016 2017 2018 $0.15 $0.31 $0.12 $0.18 $0.43
Slide 19: Return on Equity
19 Return on Equity 0.00% 2.50% 5.00% 7.50% 10.00% 2013 2014 2015 2016 2017 2018 4.69% 2.61% 5.10% 2.30% 3.42% 8.08%
Slide 20: Net Interest Income
Net Interest Income (Thousands) 20 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2014 2015 2016 2017 2018 34,044 35,360 34,134 35,561 35,494
Slide 21: Net Interest Margin
Net Interest Margin 21 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 2014 2015 2016 2017 2018 3.52% 3.49% 3.26% 3.32% 3.31%
Slide 22: Total Average Securities
Total Average Securities (Millions) 22 0 50 100 150 200 2014 2015 2016 2017 2018 157 145 147 173 185
Slide 23: Total Average Loans
Total Average Loans (Millions) 23 500 600 700 800 900 2014 2015 2016 2017 2018 805 857 888 894 882
Slide 24: Total Average Deposits
Total Average Deposits (Millions) 24 500 600 700 800 900 1,000 2014 2015 2016 2017 2018 872 893 956 976 960
Slide 25: Loan Loss Provision
Loan Loss Provision (Thousands) 25 (4,500) (500) 3,500 7,500 2014 2015 2016 2017 2018 375 1,250 3,950 800 (600)
Slide 26: Non-Performing Assets
Non - Performing Assets (Thousands) 26 0 2,000 4,000 6,000 8,000 2014 2015 2016 2017 2018 2,917 6,297 1,624 3,034 1,378
Slide 27: Allowance for Loan Loss vs. Non-Performing Assets
Allowance for Loan Loss vs. Non - Performing Assets (Thousands) 27 $0 $4,000 $8,000 $12,000 2014 2015 2016 2017 2018 Loan Loss Reserve Non Performing Assets 629 % 330 % 158 % 612 % 337 %
Slide 28: All Other Non-Interest Revenue
All Other Non - Interest Revenue (Excluding Security Gains/Loss) (Thousands) 28 8,000 10,000 12,000 14,000 16,000 18,000 2014 2015 2016 2017 2018 14,146 15,196 14,461 14,531 14,507
Slide 29: Wealth Management Revenue
Wealth Management Revenue (Thousands) 29 0 2,500 5,000 7,500 10,000 2014 2015 2016 2017 2018 8,117 8,682 8,747 9,170 9,660
Slide 30: Securities Gains / Losses
Securities Gains / Losses (Thousands) 30 (500) (400) (300) (200) (100) 0 100 200 300 2014 2015 2016 2017 2018 177 71 177 115 (439)
Slide 31: Non-Interest Expense
Non - Interest Expense (Thousands) 31 20,000 25,000 30,000 35,000 40,000 45,000 2014 2015 2016 2017 2018 43,372 41,038 41,615 40,766 40,936
Slide 32: Effective Income Tax Rate
Effective Income Tax Rate % 32 0.0% 25.0% 50.0% 75.0% 2014 2015 2016 2017 2018 34.6% 28.1% 28.0% 61.9% 17.2%
Slide 33: Regulatory Capital Ratios
Regulatory Capital Ratios As of December 31, 2018 33 10.50% 11.74% 13.53% 9.71% 11.14% 11.14% 12.14% 9.28% 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% Common Equity Tier 1 Capital Ratio Tier 1 Capital Ratio Total Capital Ratio Tier 1 Leverage Ratio Consolidated Bank Regulatory Well Capitalized Requirement
Slide 34: 2018 Summary
34 2018 Summary • We achieved a record level of earnings in 2018 due to the combination of lower income tax expense, outstanding asset quality which allowed us to recognize a negative loan loss provision for the year, and well controlled non - interest expense while making prudent investments in the
Slide 35: Banking for Today. Banking for Tomorrow. Banking for Life.
BANKING FOR TODAY. BANKING FOR TOMORROW. BANKING FOR LIFE. AMERISERV FINANCIAL,ING.
Slide 36: Jeffrey A. Stopko, President & CEO
Jeffrey A. Stopko President & Chief Executive Officer AmeriServ Financial, Inc. 36
Slide 37: Overview of AmeriServ Financial, Inc.
