Ameriserv Financial Inc. · NASDAQ:ASRV
Ameriserv Financial — Shareholder Meeting (April 2021)
67 slides from Ameriserv Financial's shareholder meeting presentation, Apr 28, 2021
Slide 1: 2021 Annual Shareholder Meeting
2021 Annual Shareholder Meeting Tuesday, April 27, 2021 Y, — AmeriServ Financial, Inc.
Slide 2: Allan R. Dennison, Chairman
AmeriServ Financial, Inc. Allan R. Dennison Chairman | 1
Slide 3: Meeting transmitted via webcast
3 This meeting is being transmitted in its entirety via webcast to all interested shareholders and prospective investors.
Slide 4: Welcome to our Annual Shareholder Meeting
4 Welcome to our Annual Shareholder Meeting. We appreciate your ongoing loyalty and support. Welcome!
Slide 5: Agenda
5 • Proxy Items • Chief Financial Officer Presentation • President & CEO Comments • Final Report on Proxy Items • Question & Answer Period Agenda
Slide 6: Election of Class II Directors
6 J. Michael Adams, Jr. Margaret A. O’Malley Mark E. Pasquerilla Election of Class II Directors
Slide 7: 2021 Equity Incentive Plan Approval
7 • AmeriServ Financial, Inc. 2021 Equity Incentive Plan Approval
Slide 8: Ratification of Appointment of S.R. Snodgrass
8 • Audit financial records for fiscal year ending 12-31-21 Ratification of Appointment of S.R. Snodgrass
Slide 9: Advisory Vote on Executive Compensation
9 • Compensation of Named Executive Officers of AmeriServ Financial, Inc. Advisory (Non-Binding) Vote
Slide 10: Annual Shareholder Meeting
2021 Annual Shareholder Meeting Tuesday, April 27, 2021 Y, — AmeriServ Financial, Inc.
Slide 11: Recognition of past and present directors
11 • Recognition of past and present directors Board of Directors
Slide 12: Michael D. Lynch, Chief Financial Officer
12 Michael D. Lynch Executive Vice President Chief Financial Officer Chief Investment Officer Chief Risk Officer
Slide 13: Forward-Looking Statements
13 Forward-Looking Statements 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 statements that in
Slide 14: Annual Financial Results Through 2020
14 Annual Financial Results Through 2020
Slide 15: Net Income
15 Net Income (thousands) $0 $2,000 $4,000 $6,000 $8,000 2016 2017 2018 2019 2020 $2,310 $3,293 $7,768 $6,028 $4,598
Slide 16: Earnings Per Common Share
16 Earnings Per Common Share $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 2016 2017 2018 2019 2020 $0.12 $0.18 $0.43 $0.35 $0.27
Slide 17: Tangible Book Value
17 Tangible Book Value $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 2016 2017 2018 2019 2020 $4.41 $4.59 $4.88 $5.08 $5.42
Slide 18: Net Interest Income
18 Net-Interest Income (thousands) $20,000 $30,000 $40,000 2016 2017 2018 2019 2020 $34,134 $35,561 $35,494 $35,442 $36,367
Slide 19: Net Interest Margin
19 Net Interest Margin % 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 2016 2017 2018 2019 2020 3.26% 3.32% 3.31% 3.29% 3.19%
Slide 20: Total Average Loans
20 Total Average Loans (Millions) 600 700 800 900 1,000 2016 2017 2018 2019 2020 888 894 882 875 923
Slide 21: Short Term Investments
21 Short Term Investments (Millions) 0 10 20 30 40 2016 2017 2018 2019 2020 17 9 8 12 32
Slide 22: Total Average Deposits
