AMERISERV FINANCIAL INC /PA/

Previous wording

**…..NET INTEREST INCOME AND MARGIN…..**The Company’s net interest income represents the amount by which interest income on earning assets exceeds interest paid on interest bearing liabilities. Net interest income is a primary source of the Company’s earnings, and it is affected by interest rate fluctuations as well as changes in the amount and mix of earning assets and interest bearing liabilities. The following table compares the Company’s net interest income performance for the third quarter of 2024 to the third quarter of 2023 (in thousands, except percentages):

Current wording

**…..NET INTEREST INCOME AND MARGIN…..**The Company’s net interest income represents the amount by which interest income on earning assets exceeds interest paid on interest bearing liabilities. Net interest income is a primary source of the Company’s earnings, and it is affected by interest rate fluctuations as well as changes in the amount and mix of earning assets and interest bearing liabilities.

Previous wording

**…..NET INTEREST INCOME AND MARGIN…..**The following table compares the Company’s net interest income performance for the first nine months of 2024 to the first nine months of 2023 (in thousands, except percentages):

Current wording

The following table compares the Company’s net interest income performance for the first quarter of 2025 to the first quarter of 2024 (in thousands, except percentages):

Previous wording

Total average loans in the third quarter of 2024 were higher than the 2023 third quarter average by $38.9 million, or 3.9%. During the third quarter of 2024, new loan originations slightly exceeded payoff activity and resulted in total loan volumes, on an end of period basis, increasing since June 30, 2024. Overall, total loans continue to be above the $1.0 billion threshold averaging $1.033 billion for the 2024 third quarter. The higher interest rate environment along with the higher average total loans outstanding resulted in total loan interest and fee income improving by $1.1 million, or 8.7%, for the third quarter of 2024 when compared to the third quarter of 2023.

Current wording

Total average loans in the first quarter of 2025 were higher than the 2024 first quarter average by $34.8 million, or 3.4%, due to consistent new loan funding opportunities throughout 2024. So far in 2025, payoff activity has surpassed new loan originations and has resulted in a $6.1 million, or 0.6%, decline in total loans since December 31, 2024. Overall, total loans continue to be well above the $1.0 billion threshold averaging $1.065 billion for the 2025 first quarter. Total loan interest income improved in the first quarter of 2025 compared to last year’s first quarter due to the increased level of average total loans outstanding, and a portion of commercial real estate (CRE) loans, that were booked at the onset of the COVID pandemic when interest rates were low, repricing upward during the first quarter of 2025. These favorable items resulted in total loan interest income improving by $732,000, or 5.3%, when the 2025 first quarter is compared to 2024.

Previous wording

Total investment securities averaged $254.6 million for the third quarter of 2024, which is $5.6 million, or 2.2%, lower than the $260.2 million average for the third quarter of last year. The decrease reflects management’s strategy to allocate more cash flow from the securities portfolio to higher yielding loans while the Company controlled the amount of high cost overnight borrowed funds. Thus, new investment security purchases were primarily used to replace cash

Current wording

Total investment securities averaged $231.4 million for the first quarter of 2025, which was $7.4 million, or 3.1%, lower than the $238.8 million average for the first quarter of last year. The decrease reflects management’s 2024 strategy to allocate more cash flow from the securities portfolio to higher yielding loans while the Company controlled the amount of high cost overnight borrowed funds. However, our liquidity position strengthened during the first quarter of 2025 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. As a result, the securities portfolio grew by $12.0 million, or 5.5%, since December 31, 2024. 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 improved yields for new securities purchases caused interest income from investments to increase by $19,000, or 0.8%, for the first quarter of 2025 compared to the same period in 2024. Overall, the average balance of total interest earning assets increased from last year’s first quarter average by $35.0 million, or 2.8%, while total interest income increased by $798,000 or 4.9%, from the first quarter of 2024.

