AMERISERV FINANCIAL INC /PA/

Previous wording

The following table compares the Company’s net interest income performance for the first quarter of 2026 to the first quarter of 2025 (in thousands, except percentages):

Current wording

The following table compares the Company’s net interest income performance for the second quarter of 2026 to the second quarter of 2025 (in thousands, except percentages):

Previous wording

The Company's net interest income in the first quarter of 2026 increased by $897,000, or 9.0%, from the prior year's first quarter while the net interest margin of 3.26% for the first quarter of 2026 represented a 25-basis point improvement from the first quarter of 2025. The increase reflects controlled balance sheet growth, as both total earning assets and total deposits were at higher average levels due to the Company’s effective balance sheet management and business development strategies. This, combined with effective pricing strategies, resulted in both the total earning asset yield and cost of interest-bearing funds improving between years. The Federal Reserve’s action to lower short-term interest rates during the final four months of 2025 favorably impacted total interest-bearing deposits and borrowings costs. In addition, while the U.S. Treasury yield curve was relatively flat on the short end, yields in the mid to long end of the curve were higher and demonstrated a steeper upward slope which favorably impacted earning asset yields. Management believes that the net interest margin will continue to improve throughout 2026 given the Company’s effective execution of strategy.

Current wording

The Company's net interest income in the second quarter of 2026 increased by $942,000, or 9.1%, from the prior year's second quarter while the net interest margin of 3.34% for the second quarter of 2026 represented a 24-basis point improvement from the second quarter of 2025. The increase reflects controlled balance sheet growth, as both total earning assets and total deposits were at higher average levels due to the Company’s effective balance sheet management. This, combined with effective pricing strategies, resulted in both the total earning asset yield and cost of interest-bearing funds improving between years. The Federal Reserve’s action to lower short-term interest rates during the latter portion of 2025 favorably impacted total interest-bearing deposits and borrowings costs. In addition, the U.S. Treasury yield curve demonstrated a more traditional steeper upward slope which favorably impacted earning asset yields. Management believes that the Company’s balance sheet is well positioned for further quarterly net interest income growth and net interest margin improvement.

Previous wording

Total average loans in the first quarter of 2026 declined from the 2025 first quarter average by $37.5 million, or 3.5%, due to increased loan payoff activity, particularly from the commercial real estate (CRE) portfolio, during the second half of 2025 and exceeded loan originations. Total loans continue to be above the $1.0 billion threshold, averaging $1.027 billion for the first quarter of 2026. Total loan interest income declined in the first quarter of 2026 compared to last year’s first quarter as the lower average loan balance more than offset the more favorable interest rate environment in 2026, and a portion of CRE loans, that were booked during the COVID pandemic when interest rates were low, have been repricing upward during the first quarter of 2026. Total loan interest income decreased by $102,000, or 0.7%, when compared to the first quarter of 2025.

Current wording

Total average loans in the second quarter of 2026 declined from the 2025 second quarter average by $47.2 million, or 4.4%, due to increased loan payoff activity, particularly from the commercial real estate (CRE) portfolio, which exceeded loan originations. However, total loans continue to be above the $1.0 billion threshold, averaging $1.022 billion for the second quarter of 2026. Total loan interest income decreased by $331,000, or 2.2%, in the second quarter of 2026 compared to last year’s second quarter. This decline reflects the lower average loan balance more than offsetting the benefits of a better interest rate environment in 2026, and a portion of CRE loans, that were booked during the COVID pandemic when interest rates were low, repricing upward during 2026.

Previous wording

Investment securities, including the available for sale, held to maturity, and trading portfolios, averaged $278.8 million for the first quarter of 2026, which was $32.1 million, or 13.0%, higher than the $246.7 million average for the first quarter of last year. Additionally, overnight short-term investments were higher by $17.0 million in the first quarter of 2026. These increases reflect the higher level of loan prepayment activity as well as the strengthening of the Company’s liquidity position throughout 2025 and the first quarter of 2026 due to deposit growth. Therefore, more funds were available to invest in the securities portfolio during a time when security yields improved, making purchases more attractive. New investment security purchases were also necessary to replace cash flow from maturing securities to maintain appropriate balances for pledging purposes related to public funds deposits. The increased level of average investment securities along with improved yields for new securities purchased caused interest income from investment securities to increase by $438,000, or 18.3%, for the first quarter of 2026 compared to the same period in 2025. Overall, the average balance of total interest earning assets increased from last year’s first quarter average by $11.7 million, or 0.9%, while total interest income increased by $480,000, or 2.8%, from the first quarter of 2025.

Current wording

Investment securities, including the available for sale, held to maturity, and trading portfolios, averaged $303.3 million for the second quarter of 2026, which was $41.8 million, or 16.0%, higher than the $261.5 million average for the second quarter of last year. Additionally, short-term investments and bank deposits were higher by $21.1 million in the second quarter of 2026. These increases reflect the higher level of loan prepayment activity, as well as the strengthening of the Company’s liquidity position due to deposit growth. Therefore, more funds were available to invest in the securities portfolio during a time when security yields improved, making purchases more attractive. New investment security purchases were also necessary to replace cash flow from maturing securities to maintain appropriate balances for pledging purposes related to public fund deposits. The increased level of average investment securities along with improved yields for new securities purchased caused interest income from investments to increase by $624,000, or 24.2%, for the second quarter of 2026 compared to the same period in 2025. Overall, the average balance of total interest earning assets increased from last year’s second quarter average by $15.8 million, or 1.2%, while total interest income increased by $410,000, or 2.3%, from the second quarter of 2025.

Previous wording

On the liability side of the balance sheet, total average deposits of $1.242 billion for the first quarter of 2026 were $24.5 million, or 2.0%, higher than the 2025 first quarter average. The increase reflects the Company’s successful business development efforts. Additionally, the Company’s core deposit base continued to demonstrate the strength and stability that it has for many years due to customer loyalty and confidence in AmeriServ Financial Bank. The Company does not utilize brokered deposits as a funding source. The loan to deposit ratio averaged 82.7% in the first quarter of 2026, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is well positioned to support its customers and community during times of economic volatility.