22 Total Average Deposits (Millions) 600 700 800 900 1,000 1,100 2016 2017 2018 2019 2020 956 976 960 980 1,035
Slide 23: Loan Loss Provision
23 Loan Loss Provision (thousands) ($1,000) $0 $1,000 $2,000 $3,000 $4,000 2016 2017 2018 2019 2020 $3,950 $800 ($600) $800 $2,375
Slide 24: Loan Loss Provision to Net Charge-Offs
24 Loan Loss Provision to Net Charge-Offs (thousands) ($1,000) $0 $1,000 $2,000 $3,000 $4,000 2016 2017 2018 2019 2020 $3,950 $800 ($600) $800 $2,375 $3,939 $518 $943 $192 $309
Slide 25: Non-Performing Assets
25 Non-Performing Assets (Thousands) $0 $2,000 $4,000 2016 2017 2018 2019 2020 $1,624 $3,034 $1,378 $2,339 $3,331
Slide 26: Aggregate Commitment for Customers Approved for Payment Relief
26 Aggregate Commitment for Customers Approved for Payment Relief (Millions) 0 50 100 150 200 250 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Slide 27: Non-Interest Revenue
27 Non-Interest Revenue (excluding security sale gains/losses) (thousands) $11,000 $13,000 $15,000 $17,000 2016 2017 2018 2019 2020 $14,461 $14,531 $14,507 $15,155 $16,275
Slide 28: Non-Interest Expense
28 Non-Interest Expense (thousands) $30,000 $35,000 $40,000 $45,000 2016 2017 2018 2019 2020 $41,615 $40,767 $40,936 $41,815 $44,455
Slide 29: Regulatory Capital Ratios
29 10.06% 11.20% 12.93% 9.29% 10.78% 10.78% 11.95% 9.03% 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 Regulatory Capital Ratios As of December 31, 2020
Slide 30: 2020 Summary
30 2020 Summary • The resiliency of our community bank customer- focused business model was evident in 2020 as the Company dealt with the many unexpected challenges resulting from the COVID-19 pandemic. • The decline in earnings in 2020 was primarily driven by an increased loan loss provision expens
Slide 31: 2020 Summary
31 2020 Summary • The Company experienced record levels of both loans and deposits as we served as an important financial resource to small businesses and consumers in our marketplace.
Slide 32: Jeffrey A. Stopko, President/CEO
32 Jeffrey A. Stopko President/CEO
Slide 33: Overview of AmeriServ Financial Inc.
ASRV Branches Loan Production Offices Overview of AmeriServ Financial Inc. Branch Map Overview ▪ $1.3 Billion Community Bank Headquartered in Johnstown, PA ▪ 16 Retail Branches ▪ 2 Loan Production Offices ▪ Sizable Wealth Management Company with $2.5 Billion Assets Under Administration ▪ Stable depo
Slide 34: Net Income (Thousands)
34 $0 $500 $1,000 $1,500 $2,000 $2,500 1Q '19 2Q 3Q 4Q 1Q '20 2Q 3Q 4Q 1Q '21 1,878 1,792 1,689 669 1,409 1,419 1,078 692 2,081 Net Income (Thousands)
Slide 35: Earnings per Share
35 $0.00 $0.05 $0.10 $0.15 1Q '19 2Q 3Q 4Q 1Q '20 2Q 3Q 4Q 1Q '21 $0.11 $0.10 $0.10 $0.04 $0.08 $0.08 $0.06 $0.04 $0.12 Earnings per Share
Slide 36: AmeriServ Strategic Plan
36 Create long-term value for our shareholders by: • Maintaining financially strong balance sheet • Appropriately managing risk • Consistently improving shareholder returns AmeriServ Strategic Plan
Slide 37: Financially Strong Balance Sheet: Deposit Composition
37 Financially Strong Balance Sheet Demand Deposits $207.4 Savings, NOW & Money Market, $607.5 Certificates of Deposit $256.7 Jumbo Certificates of Deposit $45.4 $1.1 Billion 19% 4% 23% 54% Deposit Composition ($mm) As of March 31, 2021
