Johnstown, Pa.-based AmeriServFinancial Inc. expects to record an increased provision of $3.0 millionto $3.5 million for loan losses and higher net loan charge-offs in the first quarter,according to a Form 8-K filed March 31.
The provision is related to a single borrower in the frackingindustry, who filed for bankruptcy protection in the fourth quarter of 2015, andrepresents the company's only meaningful direct loan exposure to the energy industry,the filing added.
As a result, the company expects to report a net loss for thefirst quarter but stated that its overall loan portfolio and asset quality continuesto be strong.
AmeriServ adjusted its guidance as the bankruptcy recently changedfrom Chapter 11 to Chapter 7, rendering the company's previously established reservesinsufficient to cover the discounted collateral values resulting from the liquidationprocess.
Furthermore, the company, in efforts to improve its profitability,recently closed its South Atherton branch in the State College market and consolidatedthe branch's retail customer accounts with the newer branch on North Atherton Street.The company also realigned its executive leadership team by eliminating one executiveposition. AmeriServ expects combined annual cost savings of approximately $750,000from these two initiatives in the future periods.