Current wording

On the liability side of the balance sheet, total average deposits of $1.27 billion for the second quarter of 2026 were $29.8 million, or 2.4%, higher than the 2025 second quarter average. The increase reflects the Company’s successful business development efforts. Additionally, the Company’s core deposit base continued to demonstrate the strength and stability that it has for many years due to customer loyalty and confidence in AmeriServ Financial Bank. The Company does not utilize brokered deposits as a funding source. The loan to deposit ratio averaged 80.5% in the second quarter of 2026, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is well positioned to support its customers and community during times of economic volatility.

Previous wording

The table that follows provides an analysis of net interest income on a tax-equivalent basis (non-GAAP) for the three-month periods ended March 31, 2026 and 2025 setting forth (i) average assets, liabilities, and shareholders’ equity, (ii) interest income earned on interest earning assets and interest expense paid on interest bearing liabilities, (iii) average yields earned on interest earning assets and average rates paid on interest bearing liabilities, (iv) the Company’s interest rate spread (the difference between the average yield earned on interest earning assets and the average rate paid on interest bearing liabilities), and (v) the Company’s net interest margin (net interest income as a percentage of average total interest earning assets). For purposes of this table, loan balances include non-accrual loans and interest income on loans includes loan fees or amortization of such fees which have been deferred. Regulatory stock is included within available for sale investment securities for this analysis. Additionally, a tax rate of 21% was used to compute tax-equivalent interest income and yields (non-GAAP). The tax equivalent adjustments to interest income on loans, municipal securities, and trading securities for the three months ended March 31, 2026 and 2025 was $48,000 and $7,000, respectively, which is reconciled to the corresponding GAAP measure at the bottom of the table. Differences between the net interest spread and margin from a GAAP basis to a tax-equivalent basis were not material.

Current wording

The table that follows provides an analysis of net interest income on a tax-equivalent basis (non-GAAP) for the three-month periods ended June 30, 2026 and 2025 setting forth (i) average assets, liabilities, and shareholders’ equity, (ii) interest income earned on interest earning assets and interest expense paid on interest bearing liabilities, (iii) average yields earned on interest earning assets and average rates paid on interest bearing liabilities, (iv) the Company’s interest rate spread (the difference between the average yield earned on interest earning assets and the average rate paid on interest bearing liabilities), and (v) the Company’s net interest margin (net interest income as a percentage of average total interest earning assets). For purposes of this table, loan balances include non-accrual loans and interest income on loans includes loan fees or amortization of such fees which have been deferred. Regulatory stock is included within available for sale investment securities for this analysis. Additionally, a tax rate of 21% was used to compute tax-equivalent interest income and yields (non-GAAP). The tax equivalent adjustments to interest income on loans, municipal securities, and trading securities for the three months ended June 30, 2026 and 2025 was $51,000 and $14,000, respectively, which is reconciled to the corresponding GAAP measure at the bottom of the table. Differences between the net interest spread and margin from a GAAP basis to a tax-equivalent basis were not material.

Previous wording

**…..NON-INTEREST INCOME…..**Non-interest income for the first quarter of 2026 totaled $4.0 million and decreased by $154,000, or 3.7%, from the first quarter of 2025 performance. Factors contributing to the lower level of non-interest income for the quarter included:

Current wording

**…..NON-INTEREST INCOME…..**Non-interest income for the second quarter of 2026 totaled $4.6 million and increased by $471,000, or 11.5%, from the second quarter of 2025 performance. Factors contributing to the higher level of non-interest income for the quarter included:

Previous wording

**…..NON-INTEREST EXPENSE…..**Non-interest expense for the first quarter of 2026 totaled $12.4 million and increased by $595,000, or 5.1%, from the prior year’s first quarter. Factors contributing to the higher level of non-interest expense for the quarter included:

Current wording

**…..NON-INTEREST EXPENSE…..**Non-interest expense for the second quarter of 2026 totaled $12.8 million and increased by $1.1 million, or 9.3%, from the prior year’s second quarter. Factors contributing to the higher level of non-interest expense for the quarter included:

Previous wording

**…..INCOME TAX EXPENSE…..**The Company recorded income tax expense of $426,000, or an effective tax rate of 19.2%, in the first quarter of 2026. This compares to income tax expense of $478,000, or an effective tax rate of 20.0%, for the first quarter of 2025.

Current wording

**…..INCOME TAX EXPENSE…..**The Company recorded income tax expense of $661,000, or an effective tax rate of 19.4%, in the second quarter of 2026. This compares to a credit for income taxes of $70,000 in the second quarter of 2025.

Previous wording

The Company reported first quarter 2026 net income of $1,794,000, or $0.11 per diluted common share. This performance represented a $114,000, or 6.0%, decrease from the first quarter of 2025 when net income totaled $1,908,000, or $0.12 per diluted common share. Despite the lower level of net income, the Company achieved positive operating leverage in the first quarter of 2026 as total revenue increased at a faster rate than total non-interest expense. The increase in total revenue was the result of meaningful improvement in net interest income due to effective balance sheet management. Specifically, the net interest margin increased by 25-basis points from the first quarter of 2025 leading to an $897,000 increase in net interest income. Overall, the improvement in net interest income was more than offset by higher total non-interest expense, the higher provision for credit losses, and the lower level of non-interest income resulting in the unfavorable earnings performance comparison between quarters.

Current wording

For the six-month period ended June 30, 2026, the Company reported net income of $4,532,000, or $0.27 per diluted common share. This represented a 170% increase in earnings per share from the six-month period of 2025 when net income totaled $1,626,000, or $0.10 per diluted common share. An increase in total revenue was caused by meaningful improvement in net interest income for the first six months of 2026 because of effective balance sheet management. Specifically, the Company’s net interest margin increased by 24-basis points for the first six months of 2026 leading to a $1.8 million increase in net interest income which is important since it represents approximately 72% of total revenue. Additionally, improved wealth management fees contributed to growth in non-interest income. The Company’s earnings performance in the first half of 2026 was also favorably impacted by a lower provision for credit losses reflecting improvement in asset quality. Overall, the improvement in the Company’s financial performance through the first six months of 2026 exceeded earnings through the first six months of 2025 by $2.9 million, or 179%, and resulted from increased total revenue and a lower provision for credit losses which more than offset higher non-interest expense.