Previous wording

On the liability side of the balance sheet, total average deposits of $1.165 billion for the third quarter of 2024 were $15.9 million, or 1.4%, higher than the 2023 third quarter average. The increase reflects the Company’s successful business development efforts which more than offset a portion of the funds from the government stimulus programs leaving the balance sheet and greater pricing competition in the market to retain deposits because of the higher interest rates. The Company’s core deposit base continued to demonstrate the strength and stability that it has had for many years. 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. The loan to deposit ratio averaged 88.7% in the third quarter of 2024, which indicates that the Company has ample capacity to continue to grow its loan portfolio, and we believe that it is well positioned to support our customers and our community during times of economic volatility.

Current wording

On the liability side of the balance sheet, total average deposits of $1.218 billion for the first quarter of 2025 were $58.2 million, or 5.0%, higher than the 2024 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

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 September 30, 2024 and 2023 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

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 March 31, 2025 and 2024 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 for the three months ended March 31, 2025 and 2024 was $7,000 and $6,000, 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

improved historical loss rates used to calculate the allowance for loan credit losses in accordance with ASC 326,Financial Instruments – Credit Losses (CECL).

Current wording

recovery was recognized for the loan portfolio due to favorable adjustments to historical loss rates used to calculate the allowance for loan credit losses in accordance with current expected credit losses (CECL) and a decrease in end of period loan balances since December 31, 2024.** **

Previous wording

**…..NON-INTEREST INCOME…..**Non-interest income for the third quarter of 2024 totaled $4.2 million and decreased by $53,000, or 1.2%, from the third quarter of 2023 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 first quarter of 2025 totaled $4.1 million and decreased by $826,000, or 16.7%, from the first quarter of 2024 performance. Factors contributing to the lower level of non-interest income for the quarter included:

Previous wording

**…..NON-INTEREST EXPENSE…..**Non-interest expense for the third quarter of 2024 totaled $11.7 million and decreased by $374,000, or 3.1%, from the prior year’s third quarter. Factors contributing to the lower level of non-interest expense for the quarter included:

Current wording

**…..NON-INTEREST EXPENSE…..**Non-interest expense for the first quarter of 2025 totaled $11.8 million and decreased by $101,000, or 0.9%, from the prior year’s first quarter. Factors contributing to the lower level of non-interest expense for the quarter included:

Previous wording

**…..INCOME TAX EXPENSE…..**The Company recorded income tax expense of $237,000, or an effective tax rate of 16.7%, in the third quarter of 2024. This compares to income tax expense of $124,000, or an effective tax rate of 16.1%, for the third quarter of 2023.

Current wording

**…..INCOME TAX EXPENSE…..**The Company recorded income tax expense of $478,000, or an effective tax rate of 20.0%, in the first quarter of 2025. This compares to income tax expense of $483,000, or an effective tax rate of 20.2%, in the first quarter of 2024.

Previous wording

**…..BALANCE SHEET…..**The Company’s total consolidated assets were $1.4 billion at September 30, 2024, which increased by $15.5 million, or 1.1%, from the December 31, 2023 asset level. This change was related, primarily, to increased levels of cash and cash equivalents, total loans, leases, other real estate owned (OREO) and repossessed assets and other assets. Specifically, total loans increased by $2.0 million, or 0.2%, as so far in 2024, new loan originations have only slightly exceeded payoff activity. The marginal growth in loans along with an increase in total deposits led to an $8.1 million, or 57.7%, increase in cash and cash equivalents. The $953,000, or 31.5%, increase in the right-of-use asset for operating and financing leases resulted from the execution of two new leases for office locations and one new lease for equipment during 2024. OREO and repossessed assets increased $1.8 million due primarily to the foreclosure of a non-owner occupied commercial real estate loan secured by an office property during the second quarter of 2024. Finally, other assets increased $2.7 million, or 7.3%, due to an increase in the positive balance of the accrued pension liability which was partially offset by a decrease in the market values for the interest rate swaps.