Slide 38: Financially Strong Balance Sheet: Loan Portfolio Composition
38 Financially Strong Balance Sheet Loan Portfolio Composition ($mm) As of March 31, 2021 38 Residential Mortgage $155.3 Home Equity & Consumer $91.7 Commercial & Industrial $144.7 Commercial Real Estate $527.6 $986.6 Million 75% Commercial / 25% Retail Non-Owner Occupied CRE / Total Capital Ratio:
Slide 39: Commercial Loan Portfolio Diversification
39 $240.9 33% $290.8 39% $108.1 15% $99.8 13% Johnstown Pittsburgh Hagerstown State College/Altoona Loan Total = $739.6 MIllion Financially Strong Balance Sheet Commercial Loan Portfolio Diversification ($mm) As of March 31, 2021
Slide 40: Strategic Outlook for 2021
40 • Generate positive operating leverage by growing revenues at a faster pace than expenses • Conservatively manage our asset quality while working with customers in pandemic impacted industries • Successfully execute a profitable branch acquisition in Somerset County • Continue our diligent focus
Slide 41: Generate Positive Operating Leverage
41 • Both net interest income and non-interest income are expected to grow nicely in 2021 • The growth in net interest income will be fueled by our continued participation in the Paycheck Protection Loan Program (PPP) and the redeployment of excess liquidity from the surge in deposits into higher yi
Slide 42: Paycheck Protection Program (PPP)
42 • PPP loans have a 1% interest rate and are fully guaranteed by the SBA so there is no credit risk. • Banks earn an attractive processing fee for issuing loans. • As a community bank focusing on small business, the PPP loan program has been very successful for AmeriServ Financial. Paycheck Protec
Slide 43: PPP 2021 Expected Fee Income
43 Paycheck Protection Program - 2021 Expected Fee Income Loan Amount # of Loans Approvals Fee % Fee Income Loans up to $50,000 152 $ 2,851,000 12.6% $ 359,000 Loans from $50,001 to $349,999 72 $ 9,756,000 5.0% $ 488,000 Loans $350,000 to $2 million 23 $18,940,000 3.0% $ 568,000 Total 247 $31,547,00
Slide 44: PPP Fee Income Recognition
44 Paycheck Protection Program Fee Income Recognition PPP Fees Recognized as Income in 2020 $ 1,411,000 PPP Fees Recognized as Income in 1Q 2021 $ 739,000 Remaining PPP Fees Eligible for Income Recognition $ 1,430,000 Potential PPP Fee Income for 2021 $ 2,169,000
Slide 45: Net Interest Income Growth
45 Generate Positive Operating Leverage Net Interest Income Growth • Strong commercial loan pipelines suggest that we will be able to redeploy some of our excess liquidity into the higher yielding commercial loan portfolio • We will also portfolio more residential mortgage loans to help utilize some
Slide 46: Total Deposit Cost
46 Total Deposit Cost % 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1Q '19 2Q 3Q 4Q 1Q '20 2Q 3Q 4Q 1Q '21 1.14% 1.17% 1.17% 1.09% 1.01% 0.73% 0.65% 0.59% 0.52%
Slide 47: Revenue Diversification Promotes Positive Operating Leverage
47 47 Revenue Diversification Promotes Positive Operating Leverage Non-Interest Income 31% Net Interest Income 69% ASRV generates more revenue from non-interest income than our peers due to our strong wealth management company.