Previous wording

deposits growing by $39.2 million, or 3.8%, compared to the first quarter of last year. The decrease in deposit interest expense reflects management’s effective deposit pricing strategies along with the benefit of the Federal Reserve easing monetary policy during the final four months of 2025. This reduction in interest-bearing deposit costs contributed to the previously mentioned improvement in the net interest margin. Overall, total deposit cost (including the benefit of non-interest-bearing demand deposits) averaged 1.93% in the first quarter of 2026, which was an 11-basis point improvement from the first quarter of 2025.

Current wording

last year. The decrease in deposit interest expense reflects management’s effective deposit pricing strategies along with the benefit of the Federal Reserve easing monetary policy during the final four months of 2025. Overall, total deposit cost (including the benefit of non-interest-bearing demand deposits which declined between years) averaged 1.92% in the first six months of 2026, which was a 14-basis point improvement from the first six months of 2025.

Previous wording

Total borrowings interest expense decreased by $212,000, or 21.9%, for the first quarter of 2026 when compared to the first quarter of 2025. The Company’s average utilization of overnight borrowed funds in the first quarter of 2026 was lower than the 2025 first quarter average level by $5.6 million, or 86.7%, due to the higher level of total average deposits. Also, management elected not to replace the majority of maturing Federal Home Loan Bank (FHLB) term advances during the full year of 2025 and did not replace any during the first quarter of 2026 due to the strength of the Company’s liquidity position. Therefore, advances from the FHLB averaged $42.7 million for the first quarter of 2026, which was $12.2 million, or 22.2%, lower than the $54.9 million average for the 2025 first quarter. The decrease in borrowings interest expense also reflects the Federal Reserve’s 2025 action to ease monetary policy by 75-basis points which had an immediate and favorable impact on the cost of overnight borrowed funds.

Current wording

Total borrowings interest expense declined by $400,000, or 21.6%, for the first six months of 2026 when compared to the same time period of 2025. The Company’s utilization of overnight borrowed funds for the six months of 2026 was lower than the first half of 2025, resulting in the average decreasing by $4.4 million, or 88.5%, due to the higher level of total average deposits. Also, management elected not to replace the majority of maturing Federal Home Loan Bank (FHLB) term advances during the full year of 2025 and did not replace any during the first half of 2026 because of the strength of the Company’s liquidity position. Therefore, the total average balance of advances from the FHLB during the first half of 2026 decreased by $13.0 million, or 24.5%, from the same period of last year. The decrease in borrowings interest expense also reflects the Federal Reserve’s 2025 action to ease monetary policy by 75-basis points which had an immediate and favorable impact on the cost of overnight borrowed funds.

Previous wording

**…..PROVISION FOR CREDIT LOSSES…..**The Company recorded a $217,000 provision for credit losses in the first quarter of 2026 after recording a provision recovery of $97,000 in the first quarter of 2025, resulting in an increase in expense of $314,000. The provision for credit losses in the first quarter of 2026 reflected a $284,000 provision for credit losses on loans resulting from updates to both historical loss rates and qualitative adjustments. In addition, $27,000 of provision expense was recognized for the investment securities portfolio primarily related to the creation of a partial reserve for a senior debt corporate bond within the available for sale portfolio. Both of these items were partially offset by a $94,000 provision recovery for unfunded commitments due to a decline in outstanding loan commitments.

Current wording

**…..PROVISION FOR CREDIT LOSSES…..For the first **six months of 2026, the Company recognized a $77,000 provision for credit losses recovery after recognizing a $3.0 million provision for credit losses in the first six months of 2025, resulting in a net favorable change of $3.1 million. The $2,000 provision recovery for loans in the first half of 2026 reflected a continuing favorable trend for historical loss rates along with a softening of reserve requirements due to the contraction in the size of the loan portfolio. In addition, the Company recorded an $82,000 provision recovery for unfunded commitments due to a decline in outstanding loan commitments. Both of these items were partially offset by a $7,000 provision expense for the investment securities portfolio. The provision expense for the investment securities

Previous wording

**…..BALANCE SHEET…..**The Company’s total consolidated assets were $1.5 billion at March 31, 2026, which increased by $18.8 million, or 1.3%, from the December 31, 2025 asset level. This change was related primarily to higher levels of cash and cash equivalents, investment securities, and other assets. Investment securities, including held to maturity, available for sale and trading, increased by $14.5 million, or 5.7%, as the Company’s liquidity position strengthened during the first three months of 2026 allowing more funds to be available to invest in the securities portfolio. The increased liquidity also resulted in cash and cash equivalents increasing by $3.2 million, or 6.3%. Other assets increased $2.3 million, or 5.1%, due to changes in the accrued pension obligation and prepaid expenses.

Current wording

**…..BALANCE SHEET…..**The Company’s total consolidated assets were $1.5 billion at June 30, 2026, which increased by $8.3 million, or 0.6%, from the December 31, 2025 asset level. This change was related primarily to higher levels of investment securities and other assets which were partially offset by reduced levels of cash and cash equivalents and loans and loans held for sale. Investment securities, including held to maturity, available for sale and trading, increased by $43.5 million, or 17.0%, as the Company’s liquidity position strengthened throughout the first half of 2026 allowing more funds to be available to invest in the securities portfolio. Other assets increased $4.3 million, or 9.6%, due to increases in the positive balance of the accrued pension liability, the market value for the interest rate swaps, and prepaid expenses as well as amounts receivable from the issuers of two called investment securities. Since the excess liquidity from deposit growth was directed to the investment securities portfolio during the first half of 2026, cash and cash equivalents decreased by $22.8 million, or 44.9%. Finally, loans and loans held for sale decreased by $17.2 million, or 1.7%, due to payoff activity exceeding loan originations.