Current wording

**…..BALANCE SHEET…..**The Company’s total consolidated assets were $1.4 billion at March 31, 2025, which increased by $9.2 million, or 0.6%, from the December 31, 2024 asset level. This change was related primarily to increased levels of cash and cash equivalents and investment securities which were partially offset by reduced total loans and other real estate owned (OREO) and repossessed assets. Specifically, investment securities increased by $12.0 million, or 5.5%, as the Company’s liquidity position strengthened during the first quarter of 2025 allowing more funds to be available to invest in the securities portfolio. Additionally, the increased liquidity resulted in cash and cash equivalents increasing by $5.9 million, or 33.2%. So far in 2025, loan payoff activity has surpassed new loan originations resulting in a $6.1 million, or 0.6%, decline in total loans since December 31, 2024. OREO and repossessed assets decreased $1.4 million, or 82.8%, since year-end due to the sale of a foreclosed office property during the first quarter of 2025.

Previous wording

Total deposits increased by $31.0 million, or 2.7%, in the first nine months of 2024. We believe this demonstrates customer confidence and the strength and loyalty of our core deposit base. As of September 30, 2024, the 25 largest depositors represented 25.3% of total deposits, which is an increase from December 31, 2023, when it was 22.4%. As of September 30, 2024 and December 31, 2023, the estimated amount of uninsured deposits was $420.9 million and $384.5 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 50% 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. Total short-term and FHLB borrowings were reduced by $19.2 million, or 22.5%, since year-end 2023 as a decrease in short-term borrowings more than offset an increase in FHLB term advances. Specifically, short-term borrowings decreased by $29.2 million, or 71.3%. Given the high cost of overnight borrowed funds, management has been effectively controlling the usage of this funding source. In addition, the inversion in the yield curve has caused FHLB term advances to have rates that are lower than the cost of overnight borrowed funds. Therefore, management increased usage of FHLB term advances in the first nine months of 2024 leading to an increase of $10.0 million, or 22.4%.

Current wording

Total deposits increased by $15.8 million, or 1.3%, in the first three months of 2025. Management believes this demonstrates customer confidence and the strength and loyalty of the Company’s core deposit base. As of March 31, 2025, the 25 largest depositors represented 28.3% of total deposits, which is an increase from December 31, 2024 when it was 27.6%. As of March 31, 2025 and December 31, 2024, the estimated amount of uninsured deposits was $437.1 million and $435.7 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. Total short-term and FHLB borrowings were reduced by $7.6 million, or 10.7%, since year-end 2024 as a result of the higher level of deposits. Specifically, short-term borrowings decreased by $4.3 million, or 29.2%, while FHLB term advances decreased $3.3 million, or 5.9%, in the first three months of 2025.

Previous wording

The Company’s total shareholders’ equity increased by $5.9 million, or 5.8%, during the first nine months of 2024. The increase in capital is the result of the Company’s earnings performance during the first nine months of 2024 more than offsetting our common stock dividend payments to shareholders. In addition, the pension adjustment and improved market value of the available for sale investment securities portfolio had a positive impact on accumulated other comprehensive loss. Partially offsetting these positive items was the execution of a Stock Repurchase Agreement pursuant to which the Company repurchased, at current market price, 628,003 shares of common stock from Driver Opportunity Partners, in connection with a settlement agreement, reducing capital by $1.5 million.

Current wording

The Company’s total shareholders’ equity increased by $3.5 million, or 3.3%, during the first three months of 2025. The increase in capital was the result of the Company’s earnings performance during the first quarter of 2025 more than offsetting its common stock dividend payments to shareholders. In addition, the improved market value of the available for sale investment securities portfolio had a positive impact on accumulated other comprehensive loss.

Previous wording

The Company continues to be considered well capitalized for regulatory purposes with a total capital ratio of 12.87%, and a common equity tier 1 capital ratio of 9.33% at September 30, 2024. See the discussion of the Basel III capital requirements under the Capital Resources section below. As of September 30, 2024, the Company’s book value per common share was $6.55 and its tangible book value per common share was $5.72(1). When compared to December 31, 2023, book value per common share increased by $0.59, or 9.9%, and tangible book value per common share increased by $0.56 per common share, or 10.9%. The improvement in the Company’s book value and tangible book value per share during 2024 was largely due to the favorable adjustment for both the unrealized loss on available for sale securities and the Company’s defined benefit pension plan as well as the accretive repurchase of 628,003 shares of our common stock from the activist shareholder. The tangible common equity to tangible assets ratio was 6.79%(1) at September 30, 2024 and increased by 35-basis points when compared to December 31, 2023.