ASRV Branches Loan Production Offices Overview of AmeriServ Financial Inc. Branch Map Overview ▪ $1.2 Billion Community Bank Headquartered in Johnstown, PA ▪ 16 Retail Branches ▪ 2 Loan Production Offices ▪ Sizable Wealth Management Company with $2 Billion Assets Under Administration ▪ Stable deposi
Slide 38: Strategic Plan 2017-2019
AmeriServ Financial, Inc. Strategic Plan 2017 - 2019 • Built around Banking for Life philosophy • Focuses on four key constituencies – Shareholders – Customers – Staff – Communities 38
Slide 39: Strategic Plan: Create Long-Term Shareholder Value
AmeriServ Strategic Plan 39 Create long - term value for our shareholders by: – Maintaining financially strong balance sheet – Appropriately managing risk – Consistently improving shareholder returns
Slide 40: Financially Strong Balance Sheet: Loan Portfolio Composition
40 Financially Strong Balance Sheet Loan Portfolio Composition ($mm) As of March 31, 2019 72% Commercial / 28% Retail Non - Owner Occupied CRE / Total Capital Ratio: 335% Residential Mortgage $135.7 Home Equity & Consumer $103.6 Commercial & Industrial $157.9 Commercial Real Estate $465.8 $863.1 Mil
Slide 41: Commercial Loan Portfolio Diversification
41 Financially Strong Balance Sheet Commercial Loan Portfolio Diversification ($mm) As of March 31, 2019 $198.7 32% $226.3 36% $105.6 17% $93.0 15% Johnstown Pittsburgh Hagerstown State College/Altoona Loan Total = $623.6 MIllion
Slide 42: Deposit Composition
42 Financially Strong Balance Sheet Deposit Composition ($mm) As of March 31, 2019 Demand Deposits $152.8 Savings, NOW & Money Market , $517.3 Certificates of Deposit $249.3 Jumbo Certificates of Deposit $38.4 $957.8 Million 16% 4% 26% 54%
Slide 43: Revenue Diversification Promotes Long-Term Value Creation
43 Revenue Diversification Promotes Long - Term Value Creation ASRV generates more revenue from non - interest income than our peers due to a strong wealth management company. Non - Interest Income 29.4% Net Interest Income 70.6%
Slide 44: Wealth Management – Profitable Company
Revenue Diversification Promotes Long Term Value Creation Wealth Management – Profitable Company with increasing financial contribution to ASRV – Good Diversification of business lines within Wealth Management: Retirement Services, Personal Trust, Investment Management, ERECT Fund & Diversified Serv
Slide 45: Wealth Management – ERECT Fund
Revenue Diversification Promotes Long Term Value Creation Wealth Management – Unique ERECT Fund product allows us to leverage union relationships – Scalable business model well positioned for growth – New Wealth Management office opened in Greensburg in October 2018 45
Slide 46: Shareholder Value Creation Focus
AmeriServ Strategic Plan Shareholder value creation focuses on: – Increasing Earnings Per Share (EPS) – Providing Strong Capital Returns to Shareholders 46
Slide 47: Increasing Earnings Per Share
AmeriServ Strategic Plan 47 Increasing Earnings Per Share (EPS) – Striving to grow EPS by 10% annually – Improve profitability metrics particularly ROE – Narrow financial performance gap – Careful balance sheet and income statement management
Slide 48: 2018 Key Strategic Financial Accomplishments
AmeriServ Financial 2018 48 Key Strategic Financial Accomplishments – Achieved 10% EPS annual growth goal with reported EPS increasing 139% and adjusted EPS excluding 2017 tax charge increasing 34% – Achieved goal of bringing income tax savings from tax reform to the bottom line
Slide 49: 2018 Key Strategic Financial Accomplishments (continued)
AmeriServ Financial 2018 49 Key Strategic Financial Accomplishments – EPS benefited from outstanding asset quality, good expense control and effective capital management – Careful balance sheet management strengthened regulatory capital ratios – EPS growth continued in the first quarter of 2019
Slide 50: Earnings per Share by Quarter
Earnings per Share 50 -$0.10 -$0.05 $0.00 $0.05 $0.10 $0.15 1Q '17 2Q 3Q 4Q 1Q '18 2Q 3Q 4Q 1Q '19 $0.07 $0.07 $0.08 - $0.05 $0.10 $0.10 $0.13 $0.11 $0.11
Slide 51: Strong Capital Returns to Shareholders
AmeriServ Strategic Plan Strong Capital Returns to Shareholders – Strategic plan goal – Return 75% of earnings to shareholders through a combination of dividends and share repurchases – Focus on growing book value and tangible book value per share – Subject to maintaining sufficient capital to suppo
Slide 52: Capital Returns to Shareholders
Capital Returns to Shareholders 52 2017 2018 Two Year Total Common Stock Buyback Program 3,405,000 2,346,000 5,751,000 Common Stock Dividend Payments 1,113,000 1,345,000 2,458,000 Total Capital Returned to Shareholders 4,518,000 3,691,000 8,209,000 Net Income 5,917,000 7,768,000 13,685,000 % of Earn
