AmeriServ to report 4Q loss on Rite Aid exposure, securities loss
AmeriServ Financial in Johnstown, Pa., expects to report a large quarterly loss after pursuing cost-cutting measures, selling underwater securities, and charging off loans tied to a national pharmacy chain’s bankruptcy.
AmeriServ said it recently eliminated certain executive-level wealth management posts, closed a branch, and began a “meaningful reduction” in health care premium costs. It also eliminated an undisclosed number of jobs in its mortgage banking, facilities and information technology departments and negotiated revenue enhancements in a contract renewal with Visa.
The efforts should generate about $1.5 million of pre-tax earnings in 2024.
Separately, AmeriServ sold $18 million of available-for-sale securities in December, recognizing a $922,000 loss. AmeriServ, which used the proceeds to buy higher-yielding securities, said the repositioning should add $325,000 to net interest income this year. The company should recover the securities loss in less than four years.
Finally, the company said it recorded a $6 million loan-loss provision and had $3.3 million net charge-offs in the fourth quarter, largely reflecting the bankruptcy filing of pharmacy chain Rite Aid. Rite Aid is a tenant in several commercial real estate properties financed by the bank.
Driver Management, run by Abbott Cooper, has proposed Keith Mestrich, retired CEO of Amalgamated Financial in New York, to stand for election to the $1.4 billion-asset AmeriServ’s board.