Current wording

The Bank continues to be considered well capitalized for regulatory purposes with a total capital ratio of 12.27%, and a common equity tier 1 capital ratio of 11.07% at March 31, 2025. See the discussion of the Basel III capital requirements under the Capital Resources section below. As of March 31, 2025, the Company’s book value per common share was $6.70 and its tangible book value per common share was $5.88(1). Book value per common share increased by $0.64, or 10.6%, and tangible book value per common share increased by $0.62, or 11.8%, since March 31, 2024, due to a favorable adjustment for both the unrealized loss on available for sale securities and the Company’s defined benefit pension plan along with the accretive repurchase of 628,003 shares of common stock in June 2024. In addition, the Company’s equity to asset ratio was 7.74% and its tangible common equity to tangible assets ratio was 6.85%(1) at March 31, 2025. The tangible common equity ratio increased by 21-basis points when compared to December 31, 2024.

Previous wording

Non-performing assets from the loan portfolio, which include OREO and repossessed assets, were 1.12% of total loans as of September 30, 2024. The Company recognized net loan charge-offs of $488,000, or 0.06% of total average loans, in the first nine months of 2024 compared to net loan charge-offs of $187,000, or 0.03% of total average loans, in the first nine months of 2023.

Current wording

Non-performing loans represented 1.29% of total loans as of March 31, 2025. The Company recognized net loan charge-offs of $64,000, or 0.02% of total average loans, in the first three months of 2025 compared to net loan charge-offs of $121,000, or 0.05% of total average loans, in the first three months of 2024.

Previous wording

We also continue to closely monitor the loan portfolio given the number of relatively large-sized commercial and commercial real estate loans within the portfolio. As of September 30, 2024, the 25 largest credits represented 22.5% of total loans outstanding, which is relatively consistent with December 31, 2023 when it was 22.7%.

Current wording

We also continue to closely monitor the loan portfolio given the number of relatively large-sized commercial and commercial real estate loans within the portfolio. As of March 31, 2025, the 25 largest credits represented 24.3% of total loans outstanding, which is relatively consistent with December 31, 2024 when it was 24.0%.

Previous wording

The banking regulatory agencies have recently expressed concerns about weaknesses in 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

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 emphasis on ensuring that the subsidiary bank has appropriate levels of capital to support its non-owner occupied commercial real estate loan concentration, which stood at 388% as of September 30, 2024. It should be noted that this ratio increased from 375% at December 31, 2023 due to the growth in non-owner occupied commercial real estate loan balances out pacing the increase in total regulatory capital. Further, non-owner occupied commercial real estate loans represented 51.3% and 49.3% of total loans as of September 30, 2024 and December 31, 2023, respectively.

Current wording

There is a particular emphasis on ensuring that the subsidiary bank has appropriate levels of capital to support its non-owner occupied commercial real estate loan concentration, which stood at 376% as of March 31, 2025. It should be noted that this ratio improved from 379% at December 31, 2024 due to the growth of total regulatory capital in the first three months of 2025. Further, non-owner occupied commercial real estate loans represented 51.6% and 51.3% of total loans as of March 31, 2025 and December 31, 2024, respectively.

Previous wording

The allowance for loan credit losses declined since December 31, 2023 by $633,000, or 4.2%, to $14.4 million at September 30, 2024. Even with this modest decrease, the allowance for loan credit losses is $2.1 million, or 17.1%, higher than the allowance for loan credit losses at September 30, 2023. The increase since last year’s third quarter end was due to the Company strengthening its allowance for loan credit losses during the fourth quarter of 2023. Overall, the Company continues to maintain solid coverage of both total loans and non-performing loans as the allowance for loan credit losses provided 147% coverage of non-performing loans and 1.39% of total loans at September 30, 2024.