Previous wording

Total deposits increased by $21.8 million, or 1.7%, in the first three months of 2026. Management believes this demonstrates customer confidence as well as the strength and loyalty of the Company’s core deposit base. As of March 31, 2026, the 25 largest depositors represented 28.7% of total deposits, which increased slightly from December 31, 2025 when it was 28.5%. As of March 31, 2026 and December 31, 2025, the estimated amount of uninsured deposits was $495.1 million and $476.2 million, respectively. The estimate of uninsured deposits was done at the single account level and does not take into account total customer balances in the Bank. It should be noted that approximately 60% of these uninsured deposits relate to public funds from municipalities, government entities, and school districts which by law are required to be collateralized by investment securities or FHLB letters of credit to protect these depositor funds. FHLB term advances were reduced by $3.7 million, or 8.3%, since year-end 2025 as a result of the higher level of deposits.

Current wording

Total deposits increased by $13.2 million, or 1.1%, in the first six months of 2026. Management believes this demonstrates customer confidence as well as the strength and loyalty of the Company’s core deposit base. As of June 30, 2026, the 25 largest depositors represented 29.5% of total deposits, which increased from December 31, 2025 when it was 28.5%. As of June 30, 2026 and December 31, 2025, the estimated amount of uninsured deposits was $497.0 million and $476.2 million, respectively. The estimate of uninsured deposits was done at the single account level and does not take into account total customer balances in the Bank. It should be noted that approximately 60% of these uninsured deposits relate to public funds from municipalities, government entities, and school districts which by law are required to be collateralized by investment securities or FHLB letters of credit to protect these depositor funds. FHLB term advances were reduced by $8.4 million, or 18.9%, since year-end 2025 as a result of the higher level of deposits.

Previous wording

The Company’s total shareholders’ equity increased by $1.4 million, or 1.2%, during the first quarter of 2026. The increase in capital was the result of the Company’s earnings performance during the first three months of 2026 more than offsetting its common stock dividend payment to shareholders along with the positive impact on accumulated other comprehensive loss from the revaluation of the pension obligation. In addition, capital was increased as a result of the issuance of common stock under the amended and restated consulting agreement with SB Value Partners (as disclosed in the Company’s Current Report on Form 8-K filed on January 6, 2026). These increases were partially offset by the decline in the market value of the available for sale investment securities portfolio which had an unfavorable impact on accumulated other comprehensive loss.

Current wording

offsetting its common stock dividend payments to shareholders along with the positive impact on accumulated other comprehensive loss from the revaluation of the pension obligation. In addition, capital was increased as a result of the issuance of common stock under the amended and restated consulting agreement with SB Value Partners. These increases were partially offset by the decline in the market value of the available for sale investment securities portfolio which had an unfavorable impact on accumulated other comprehensive loss.

Previous wording

The Bank continues to be considered well capitalized for regulatory purposes with a total risk based capital ratio of 12.98% and an asset leverage ratio of 9.45% at March 31, 2026. See the discussion of the Basel III capital requirements under the Capital Resources section below. As of March 31, 2026, the Company’s book value per common share was $7.12 and its tangible book value per common share was $6.31(1). In addition, the Company’s equity to asset ratio was 8.20% and its tangible common equity to tangible assets ratio was 7.34%(1) at March 31, 2026. The tangible common equity ratio remained unchanged from December 31, 2025.

Current wording

The Bank continues to be considered well capitalized for regulatory purposes with a community bank leverage ratio of 9.46% at June 30, 2026. See the discussion of the capital requirements under the Capital Resources section below. As of June 30, 2026, the Company’s book value per common share was $7.26 and its tangible book value per common share was $6.45(1). In addition, the Company’s equity to assets ratio was 8.42% and its tangible common equity to tangible assets ratio was 7.55%(1) at June 30, 2026. The tangible common equity ratio increased by 21-basis points when compared to December 31, 2025.

Previous wording

The slight decrease in accruing loan delinquency since year-end 2025 was attributable to a lower level of delinquency within the commercial & industrial loan class which was partially offset by an increase in residential mortgage and consumer loan delinquency. Non-performing loans decreased from $8.3 million at December 31, 2025 to $8.0 million at March 31, 2026 due to the partial charge-down of a non-accrual CRE loan secured by retail property. Risk rating upgrade activity and, to a lesser extent, the aforementioned charge-down contributed to the decrease in classified loans. Specifically, classified loans decreased $1.5 million, or 13.6%, from December 31, 2025 and totaled $9.8 million at March 31, 2026.

Current wording

The increase in accruing loan delinquency since year-end 2025 was attributable to a higher level of delinquency within the non-owner occupied commercial real estate retail loan class which was partially offset by a decrease in residential mortgage loan delinquency. Non-performing loans decreased from $8.3 million at December 31, 2025 to $7.7 million at June 30, 2026 due to the partial charge-down of a CRE loan secured by retail property as well as paydown activity on a large non-accrual loan relationship. Risk rating upgrade activity and, to a lesser extent, the aforementioned charge-down and paydown activity contributed to the decrease in classified loans. Specifically, classified loans decreased $1.8 million, or 16.1%, from December 31, 2025 and totaled $9.5 million at June 30, 2026.

Previous wording

Non-performing loans represented 0.78% of total loans as of March 31, 2026. The Company recognized net loan charge-offs of $206,000, or 0.08% of total average loans, in the first quarter of 2026 compared to net loan charge-offs of $64,000, or 0.02% of total average loans, in the first quarter of 2025.

Current wording

Non-performing loans represented 0.76% of total loans as of June 30, 2026. The Company recognized net loan charge-offs of $230,000, or 0.05% of total average loans, in the first six months of 2026 compared to net loan charge-offs of $3.0 million, or 0.56% of total average loans, in the first six months of 2025.