Slide 48: Wealth Management
48 • 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 Services Revenue Diversification Promotes Positive Operating Leverage Wealt
Slide 49: Wealth Management
49 • Unique ERECT Fund product allows us to leverage union relationships • Scalable business model well positioned for further growth Revenue Diversification Promotes Positive Operating Leverage Wealth Management
Slide 50: Wealth Management Fees
50 Wealth Management Fees $2,396 $2,419 $2,431 $2,484 $2,554 $2,471 $2,604 $2,583 $2,872 $1,000 $1,500 $2,000 $2,500 $3,000 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021
Slide 51: Payment Relief Update
51 Conservatively Manage Asset Quality Payment Relief Update Excludes PPP Loans (dollars in thousands) 51 3/31/2021 Balance Requested Payment Relief % Requesting Relief CRE / Commercial $ 672,300 $ 47,501 7.07% Home Equity / Consumer $ 91,700 $ 37 0.04% Residential Mortgage $ 155,300 $ 2,093 1.35% T
Slide 52: Conservatively Manage Asset Quality
52 Conservatively Manage Asset Quality March 31, 2021 • Allowance for loan losses totaled $11.6 million which represented 1.18% of total loans (1.27% excluding PPP loans) and provided 274% coverage of non- performing assets which totaled $4.2 million. • As a result of the economic challenges created
Slide 53: Conservatively Manage Asset Quality
53 • AmeriServ not operating under CECL so we continue to utilize the incurred loss methodology when determining loan loss reserves. • Within the allowance for loan losses, $1.1 million or almost 10% is considered unallocated or available for general loan portfolio risk. Conservatively Manage Asset
Slide 54: Somerset County Branch Acquisition
54 • Acquiring approximately $45 million in deposits associated with 2 Riverview Bank branches • We will continue to operate the Meyersdale branch ($37 million of deposits) and merge the deposits from their Somerset branch ($8 million of deposits) into our existing Somerset location • Logical expans
Slide 55: Somerset County Branch Acquisition
55 • Meyersdale is a nice strategic market fit, extending our franchise south towards Maryland and our Hagerstown location • Profitable branch acquisition due to our well-defined use of these deposits Somerset County Branch Acquisition
Slide 56: Somerset County Branch Acquisition
56 • We plan to use $33 million of these low-cost deposits to replace an institutional deposit that is maturing in September that has a rate of 2.95% • This replacement alone will increase net interest income by approximately $800,000 and eliminate a deposit concentration with a large customer Somer
Slide 57: Somerset County Branch Acquisition
57 • The deposits will be acquired for a 3.71% premium or $1.7 million causing modest tangible book value (TBV) dilution of 1.8% • Since the branch acquisition is immediately accretive to ASRV’s earnings, the initial TBV dilution will be earned back in less than 3 years • The branch acquisition has
Slide 58: Capital Allocation Strategies
58 • Return capital to shareholders through dividends, share repurchases, or both if feasible. • Focus on growing book value and tangible book value per share • Capital return strategies are always subject to maintaining sufficient capital to support balance sheet growth Capital Allocation Strategie
Slide 59: Capital Returns to Shareholders
59 Capital Returns to Shareholders 2018 2019 2020 Three Year Total Common Stock BuyBack Program 2,346,000 2,550,000 151,000 5,047,000 Common Stock Dividends 1,345,000 1,642,000 1,716,000 4,703,000 Total Capital Returned 3,691,000 4,192,000 1,867,000 9,750,000 Net Income 7,768,000 6,028,000 4,598,000
Slide 60: Capital Allocation – Response to Pandemic
60 • As a result of the pandemic in 2020 we shifted our focus to capital preservation rather than capital returns • This change was necessary to support strong balance sheet growth, increased customer lending, and to manage heightened credit risk due to the downturn in the economy • Regulatory capit
Slide 61: Capital Allocation – Common Stock Dividends
61 • The Board of Directors remains committed to continuing to pay our quarterly common stock cash dividend at the current rate of $0.025 per quarter • This dividend provides shareholders with an ongoing cash return and a competitive dividend yield given the continued low interest rate environment •
Slide 62: Capital Allocation – Holding Company Debt
62 • As a result of regulatory changes, the regulatory focus on banks with an asset size below $3 billion is now on bank capital levels rather than holding company capital levels. • AmeriServ may have an opportunity to reduce the cost of debt housed at our holding company (TRUPS – Tier 1 Capital 8.4
Slide 63: Capital Allocation – ASRV Stock Price
63 • The ASRV stock price has increased by 38% from last year’s annual meeting and is currently trading at $4.15 a share • Even with this improvement, ASRV stock continues to trade at attractive multiples of 13.8 times trailing 12-month earnings and 76% of tangible book value Capital Allocation – AS
Slide 64: Report On Election
64 Report On Election
Slide 65: Question & Answer Period
65 Question & Answer Period
Slide 66: Thank you for joining us
66 Stay well and stay safe! Thank you for joining us!
Slide 67: Annual Shareholder Meeting
2021 Annual Shareholder Meeting Tuesday, April 27, 2021 YY, — AmeriServ Financial, Inc.
Ameriserv Financial — Shareholder Meeting (April 2021) on 6ix