Current wording

adjustments coupled with a decrease in loan balances since year-end 2024. Overall, the Company continues to maintain solid coverage of both total loans and non-performing loans as the allowance for loan credit losses provided 101% coverage of non-performing loans and 1.30% of total loans at March 31, 2025.

Previous wording

The allowance for credit losses on the investment securities portfolio was comprised of $360,000 on available for sale securities and $88,000 on held to maturity securities as of September 30, 2024. This compares to $926,000 on available for sale securities and $37,000 on held to maturity securities as of December 31, 2023. The allowance for credit losses on available for sale securities decreased $566,000, or 61.1%, since year-end 2023 due to the successful sale of the Signature Bank subordinated debt investment which was partially offset by the establishment of an allowance for credit losses on another corporate available for sale security that was deemed to be credit impaired in 2024.

Current wording

The allowance for credit losses on the investment securities portfolio was comprised of $1.0 million on available for sale securities and $96,000 on held to maturity securities as of March 31, 2025. This compares to $360,000 on available for sale securities and $89,000 on held to maturity securities as of December 31, 2024. The allowance for credit losses on available for sale securities increased $640,000 since year-end 2024 as a result of the establishment of a full reserve for a corporate security due to further credit deterioration after a partial reserve for this particular security was established last year.

Previous wording

**…..LIQUIDITY…..**The Company’s liquidity position continues to be strong. Total average deposits were $10.5 million, or 0.9%, higher when compared to the 2023 first nine-month average. The increase reflects the Company’s successful business development efforts which more than offset a portion of the funds from the government stimulus programs leaving the balance sheet and greater pricing competition in the market to retain deposits because of the higher interest rates. The Company’s core deposit base continued to demonstrate the strength and stability that it has had for many years. On September 30, 2024, total deposits grew by $31.0 million, or 2.7%, since December 31, 2023, 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 is used to help fund loan growth.

Current wording

**…..LIQUIDITY…..**The Company’s liquidity position strengthened during the first quarter of 2025 due to deposit growth. Total average deposits were $58.2 million, or 5.0%, higher when compared to the 2024 first three-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. On March 31, 2025, total deposits grew by $15.8 million, or 1.3%, since December 31, 2024, 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

Average short-term investments remained relatively stable in the nine months of 2024 compared to the nine months of last year, increasing slightly by $69,000, or 1.8%. Advances from the FHLB averaged $50.7 million in the nine months of 2024 which is $31.9 million, or 169.8%, higher than the $18.8 million average in the nine months of 2023. Management’s strategy to increase term advances to lock in lower rates than overnight borrowings due to the inversion in the yield curve has favorably impacted net interest income. 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 2024 has been lower than the 2023 level. Total fed funds purchased and other short-term borrowings averaged $30.2 million for the nine months of 2024 after averaging $33.9 million for the nine months of 2023. Continued 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. So far in 2024, purchases of securities have continued to follow the same trend exhibited during the full year of 2023. Securities purchases have been slow as more

Current wording

Further demonstrating the strength of the Company’s liquidity position, average short-term investments grew in the first three months of 2025 compared to the first three months of last year by $7.6 million, or 180.8%. Advances from the FHLB averaged $54.9 million in the first quarter of 2025 which is $7.0 million, or 14.6%, higher than the $47.9 million average in the first quarter of 2024. Management’s strategy to increase term advances to lock in lower rates than overnight borrowings due to the inversion in the short end of the yield curve has favorably impacted net interest income. 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 2025 has been lower than the 2024 level. Total short-term borrowings averaged $6.4 million for the first quarter of 2025 after averaging $33.6 million for the first quarter of 2024. Continued 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 2025 more attractive. In addition, loan pipelines are currently at a typical level. Total average loans in the first quarter of 2025 were higher than the 2024 first quarter average by $34.8 million, or 3.4%. We strive to operate our loan to deposit ratio in a range of 80% to 100%. The Company’s loan to deposit ratio averaged 87.4% in the first quarter of 2025, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is well positioned to support our customers and our community during times of economic volatility. We are also strongly positioned to service our existing loan pipeline and grow our loan to deposit ratio while remaining within our guideline parameters.