Previous wording

The banking regulatory agencies have expressed concerns about weaknesses in certain sectors of the current commercial real estate market. Banking regulators generally give commercial real estate lending greater scrutiny and may require banks with higher levels of commercial real estate loans to implement enhanced risk management practices, including stricter underwriting, internal controls, risk management policies, more granular reporting, and portfolio stress testing, as well as possibly higher levels of allowances for credit losses and capital levels as a result of commercial real estate lending growth and exposures. If the Company's banking regulators determine that our commercial real estate lending activities are particularly risky and are subject to such heightened scrutiny, the Company may incur significant additional costs or be required to restrict certain of our commercial real estate lending activities. Furthermore, failures in the Company's risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could have a material adverse effect on the Company's business, financial condition, and results of operations.

Current wording

Banking regulators generally give commercial real estate lending greater scrutiny and may require banks with higher levels of commercial real estate loans to implement enhanced risk management practices, including stricter underwriting, internal controls, risk management policies, more granular reporting, and portfolio stress testing, as well as possibly higher levels of allowances for credit losses and capital levels as a result of commercial real estate lending growth and exposures. If the Company's banking regulators determine that our commercial real estate lending activities are particularly risky and are subject to such heightened scrutiny, the Company may incur significant additional costs or be required to restrict certain of our commercial real estate lending activities. Furthermore, failures in the Company's risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which could have a material adverse effect on the Company's business, financial condition, and results of operations.

Previous wording

There is a particular regulatory emphasis on ensuring that a subsidiary bank has appropriate levels of capital to support its non-owner occupied commercial real estate loan concentration, which for the Bank stood at 352% as of March 31, 2026. It should be noted that this ratio remained unchanged from December 31, 2025 due to the growth of the outstanding balance of non-owner occupied commercial real estate loans offsetting the growth in total regulatory capital during the first three months of 2026. Further, non-owner occupied commercial real estate loans represented 50.8% and 50.4% of total loans as of March 31, 2026 and December 31, 2025, respectively.

Current wording

There is a particular regulatory emphasis on ensuring that a subsidiary bank has appropriate levels of capital to support its non-owner occupied commercial real estate loan concentration, which for the Bank stood at 335% as of June 30, 2026. It should be noted that this ratio declined from 352% at December 31, 2025 due to the growth of total regulatory capital in the first six months of 2026 combined with a decrease in the outstanding balance of non-owner occupied commercial real estate loans. Further, non-owner occupied commercial real estate loans represented 50.0% and 50.4% of total loans as of June 30, 2026 and December 31, 2025, respectively.

Previous wording

The allowance for loan credit losses increased since December 31, 2025 by $78,000, or 0.6%, to $13.2 million at March 31, 2026. Despite the slight contraction in loan balances since year-end 2025, the allowance balance grew as a result of updates to both the historical loss rates and qualitative adjustments. Overall, the Company continues to maintain solid coverage of total loans as the allowance for loan credit losses provided 1.28% coverage of total loans at March 31, 2026. Additionally, at March 31, 2026, the allowance for loan credit losses provided 165% coverage of non-performing loans.

Current wording

The allowance for loan credit losses decreased since December 31, 2025 by $232,000, or 1.8%, to $12.9 million at June 30, 2026. The reduction in the allowance balance was the result of an improvement in asset quality and a decrease in outstanding loan balances since year-end 2025. Overall, the Company continues to maintain solid coverage of total loans as the allowance for loan credit losses provided 1.27% coverage of total loans at June 30, 2026. Additionally, at June 30, 2026, the allowance for loan credit losses provided 167% coverage of non-performing loans.

Previous wording

The allowance for credit losses on the investment securities portfolio was comprised of $34,000 on AFS securities and $83,000 on held to maturity securities as of March 31, 2026. This compares to no reserve on available for sale securities and $90,000 on held to maturity securities as of December 31, 2025. The increase in the reserve on AFS securities reflects a partial reserve established for a senior debt corporate bond that was deemed to be credit impaired during the first quarter of 2026. The decrease in the allowance for credit losses on unfunded commitments since year-end 2025 resulted primarily from a decline in outstanding loan commitments.

Current wording

The allowance for credit losses on the investment securities portfolio was comprised of $30,000 on available for sale (AFS) securities and $67,000 on held to maturity (HTM) securities as of June 30, 2026. This compares to no reserve on AFS securities and $90,000 on HTM securities as of December 31, 2025. The increase in the reserve on AFS securities reflects a partial reserve established for a senior debt corporate bond that was deemed to be credit impaired during the first half of 2026. The decrease in the reserve on HTM securities reflects the call of a corporate bond. The decrease in the allowance for credit losses on unfunded commitments since year-end 2025 resulted primarily from a decline in outstanding loan commitments.

Previous wording

development efforts. The Company’s core deposit base continued to demonstrate the strength and stability that it has had for many years. As of March 31, 2026, total deposits grew by $21.8 million, or 1.7%, since December 31, 2025, demonstrating customer loyalty and confidence in AmeriServ Financial Bank. In addition to its loyal core deposit base, the Company has several other sources of liquidity, including a significant unused borrowing capacity at the Federal Home Loan Bank (FHLB), overnight lines of credit at correspondent banks and access to the Federal Reserve Discount Window. The Company does not utilize brokered deposits as a funding source. Overall, deposit volumes continue to remain at a high level. The core deposit base is adequate to fund the Company’s operations. Cash flow from maturities, prepayments and amortization of securities can also be used to help fund loan growth.

Current wording

**…..LIQUIDITY…..**The Company’s liquidity position continued to strengthen during the first half of 2026 due to loan prepayment activity as well as deposit growth. Specifically, total average deposits were $27.1 million, or 2.2%, higher when compared to the 2025 first six-month average. The increase reflects the Company’s successful business development efforts. The Company’s core deposit base continued to demonstrate the strength and stability that it has had for many years. As of June 30, 2026, total deposits grew by $13.2 million, or 1.1%, since December 31, 2025, demonstrating customer loyalty and confidence in AmeriServ Financial Bank. In addition to its loyal core deposit base, the Company has several other sources of liquidity, including a significant unused borrowing capacity at the Federal Home Loan Bank (FHLB), overnight lines of credit at correspondent banks and access to the Federal Reserve Discount Window. The Company does not utilize brokered deposits as a funding source. Overall, deposit volumes continue to remain at a high level. The core deposit base is adequate to fund the Company’s operations. Cash flow from maturities, prepayments and amortization of securities can also be used to help fund loan growth.