Slide 53: Tangible Book Value Per Common Share
53 Tangible Book Value Per Common Share $3.00 $3.50 $4.00 $4.50 $5.00 2013 2014 2015 2016 2017 2018 1Q 2019 $4.24 $4.33 $4.56 $4.41 $4.59 $4.88 $4.97
Slide 54: 2018 Key Strategic Customer Accomplishments
AmeriServ Financial 2018 54 Key Strategic Customer Accomplishments – Expanded Maryland presence in late 2018 by consolidating successful Loan Production Office into new full service AmeriServ Financial Banking Center in Hagerstown, Maryland – Simplified deposit product line - up by converting to 4 n
Slide 55: 2018 Key Strategic Customer Accomplishments (continued)
AmeriServ Financial 2018 55 Key Strategic Customer Accomplishments – Cost effectively leveraged technology by providing customers with a new Business Internet Banking platform with mobile capabilities and a new Consumer Internet Banking system – Introduced the new AmeriServ Seminar Series for both c
Slide 56: 2019 Outlook – Key Strategic Initiatives
AmeriServ Financial 2019 56 Outlook 2019 – Key Strategic Initiatives – Continue to execute strategic plan and further improve earnings – Grow the loan portfolio in order to increase net interest income and net interest margin while maintaining strong asset quality and sound credit underwriting
Slide 57: 2019 Outlook – Key Strategic Initiatives (continued)
AmeriServ Financial 2019 57 Outlook 2019 – Key Strategic Initiatives – Further develop banking and wealth management presence in the Hagerstown, Maryland market – Continue technology platform enhancements with introduction of Online Account Opening and New Account Desk – Further leverage union - rel
Slide 58: PSEA Mortgage & Consumer Loan Production Since Inception
58 Pennsylvania State Education Association (PSEA) Mortgage & Consumer Loan Production Since Inception (Thousands) 0 5,000 10,000 15,000 20,000 25,000 30,000 2013 2014 2015 2016 2017 2018 4,200 10,600 15,300 26,900 20,400 15,400
Slide 59: 2019 Outlook – Increase Common Stock Price
AmeriServ Financial 2019 59 Outlook 2019 – Key Strategic Initiatives – Increase common stock price through improved earnings and active capital returns to shareholders while ensuring we maintain sufficient capital to support balance sheet growth
Slide 60: 2019 Outlook – Dividends
AmeriServ Strategic Plan 60 Outlook 2019 Strong Capital Returns to Shareholders - Dividends – April 20 19: Increased quarterly common stock cash dividend by ½ cent or 25% to $0.025 per share – R epresents third consecutive year of a common stock dividend increase – After this increase, dividend payo
Slide 61: 2019 Outlook – Buybacks
AmeriServ Strategic Plan 61 Outlook 2019 Strong Capital Returns to Shareholders – Buybacks – 1 st Quarter 2019: Completed existing common stock buyback program by repurchasing 112,000 shares at a cost of $476,000 – C ompleted buyback program in 9 months by repurchasing 540,000 shares at a total cost
Slide 62: 2019 Outlook – Buybacks: Low Risk and Accretive
AmeriServ Strategic Plan 62 Outlook 2019 Strong Capital Returns to Shareholders - Buybacks – Low risk and accretive use of capital given all shares repurchased at a price below tangible book value which currently rests at $4.97 – Buyback program beneficial to EPS; able to spread increased earnings o
Slide 63: Total Shareholder Return
BANKING FOR LIFE Total Shareholder Return Glass Lewis TOTAL SHAREHOLDER RETURN 1 Year 3 Year Average Year Average ASRV 1.2% 9.7% 7.4% S&P 500 4.4% 9.3% 8.5% Peer -16.6% 8.0% 7.7% Iss TOTAL SHAREHOLDER RETURN 1 Year Year Average Year Average ASRV “1.18% 9.72% 7.41% GICS 4010 “14.59% 9.64% 8.75% Russe
Slide 64: 2019 Outlook – Attractive Stock Valuation
64 AmeriServ Strategic Plan Outlook 2019 - Attractive Stock Valuation – S trategic focus and execution demonstrates commitment to increasing EPS and providing strong capital returns to shareholders – ASRV total shareholder return has exceeded proxy advisory peer indexes over the past one - and - thr
Slide 65: Banking for Today. Banking for Tomorrow. Banking for Life.
BANKING FOR TODAY. BANKING FOR TOMORROW. BANKING FOR LIFE. AMERISERV FINANCIAL,ING.
Slide 66: Report on Election
Report On Election BANKING FOR Litt
Slide 67: Question & Answer Period
Question & Answer Period esr
Slide 68: Banking for Today. Banking for Tomorrow. Banking for Life.
BANKING FOR TODAY. BANKING FOR TOMORROW. BANKING FOR LIFE. AMERISERV FINANCIAL,ING.
Ameriserv Financial — Shareholder Meeting (April 2019) on 6ix