AMERISERV FINANCIAL INC /PA/

Previous 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):

Current wording

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

Previous wording

The Company's net interest income in the first quarter of 2025 increased by $1.2 million, or 13.5%, from the prior year's first quarter while the net interest margin of 3.01% for the first quarter of 2025 represented a 31-basis point improvement from the first quarter of 2024. The increase reflects controlled balance sheet growth, as both total loans and total deposits were at higher levels due to the Company’s effective 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 interest rates during the latter portion of 2024 favorably impacted total interest-bearing deposits and borrowings costs. In addition, while the U.S. Treasury yield curve remained modestly inverted on the short end, the mid to long end of the curve demonstrated a normal upward slope and 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.

Current wording

The Company's net interest income in the second quarter of 2025 increased by $1.5 million, or 17.1%, from the prior year's second quarter while the net interest margin of 3.10% for the second quarter of 2025 represented a 36-basis point improvement from the second quarter of 2024. The increase reflects controlled balance sheet growth, as both total loans and total deposits were at higher levels due to the Company’s effective 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 latter portion of 2024 favorably impacted total interest-bearing deposits and borrowings costs. In addition, while the U.S. Treasury yield curve remained modestly inverted on the short end, the mid to long end of the curve demonstrated higher yields and a 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 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.

Current wording

Total average loans in the second quarter of 2025 were higher than the 2024 second quarter average by $39.5 million, or 3.8%, due to consistent new loan funding opportunities throughout 2024. During the second quarter of 2025, new loan originations exceeded payoff activity and resulted in total loan volumes, on an end of period basis, increasing since March 31, 2025. Overall, total loans continue to be well above the $1.0 billion threshold, averaging $1.069 billion for the second quarter of 2025. Total loan interest income improved in the second quarter of 2025 compared to last year’s second 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, have been repricing upward during 2025. These favorable items resulted in total loan interest income improving by $929,000, or 6.6%, when the 2025 second quarter is compared to 2024.

Previous wording

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 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 its customers and community during times of economic volatility.

Current wording

On the liability side of the balance sheet, total average deposits of $1.240 billion for the second quarter of 2025 were $77.3 million, or 6.6%, higher than the 2024 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 86.2% in the second quarter of 2025, 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

Total borrowings interest expense decreased by $311,000, or 24.3%, in the first quarter of 2025 when compared to the first quarter of 2024. The Company’s utilization of overnight borrowed funds in the first quarter of 2025 was significantly lower than the 2024 first quarter level by $27.2 million, or 80.9%, due to the higher level of total average deposits. The decrease in borrowings interest expense also reflects the Federal Reserve’s 2024 action to ease monetary policy by 100 basis points which had an immediate and favorable impact on the cost of overnight borrowed funds. Advances from the Federal Home Loan Bank averaged $54.9 million for the first quarter of 2025, which was $7.0 million, or 14.6%, higher than the $47.9 million average for the 2024 first quarter. Management’s strategy to increase term advances to lock in lower rates than overnight borrowings was due to the inversion in the short end of the yield curve and has favorably impacted net interest income.

Current wording

Total borrowings interest expense decreased by $359,000, or 28.8%, for the second quarter of 2025 when compared to the second quarter of 2024. The Company’s utilization of overnight borrowed funds in the second quarter of 2025 was significantly lower than the 2024 second quarter level by $24.7 million, or 87.3%, due to the higher level of total average deposits. The decrease in borrowings interest expense also reflects the Federal Reserve’s 2024 action to ease monetary policy by 100 basis points which had an immediate and favorable impact on the cost of overnight borrowed funds. Advances from the Federal Home Loan Bank averaged $50.9 million for the second quarter of 2025, which was $229,000, or 0.5%, higher than the $50.7 million average for the 2024 second quarter. Management’s strategy to increase term advances to lock in lower rates than overnight borrowings was due to the inversion in the short end of the yield curve and has favorably impacted net interest income.

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, 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.