Previous wording

Further demonstrating the strength of the Company’s liquidity position, average short-term investments grew in the first three months of 2026 compared to the first three months of last year, increasing by $17.0 million. Advances from the FHLB averaged $42.7 million in the first quarter of 2026 which was $12.2 million, or 22.2%, lower than the $54.9 million average in the first quarter of 2025. Management continues to monitor the changing economic conditions and adjust pricing strategies accordingly which largely determines customer behavior and the level of total deposits as well as shifts within the total deposit mix. Also, diligent monitoring and management of our short-term investment position and our level of overnight borrowed funds remains a priority. Given the high cost of overnight borrowed funds, management has been effectively controlling the usage of this funding source. The Company’s utilization of overnight borrowed funds in the first quarter of 2026 was lower than the 2025 first quarter level. Total short-term borrowings averaged $851,000 for the first three months of 2026 after averaging $6.4 million for the first three months of 2025. Loan growth and prudent investment in securities are critical to achieve the best return on the normal level of earning asset cash flow that occurs each month. Due to the Company’s strengthened liquidity position, more funds were available to invest in the securities portfolio during a time when security yields improved, making purchases so far in 2026 more attractive. In addition, loan pipelines are currently at a typical level. Total average loans in the first quarter of 2026 were lower than the 2025 first quarter average by $37.5 million, or 3.5%. We strive to operate our loan to deposit ratio in a range of 80% to 100%. The Company’s loan to deposit ratio averaged 82.7% in the first quarter of 2026, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is well positioned to support its customers and community during times of economic volatility. We are also strongly positioned to service the existing loan pipeline and grow the loan to deposit ratio while remaining within the guideline parameters.

Current wording

Further demonstrating the strength of the Company’s liquidity position, average short-term investments and bank deposits grew in the first six months of 2026 compared to the first six months of last year, increasing by $19.1 million. Advances from the FHLB averaged $39.9 million in the first half of 2026 which was $13.0 million, or 24.5%, lower than the $52.9 million average in the first half of 2025. Management continues to monitor the changing economic conditions and adjust pricing strategies accordingly which largely determines customer behavior and the level of total deposits as well as shifts within the total deposit mix. Also, diligent monitoring and management of our short-term investment position and our level of overnight borrowed funds remains a priority. Given the high cost of overnight borrowed funds, management has been effectively controlling the usage of this funding source. The Company’s utilization of overnight borrowed funds so far in 2026 has been lower than the 2025 level. Total short-term borrowings averaged $577,000 for the first six months of 2026 after averaging $5.0 million for the first six months of 2025. Loan growth and prudent investment in securities are critical to achieve the best return on the normal level of earning asset cash flow that occurs each month. Due to the Company’s strengthened liquidity position, more funds were available to invest in the securities portfolio during a time when security yields improved, making purchases so far in 2026 more attractive. In addition, loan pipelines are currently at a typical level. Total average loans in the first six months of 2026 were lower than the 2025 first six-month average by $42.3 million, or 4.0%. We strive to operate our loan to deposit ratio in a range of 80% to

Previous wording

Liquidity can also be analyzed by utilizing the Consolidated Statements of Cash Flows. Cash and cash equivalents increased by $3.2 million from December 31, 2025, to $54.1 million at March 31, 2026, due to $17.6 million of net cash provided by financing activities and $356,000 of net cash provided by operating activities which more than offset $14.7 million of net cash used in investing activities. Within investing activities, cash advanced for new loans originated totaled $32.7 million while cash received from loan principal payments was $34.2 million leading to a net decrease in loans of $1.5 million. Additionally, investment security purchases exceeded maturities resulting in a net increase in securities of $15.9 million. Within financing activities, total borrowings on advances from FHLB decreased by $3.7 million while total deposits increased by $21.8 million.

Current wording

Liquidity can also be analyzed by utilizing the Consolidated Statements of Cash Flows. Cash and cash equivalents decreased by $22.8 million from December 31, 2025, to $28.0 million at June 30, 2026, due to $25.8 million of net cash used in investing activities and $759,000 of net cash used in operating activities which more than offset $3.7 million of net cash provided by financing activities. Within investing activities, cash advanced for new loans originated totaled $62.4 million while cash received from loan principal payments was $80.0 million leading to a net decrease in loans of $17.6 million. Additionally, investment security purchases exceeded maturities resulting in a net increase in securities of $43.1 million. Within financing activities, total borrowings on advances from FHLB decreased by $8.4 million while total deposits increased by $13.2 million.

Previous wording

The holding company had $5.6 million of cash, short-term investments, and investment securities at March 31, 2026, which represented a $167,000 increase in the holding company’s cash position since December 31, 2025. Dividend payments from our subsidiary provide ongoing cash to the holding company. At March 31, 2026, our subsidiary Bank had $8.7 million of cash available for immediate dividends to the holding company under applicable regulatory formulas. Additionally, the holding company has a $3 million line of credit with an unrelated financial institution which can be used for general corporate purposes. There were no borrowings under the line at March 31, 2026. Overall, we believe that the holding company has sufficient liquidity to meet its subordinated debt interest payments and its dividend payments on its common stock.

Current wording

The holding company had $6.2 million of cash, short-term investments, and investment securities at June 30, 2026, which represented a $801,000 increase from the holding company’s cash position since December 31, 2025. Dividend payments from our subsidiary provide ongoing cash to the holding company. At June 30, 2026, our subsidiary Bank had $10.9 million of cash available for immediate dividends to the holding company under applicable regulatory formulas. Additionally, the holding company has a $3 million line of credit with an unrelated financial institution which can be used for general corporate purposes. There were no borrowings under the line at June 30, 2026. Overall, we believe that the holding company has sufficient liquidity to meet its subordinated debt interest payments and its dividend payments on its common stock.