Previous wording

Liquidity can also be analyzed by utilizing the Consolidated Statements of Cash Flows. Cash and cash equivalents increased by $8.1 million from December 31, 2023, to $22.1 million at September 30, 2024, due to $8.6 million of net cash provided by financing activities and $155,000 of net cash provided by investing activities which more than offset $685,000 of net cash used in operating activities. Within investing activities, cash advanced for new loans originated totaled $129.0 million and was $3.7 million higher than the $125.3 million of cash received from loan principal payments. Within financing activities, total short-term borrowings decreased by $29.2 million, total borrowings on advances from FHLB increased by $10.0 million while total deposits increased by $31.0 million.

Current wording

Liquidity can also be analyzed by utilizing the Consolidated Statements of Cash Flows. Cash and cash equivalents increased by $5.9 million from December 31, 2024, to $23.6 million at March 31, 2025, due to $7.7 million of net cash provided by financing activities and $599,000 of net cash provided by operating activities which more than offset $2.4 million of net cash used in investing activities. Within investing activities, cash advanced for new loans originated totaled $32.9 million and was $5.5 million lower than the $38.4 million of cash received from loan principal payments. Within financing activities, total short-term borrowings decreased by $4.3 million, total borrowings on advances from FHLB decreased by $3.3 million while total deposits increased by $15.8 million.

Previous wording

The holding company had $6.3 million of cash, short-term investments, and investment securities at September 30, 2024, which represented a $1.9 million decrease from the holding company’s cash position since December 31, 2023. Dividend payments from our subsidiaries provided ongoing cash to the holding company. At September 30, 2024, our subsidiary Bank had $2.0 million of cash available for immediate dividends to the holding company under applicable regulatory formulas. Management follows a policy that limits dividend payments from the Trust Company to 75% of annual net income. 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 $5.7 million of cash, short-term investments, and investment securities at March 31, 2025, which represented a $1.1 million decrease from the holding company’s cash position since December 31, 2024. Dividend payments from our subsidiary provide ongoing cash to the holding company. At March 31, 2025, our subsidiary Bank had $762,000 of cash available for immediate dividends to the holding company under applicable regulatory formulas. Additionally, during the first quarter of 2025, the holding company established a $3 million line of credit with PNC Bank which can be used for general corporate purposes. There were no borrowings under the line at March 31, 2025. 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 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 $22.1 million and $14.0 million at September 30, 2024 and December 31, 2023, 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 $23.6 million and $17.7 million at March 31, 2025 and December 31, 2024, 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 September 30, 2024, the Company had $299 million of overnight borrowing availability at the FHLB, $43 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 March 31, 2025, the Company had $295 million of overnight borrowing availability at the FHLB, $40 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

**…..CAPITAL RESOURCES…..**The Bank meaningfully exceeds all regulatory capital ratios for each of the periods presented and is considered well capitalized. The Company’s common equity tier 1 capital ratio was 9.33%, the tier 1 capital ratio was 9.33%, and the total capital ratio was 12.87% at September 30, 2024. The Company’s tier 1 leverage ratio was 7.75% at September 30, 2024. We anticipate that we will maintain our strong capital ratios throughout the remainder of 2024.

Current wording

**…..CAPITAL RESOURCES…..**The Bank exceeds all regulatory capital ratios for each of the periods presented and is considered well capitalized. The Bank’s common equity tier 1 capital ratio was 11.07%, the tier 1 capital ratio was 11.07%, and the total capital ratio was 12.27% at March 31, 2025. The Bank’s tier 1 leverage ratio was 9.20% at March 31, 2025. We anticipate that we will maintain our strong capital ratios throughout the remainder of 2025.