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, 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 and trading securities for the three months ended June 30, 2025 and 2024 was $14,000 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

**…..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:

Current wording

**…..NON-INTEREST INCOME…..**Non-interest income for the second quarter of 2025 totaled $4.1 million and decreased by $276,000, or 6.3%, from the second 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 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:

Current wording

**…..NON-INTEREST EXPENSE…..**Non-interest expense for the second quarter of 2025 totaled $11.7 million and decreased by $1.6 million, or 11.9%, from the prior year’s second quarter. Factors contributing to the lower level of non-interest expense for the quarter included:

Previous wording

The Company reported first quarter 2025 net income of $1,908,000, or $0.12 per diluted common share. This performance represented a 9.1% increase in earnings per share compared to the first quarter of 2024 when net income totaled $1,904,000, or $0.11 per diluted common share. The Company achieved positive operating leverage in the first quarter of 2025 as total revenue increased while non-interest expenses declined. The increase in total revenue was caused by meaningful improvement in net interest income as the first quarter net interest margin increased by 31 basis points from the prior year quarter and 13 basis points on a sequential quarter basis.

Current wording

For the six-month period ended June 30, 2025, the Company reported net income of $1,626,000, or $0.10 per diluted common share. This represented an 11.1% increase in earnings per share from the six-month period of 2024 when net income totaled $1,529,000, or $0.09 per diluted common share. The Company achieved positive operating leverage in both quarters of 2025 as total revenue increased while non-interest expenses declined. The increase in total revenue was caused by meaningful improvement in net interest income as the net interest margin increased by 34-basis points for the first six months of 2025. Additionally, our non-interest expense has favorably declined in both quarters of 2025 as management works to carefully control operating costs.

Previous 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.

Current wording

Total investment securities averaged $236.8 million for the first half of 2025, which was $1.5 million, or 0.6%, lower than the $238.3 million average for the first half of 2024. 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 six months of 2025 due to deposit growth. Therefore, as previously discussed for the quarterly comparison, 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 $17.9 million, or 8.1%, since December 31, 2024. The improved yields for new securities purchases caused interest income from investments to increase by $155,000, or 3.2%, for the first six months of 2025 compared to last year’s first six months. Overall, through six months, the average balance of total interest earning assets increased from last year’s average by $45.5 million, or 3.6%, while total interest income increased by $2.0 million, or 6.0%, from the first half of 2024.

Previous 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

Current wording

On the liability side of the balance sheet, total average deposits through the first six months of 2025 were $67.8 million, or 5.8%, higher when compared to the first six months of 2024 due to the Company’s successful business development efforts. Additionally, as previously mentioned, the Company’s core deposit base continues to demonstrate the strength and stability that it has for many years demonstrating what we believe is customer loyalty and confidence in AmeriServ Financial Bank. The Company does not utilize brokered deposits as a funding source.

Previous wording

Total interest expense in the first quarter of 2025 favorably decreased by $386,000, or 5.2%, when compared to the first quarter of 2024. Deposit interest expense declined by $75,000, or 1.2%, despite total average interest-bearing deposits growing by $56.9 million, or 5.8%, compared to the first quarter of last year. The quarter-over-quarter decrease in total interest expense was primarily due to total interest-bearing deposit cost demonstrating a declining trend that coincided with the Federal Reserve easing monetary policy during the final four months of 2024. 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 which grew between years) averaged 2.04% in the first quarter of 2025, which is an 11-basis point improvement from the first quarter of 2024.

Current wording

Total interest expense favorably decreased by $726,000, or 4.8%, for the first half of 2025 when compared to the same time period of 2024. Deposit interest expense declined by $56,000, or 0.4%, through the first six months of 2025 despite total average interest-bearing deposits growing by $68.7 million, or 7.0%, compared to the first six months of last year. The year to date decrease in deposit interest expense reflects total interest-bearing deposit cost demonstrating a declining trend that coincided with the Federal Reserve easing monetary policy during the final four months of 2024. Overall, total deposit cost (including the benefit of non-interest-bearing demand deposits which remained relatively

Previous wording

**…..PROVISION FOR CREDIT LOSSES…..**The Company recorded a $97,000 provision for credit losses recovery in the first quarter of 2025 after recording a provision recovery of $557,000 in the first quarter of 2024, resulting in an unfavorable change of $460,000. The provision for credit losses recovery in the first quarter of 2025 reflects the net impact of the following items: A $709,000 recovery was recognized on unfunded commitments and was based upon the results of an independent third-party validation recommendation to adjust the utilization rates used to calculate the provision. This recovery was partially offset by $647,000 of provision expense on investment securities primarily for establishing a full reserve for a corporate security in the available for sale (AFS) securities portfolio due to further credit deterioration after a partial reserve for this particular security was established last year. Finally, a $36,000

Current wording

Company recognized $636,000 of provision expense for the investment securities portfolio related to establishing a full reserve for an available for sale corporate security due to further credit deterioration after a partial reserve for this particular security was established last year. Partially offsetting these provision expenses was the recognition of a $720,000 provision recovery on unfunded commitments based primarily upon the results of an independent third-party validation recommendation to adjust the utilization rates used to calculate the provision.

Previous 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.

Current wording

**…..INCOME TAX EXPENSE…..**The Company recorded an income tax expense of $408,000, or an effective tax rate of 20.1%, in the first six months of 2025. This compares to an income tax expense of $374,000, or an effective tax rate of 19.7%, for the first six months of 2024. The higher level of income tax expense this year was due to the increased level of pre-tax income.

Previous 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.

Current wording

**…..BALANCE SHEET…..**The Company’s total consolidated assets were $1.4 billion at June 30, 2025, which increased by $26.4 million, or 1.9%, from the December 31, 2024 asset level. This change was related primarily to higher levels of cash and cash equivalents and investment securities which were partially offset by reduced other real estate owned (OREO) and repossessed assets. Investment securities, including held to maturity, available for sale and trading, increased by $22.1 million, or 10.1%, as the Company’s liquidity position strengthened during the first six months of 2025 allowing more funds to be available to invest in the securities portfolio. Further, during the second quarter of 2025, the Company established an investment trading account which holds primarily U.S. Treasury and municipal (taxable and tax-exempt) securities. The increased liquidity also resulted in cash and cash equivalents increasing by $7.3 million, or 41.1%. OREO and repossessed assets decreased $1.5 million, or 85.0%, since year-end due primarily to the sale of a foreclosed office property during the first quarter of 2025.

Previous 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.

Current wording

Total deposits increased by $43.5 million, or 3.6%, in the first six months of 2025. Management believes this demonstrates customer confidence and the strength and loyalty of the Company’s core deposit base. As of June 30, 2025, the 25 largest depositors represented 27.2% of total deposits, which remained relative stable from December 31, 2024 when it was 27.6%. As of June 30, 2025 and December 31, 2024, the estimated amount of uninsured deposits was $468.7 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 $19.1 million, or 27.0%, since year-end 2024 as a result of the higher level of deposits. Specifically, short-term borrowings decreased by $12.0 million, or 81.6%, while FHLB term advances decreased $7.1 million, or 12.7%, in the first six months of 2025.

Previous 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.

Current wording

The Company’s total shareholders’ equity increased by $3.7 million, or 3.4%, during the first six months of 2025. The increase in capital was the result of the Company’s earnings performance during the first half 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 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.

Current wording

The Bank continues to be considered well capitalized for regulatory purposes with a total capital ratio of 12.14% and a common equity tier 1 capital ratio of 10.94% at June 30, 2025. See the discussion of the Basel III capital requirements under the Capital Resources section below. As of June 30, 2025, the Company’s book value per common share was $6.71 and its tangible book value per common share was $5.89(1). Book value per common share increased by $0.43, or 6.8%, and tangible book value per common share increased by $0.44, or 8.1%, since June 30, 2024, due to a favorable adjustment for both the unrealized loss on available for sale securities and the Company’s defined benefit pension plan. In addition, the Company’s equity to asset ratio was 7.66% and its tangible common equity to tangible assets ratio was 6.78%(1) at June 30, 2025. The tangible common equity ratio increased by 14-basis points when compared to December 31, 2024.

Previous wording

The increase in accruing loan delinquency since year-end 2024 was attributable to an increase in commercial real estate (CRE) loan delinquency related to one loan relationship secured by retail properties. Non-performing loans increased from $10.9 million at December 31, 2024 to $13.7 million at March 31, 2025 due to the transfer of a $3.3 million CRE loan into non-accrual status which more than offset a $300,000 reduction in non-accrual residential mortgage loans. The aforementioned reduction in non-accrual residential mortgage loans contributed to a decrease in classified loans. Specifically, classified loans decreased $398,000, or 1.7%, from December 31, 2024 and totaled $23.2 million at March 31, 2025.