Previous wording

Financial institutions must maintain liquidity to meet the day-to-day requirements of depositors and borrowers, take advantage of market opportunities, and provide a cushion against unforeseen needs. Liquidity needs can be met by either reducing assets or increasing liabilities. Sources of asset liquidity are provided by short-term investments, interest bearing deposits with banks, and federal funds sold. These assets totaled $54.1 million and $50.9 million at March 31, 2026 and December 31, 2025, respectively. Maturing and repaying loans, as well as the monthly cash flow associated with mortgage-backed securities and security maturities are other significant sources of asset liquidity for the Company.

Current wording

Financial institutions must maintain liquidity to meet day-to-day requirements of depositors and borrowers, take advantage of market opportunities, and provide a cushion against unforeseen needs. Liquidity needs can be met by either reducing assets or increasing liabilities. Sources of asset liquidity are provided by short-term investments, interest bearing deposits with banks, and federal funds sold. These assets totaled $28.0 million and $50.9 million at June 30, 2026 and December 31, 2025, respectively. Maturing and repaying loans, as well as the monthly cash flow associated with mortgage-backed securities and security maturities are other significant sources of asset liquidity for the Company.

Previous wording

Liability liquidity can be met by attracting deposits with competitive rates, using repurchase agreements, buying federal funds, or utilizing the facilities of the Federal Reserve or the FHLB systems. The Company utilizes a variety of these methods of liability liquidity. Additionally, the Company’s subsidiary bank is a member of the FHLB, which provides the opportunity to obtain short-term to longer-term advances based upon the Company’s investment in certain residential mortgage, commercial real estate, and commercial and industrial loans. At March 31, 2026, the Company had $288 million of overnight borrowing availability at the FHLB, $45 million of short-term borrowing availability at the Federal Reserve Bank and $35 million of unsecured federal funds lines with correspondent banks. The Company believes it has ample liquidity available to fund outstanding loan commitments if they were fully drawn upon.

Current wording

Liability liquidity can be met by attracting deposits with competitive rates, using repurchase agreements, buying federal funds, or utilizing the facilities of the Federal Reserve or the FHLB systems. The Company utilizes a variety of these methods of liability liquidity. Additionally, the Company’s subsidiary bank is a member of the FHLB, which provides the opportunity to obtain short-term to longer-term advances based upon the Company’s investment in certain residential mortgage, commercial real estate, and commercial and industrial loans. At June 30, 2026, the Company had $268 million of overnight borrowing availability at the FHLB, $41 million of short-term borrowing availability at the Federal Reserve Bank and $35 million of unsecured federal funds lines with correspondent banks. The Company believes it has ample liquidity available to fund outstanding loan commitments if they were fully drawn upon.

Previous wording

Our focus is on preserving capital to support customer lending and allow the Company to take advantage of business opportunities as they arise. We currently believe that we have sufficient capital and earnings power to continue to pay our common stock cash dividend at its current rate of $0.03 per quarter. The Company had a book value of $7.12 per common share and a tangible book value of $6.31(1) per common share on March 31, 2026. In addition, our common equity ratio was 8.20% and our tangible common equity ratio was 7.34%(1). At March 31, 2026, the Company had approximately 17.0 million common shares outstanding.

Current wording

Our current focus is on preserving capital to support customer lending and allow the Company to take advantage of business opportunities as they arise. We currently believe that we have sufficient capital and earnings power to continue to pay our common stock cash dividend at its current rate of $0.03 per quarter. The Company had a book value of $7.26 per common share and a tangible book value of $6.45(1) per common share on June 30, 2026. In addition, our common equity ratio was 8.42% and our tangible common equity ratio was 7.55%(1). At June 30, 2026, the Company had approximately 17.0 million common shares outstanding.

Previous wording

The variability of net interest income was slightly negative in the upward rate scenarios as the Company was marginally more exposed to liabilities repricing upward to a greater extent than assets. Specifically, the cost of funds was immediately impacted when short-term national interest rates increase because certain deposit products and overnight borrowed funds move with the market. This was partially offset by the Company’s investment securities portfolio and the scheduled repricing of loans tied to an index, such as SOFR or prime. In addition, the Company has effectively utilized interest rate swaps and hedges for interest rate risk management purposes. The interest rate swaps allow our customers to lock in fixed interest rates while the Company retains the benefit of interest rates moving with the market. The interest rate hedges fix the cost of certain deposits that are indexed and move with short-term interest rates which reduces the Company’s negative variability of net interest income in a rising interest rate environment. Regarding interest bearing liabilities, the Company will continue its disciplined approach to price its core deposit accounts in a controlled but competitive manner and control the amount of overnight borrowed funds. The variability of net interest income is negative in the downward rate scenarios as the Company has more exposure to assets repricing downward to a greater extent than liabilities.

Current wording

The variability of net interest income was slightly negative in the upward rate scenarios as the Company was marginally more exposed to liabilities repricing upward to a greater extent than assets. Specifically, the cost of funds was immediately impacted when short-term national interest rates increase because certain deposit products and overnight borrowed funds move with the market. This was partially offset by the Company’s investment securities portfolio and the scheduled repricing of loans tied to an index, such as SOFR or prime. In addition, the Company has effectively utilized interest rate swaps and hedges for interest rate risk management purposes. The interest rate swaps allow our customers to lock in fixed interest rates while the Company retains the benefit of interest rates moving with the market. The interest rate hedges fix the cost of certain deposits that are indexed and move with short-term interest rates which reduces the Company’s negative variability of net interest income in a rising interest rate environment. Regarding interest bearing liabilities, the Company will continue its disciplined approach to price its core deposit accounts in a controlled but competitive manner and control the amount of overnight borrowed funds. The variability of net interest income was slightly positive in the downward rate scenarios as the Company has marginally more exposure to short-term liabilities repricing downward to a greater extent than assets.