Previous wording

The Basel III capital standards establish the minimum capital levels in addition to the well capitalized requirements under the federal banking regulations prompt corrective action. The capital rules also impose a 2.5% capital conservation buffer (CCB) on top of the three minimum risk-weighted asset ratios. Banking institutions that fail to meet the effective minimum ratios once the CCB is taken into account will be subject to constraints on capital distributions, including dividends and share repurchases, and certain discretionary executive compensation. The severity of the constraints depends on the amount of the shortfall and the institution’s “eligible retained income” (four quarter trailing net income, net of distributions and tax effects not reflected in net income). The Company and the Bank meet all capital

Current wording

The Basel III capital standards establish the minimum capital levels in addition to the well capitalized requirements under the federal banking regulations prompt corrective action. The capital rules also impose a 2.5% capital conservation buffer (CCB) on top of the three minimum risk-weighted asset ratios. Banking institutions that fail to meet the effective minimum ratios once the CCB is taken into account will be subject to constraints on capital distributions, including dividends and share repurchases, and certain discretionary executive compensation. The severity of the constraints depends on the amount of the shortfall and the institution’s “eligible retained income” (four quarter trailing net income, net of distributions and tax effects not reflected in net income). The Company and the Bank meet all capital requirements, including the CCB, and continue to be committed to maintaining strong capital levels that exceed regulatory requirements while also supporting balance sheet growth and providing a return to our shareholders.

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 $6.55 per common share and a tangible book value of $5.72(1) per common share on September 30, 2024. In addition, our tangible common equity ratio was 6.79%(1). At September 30, 2024, the Company had approximately 16.5 million common shares outstanding.

Current 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 $6.70 per common share and a tangible book value of $5.88(1) per common share on March 31, 2025. In addition, our common equity ratio was 7.74% and our tangible common equity ratio was 6.85%(1). At March 31, 2025, the Company had approximately 16.5 million common shares outstanding.

Previous wording

The Company believes that its overall interest rate risk position is well controlled. The execution of $70 million of interest rate hedges during 2023, in order to fix the cost of certain deposits that are indexed and move with short-term interest rates, reduced the Company’s negative variability of net interest income in a rising interest rate environment and helped slow net interest margin compression. The fed funds rate is currently at a targeted range of 4.75% to 5.00% as the Federal Reserve took action in September 2024 to ease monetary policy. The 50-basis point decrease to the target fed funds rate was the Federal Open Market Committee’s first change to interest rates since the third quarter of 2023.

Current wording

The Company believes that its overall interest rate risk position is well controlled. The execution of $70 million of interest rate hedges during 2023, in order to fix the cost of certain deposits that are indexed and move with short-term interest rates, reduced the Company’s negative variability of net interest income in a rising interest rate environment and helped slow net interest margin compression while interest rates were rising. The fed funds rate is unchanged from year-end 2024 and is currently at a targeted range of 4.25% to 4.50%. The Federal Reserve has not taken further action to change interest rates so far in 2025.

Previous wording

above, the Company has effectively utilized interest rate swaps 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. 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. Overall, based on the slight change in the variability of net interest income in the various interest rate scenarios, the Company is well positioned to sustain either a rate increase or decrease.

Current wording

The variability of net interest income is positive in the upward rate shocks due to scheduled maturities and repricing within the Company’s investment securities portfolio and the scheduled repricing of loans tied to an index, such as SOFR or prime. In addition to the interest rate hedges discussed above, the Company has effectively utilized interest rate swaps 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. Also, 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. The market value of portfolio equity increases in the upward rate shocks due to the improved value of the Company’s core deposit base. Negative variability of market value of portfolio equity occurs in the downward rate shocks due to a reduced value for core deposits.