Current wording

The decrease in accruing loan delinquency since year-end 2024 was attributable to a lower level of delinquency within all segments of the loan portfolio. Specifically, two commercial loans from one borrower relationship were transferred to non-accrual during the first half of 2025 which significantly contributed to the decrease in accruing loan delinquency. Non-performing loans increased from $10.9 million at December 31, 2024 to $15.2 million at June 30, 2025 due to the transfer of one CRE loan and three C&I loans from one borrower relationship and one additional CRE loan into non-accrual status which more than offset the charge-down of a CRE loan secured by a mixed use commercial real estate property. The aforementioned charge-down of a CRE loan contributed to a decrease in classified loans. Specifically, classified loans decreased $2.4 million, or 10.1%, from December 31, 2024 and totaled $21.2 million at June 30, 2025.

Previous 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.

Current wording

Non-performing loans represented 1.42% of total loans as of June 30, 2025. The Company recognized net loan charge-offs of $3.0 million, or 0.56% of total average loans, in the first six months of 2025 compared to net loan charge-offs of $332,000, or 0.06% of total average loans, in the first six 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 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%.

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 June 30, 2025, the 25 largest credits represented 23.9% of total loans outstanding, which is relatively consistent with December 31, 2024 when it was 24.0%.

Previous 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.

Current 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.

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 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.

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 378% as of June 30, 2025. It should be noted that this ratio improved slightly from 379% at December 31, 2024 due to the growth of total regulatory capital in the first six months of 2025. Further, non-owner occupied commercial real estate loans represented 51.7% and 51.3% of total loans as of June 30, 2025 and December 31, 2024, respectively.

Previous 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.

Current wording

The allowance for loan credit losses increased since December 31, 2024 by $148,000, or 1.1%, to $14.1 million at June 30, 2025. The allowance balance grew as a result of increased historical loss rates caused by charge-off activity coupled with increased outstanding 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 93% coverage of non-performing loans and 1.32% of total loans at June 30, 2025.

Previous 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.

Current wording

The allowance for credit losses on the investment securities portfolio was comprised of $1.0 million on available for sale securities and $85,000 on held to maturity securities as of June 30, 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 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.

Current wording

**…..LIQUIDITY…..**The Company’s liquidity position strengthened during the first half of 2025 due to deposit growth. Total average deposits were $67.8 million, or 5.8%, higher when compared to the 2024 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. On June 30, 2025, total deposits grew by $43.5 million, or 3.6%, 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

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.

Current wording

Further demonstrating the strength of the Company’s liquidity position, average short-term investments grew in the first six months of 2025 compared to the first six months of last year by $7.3 million, or 192.8%. Advances from the FHLB averaged $52.9 million in the first half of 2025 which is $3.6 million, or 7.3%, higher than the $49.3 million average in the first half 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 $5.0 million for the first six months of 2025 after averaging $31.0 million for the first six months 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 six months of 2025 were higher than the 2024 first six-month average by

Previous 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.

Current wording

Liquidity can also be analyzed by utilizing the Consolidated Statements of Cash Flows. Cash and cash equivalents increased by $7.3 million from December 31, 2024, to $25.0 million at June 30, 2025, due to $23.4 million of net cash provided by financing activities and $537,000 of net cash provided by operating activities more than offsetting $16.6 million of net cash used in investing activities. Within investing activities, cash advanced for new loans originated totaled $73.8 million while cash received from loan principal payments was $69.7 million leading to a net increase in loans of $4.0 million. Within financing activities, total short-term borrowings decreased by $12.0 million, total borrowings on advances from FHLB decreased by $7.1 million while total deposits increased by $43.5 million.

Previous 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.

Current wording

The holding company had $4.7 million of cash, short-term investments, and investment securities at June 30, 2025, which represented a $2.1 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 June 30, 2025, our subsidiary Bank had $1.1 million 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 June 30, 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 $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.

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 $24.1 million and $17.7 million at June 30, 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 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.

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, 2025, the Company had $297 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

**…..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.

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 10.94%, the tier 1 capital ratio was 10.94%, and the total capital ratio was 12.14% at June 30, 2025. The Bank’s tier 1 leverage ratio was 9.12% at June 30, 2025. We anticipate that we will maintain our strong capital ratios throughout the remainder of 2025.

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 $6.70 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.

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 $6.71 per common share and a tangible book value of $5.89(1) per common share on June 30, 2025. In addition, our common equity ratio was 7.66% and our tangible common equity ratio was 6.78%(1). At June 30, 2025, the Company had approximately 16.5 million common shares outstanding.

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 $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.

Current wording

of credit risk. The Company had various outstanding commitments to extend credit approximating $253.3 million and standby letters of credit of $7.9 million as of June 30, 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

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

**…..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.

Previous 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

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 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.

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; and (xv) 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 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