Previous wording

**…..OFF BALANCE SHEET ARRANGEMENTS…..**The Company incurs off-balance sheet risks in the normal course of business in order to meet the financing needs of its customers. These risks derive from commitments to extend credit and standby letters of credit. Such commitments and standby letters of credit involve, to varying degrees, elements of credit risk. The Company had various outstanding commitments to extend credit approximating $226.1 million and standby letters of credit of $8.8 million as of March 31, 2026. The Company’s exposure to credit loss in the event of nonperformance by the other party to these commitments to extend credit and standby letters of credit is represented by their contractual amounts. The Company uses the same credit and collateral policies in making commitments and conditional obligations as for all other lending.

Current wording

**…..OFF BALANCE SHEET ARRANGEMENTS…..**The Company incurs off-balance sheet risks in the normal course of business in order to meet the financing needs of its customers. These risks derive from commitments to extend credit and standby letters of credit. Such commitments and standby letters of credit involve, to varying degrees, elements of credit risk. The Company had various outstanding commitments to extend credit approximating $217.3 million and standby letters of credit of $8.8 million as of June 30, 2026. The Company’s exposure to credit loss in the event of nonperformance by the other party to these commitments to extend credit and standby letters of credit is represented by their contractual amounts. The Company uses the same credit and collateral policies in making commitments and conditional obligations as for all other lending.

Previous wording

Pension costs and liabilities are dependent on assumptions used in calculating such amounts. These assumptions include discount rates, benefits earned, interest costs, expected return on plan assets, mortality rates, and other factors. In accordance with GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation of future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the Company’s pension obligations and future expense. Additionally, pension expense can also be impacted by settlement accounting charges if the amount of employee selected lump sum distributions exceed the total amount of service and interest component costs of the net periodic pension cost in a particular year. Our pension benefits are described further in Note 15 of the Notes to Unaudited Consolidated Financial Statements.

Current wording

Pension costs and liabilities are dependent on assumptions used in calculating such amounts. These assumptions include discount rates, benefits earned, interest costs, expected return on plan assets, mortality rates, and other factors. In accordance with GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation of future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the Company’s pension obligations and future expense. Additionally, pension expense can also be impacted by settlement accounting charges if the amount of employee selected lump sum distributions exceed the

Previous wording

The Company measures expected credit losses on held to maturity debt securities, which are comprised of U.S. government agency and mortgage-backed securities as well as municipal, corporate, and other bonds. The Company’s agency and mortgage-backed securities are issued by U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. As such, no allowance for credit losses has been established for these securities. The allowance for credit

Current wording

The Company measures expected credit losses on held to maturity debt securities, which are comprised of U.S. government agency and mortgage-backed securities as well as municipal, corporate, and other bonds. The Company’s agency and mortgage-backed securities are issued by U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. As such, no allowance for credit losses has been established for these securities. The allowance for credit losses on the municipal, corporate, and other bonds within the held to maturity securities portfolio is calculated using the PD/LGD method. The calculation is completed on a quarterly basis using the default studies provided by an industry leading source.

Previous wording

The Company recognizes all derivatives as either assets or liabilities on the Consolidated Balance Sheets and measures those instruments at fair value. For derivatives designated as fair value hedges, changes in the fair value of the derivative and hedged item related to the hedged risk are recognized in earnings. Changes in fair value of derivatives designated and accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive loss, net of deferred taxes and are subsequently reclassified to earnings when the hedged transaction

Current wording

The Company recognizes all derivatives as either assets or liabilities on the Consolidated Balance Sheets and measures those instruments at fair value. For derivatives designated as fair value hedges, changes in the fair value of the derivative and hedged item related to the hedged risk are recognized in earnings. Changes in fair value of derivatives designated and accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive loss, net of deferred taxes and are subsequently reclassified to earnings when the hedged transaction affects earnings. Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item.

Previous wording

Such factors include the following: (i) the effect of changing regional and national economic conditions; (ii) the effects of trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve; (iii) significant changes in interest rates and prepayment speeds; (iv) inflation, stock and bond market, and monetary fluctuations; (v) credit risks of commercial, real estate, consumer, and other lending activities; (vi) changes in federal and state banking and financial services laws and regulations and supervisory actions by such regulators, including bank failures; (vii) the presence in the Company’s market area of competitors with greater financial resources than the Company; (viii) the timely development of competitive new products and services by the Company and the acceptance of those products and services by customers and regulators (when required); (ix) the willingness of customers to substitute competitors’ products and services for those of the Company and vice versa; (x) changes in consumer spending and savings habits; (xi) unanticipated regulatory or judicial proceedings; (xii) the ability to attract new or retain existing deposits or to retain or grow loans, including growth from unfunded closed loans; (xiii) the ability to generate future revenue growth or to control future growth in non-interest expense, including, but not limited to, those related to technological changes, including changes regarding artificial intelligence and cybersecurity, changes affecting oversight of the financial services industry, and changes intended to manage or mitigate climate and related environmental risks; (xiv) the impact of failure in, or breach of, our operational or security systems or those of third parties with whom we do business, including as a result of cyberattacks or an increase in the incidence of fraud, illegal payments, security breaches or other illegal acts impacting us or our customers; (xv) unanticipated effects to our banking platform, including risks and unanticipated costs related to a core system migration; and (xvi) other external developments which could materially impact the Company’s operational and financial performance.

Current wording

Such factors include the following: (i) the effect of changing regional and national economic conditions; (ii) the effects of trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve; (iii) significant changes in interest rates and prepayment speeds; (iv) inflation, stock and bond market, and monetary fluctuations; (v) credit risks of commercial, real estate, consumer, and other lending activities; (vi) changes in federal and state banking and financial services laws and regulations and supervisory actions by such regulators, including bank failures; (vii) the presence in the Company’s market area of competitors with greater financial resources than the Company; (viii) the timely development of competitive new products and services by the Company and the acceptance of those products and services by customers and regulators (when required); (ix) the willingness of customers to substitute competitors’ products and services for those of the Company and vice versa; (x) changes in consumer spending and savings habits; (xi) unanticipated regulatory or judicial proceedings; (xii) the ability to attract new or retain