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 in excess of the amount recognized in the consolidated financial statements. The Company had various outstanding commitments to extend credit approximating $250.1 million and standby letters of credit of $8.9 million as of September 30, 2024. 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 in excess of the amount recognized in the consolidated financial statements. The Company had various outstanding commitments to extend credit approximating $243.1 million and standby letters of credit of $8.4 million as of March 31, 2025. 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

**…..RECONCILIATION OF NON-GAAP FINANCIAL MEASURES…..**This document contains certain financial information determined by methods other than in accordance with generally accepted accounting principles in the United States (GAAP). The tangible common equity ratio and tangible book value per share are considered to be non-GAAP measures and are calculated by dividing tangible common equity by tangible assets or shares outstanding. The Company believes that these non-GAAP financial measures provide information to investors that is useful in understanding its financial condition. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures, and, because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies.

Current wording

The Company believes that these non-GAAP financial measures provide information to investors that is useful in understanding its financial condition. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures, and, because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies.

Previous wording

Effective January 1, 2023, the Company adopted ASC 326,Financial Instruments - Credit Lossesand subsequent related updates. This standard requires the Company to measure the current expected credit losses (CECL) on financial assets measured at amortized cost, including loans and held to maturity (HTM) securities, and off-balance sheet credit exposures such as unfunded commitments. In addition, ASC 326 requires credit losses on available for sale (AFS) debt securities to be presented as an allowance rather than as a write-down when management does not intend to sell or believes that it is not more likely than not they will be required to sell the security.

Current wording

The Company measures the current expected credit losses (CECL) on financial assets measured at amortized cost, including loans and held to maturity (HTM) securities, and off-balance sheet credit exposures such as unfunded commitments. In addition, ASC 326 requires credit losses on available for sale (AFS) debt securities to be presented as

Previous wording

The Company measures expected credit losses on available for sale debt securities when the Company does not intend to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this evaluation indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost, a credit loss exists and an allowance for credit losses is recorded for the credit loss, equal to the amount that the fair value is less than the amortized cost basis.

Current wording

The Company measures expected credit losses on available for sale debt securities when the Company does not intend to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available for sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this evaluation indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost, a credit loss exists and an allowance for credit losses is recorded for the credit loss, equal to the amount that the fair value is less than the amortized cost basis. At times, based on management judgment, the Company may establish an allowance for credit losses in excess of the amount that the fair value is less than the amortized cost basis based on the specific circumstances surrounding the security.

Previous wording

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers our historical loss experience, current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

Current wording

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, which considers our historical loss experience, current conditions and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

Previous wording

AmeriServ Financial is committed to improving shareholder value by striving for consistently improving financial performance; providing our customers with products and exceptional service for every step in their lifetime financial journey; cultivating an employee atmosphere rooted in trust, empowerment and growth; and serving our communities through employee involvement and a philanthropic spirit. We will strive to provide our shareholders with consistently improved financial performance; the products, services and know-how needed to forge lasting banking for life customer

Current wording

AmeriServ Financial is committed to improving shareholder value by striving for consistently improving financial performance; providing our customers with products and exceptional service for every step in their lifetime financial journey; cultivating an employee atmosphere rooted in trust, empowerment and growth; and serving our communities through employee involvement and a philanthropic spirit. We will strive to provide our shareholders with consistently improved financial performance; the products, services and know-how needed to forge lasting banking for life customer relationships; a work environment that challenges and rewards staff; and the manpower and financial resources needed to make a difference in the communities we serve. Our strategic initiatives will focus on these four key constituencies:

Previous wording

This Form 10-Q 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 include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan” or similar expressions. These forward-looking statements are based upon current expectations, are subject to risk and uncertainties and are applicable only as of the dates of such statements. Forward-looking statements involve risks, uncertainties and assumptions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Form 10-Q, even if subsequently made available on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Form 10-Q. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statement identifying important factors (some of which are beyond the Company’s control) which could

Current wording

This Form 10-Q 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 include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan” or similar expressions. These forward-looking statements are based upon current expectations, are subject to risk and uncertainties and are applicable only as of the dates of such statements. Forward-looking statements involve risks, uncertainties and assumptions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Form 10-Q, even if subsequently made available on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Form 10-Q. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary statement identifying important factors (some of which are beyond the Company’s control) which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions.