Ameriserv Financial Inc /Pa/ ASRV US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

The following discussion and analysis of financial condition and results of operations of the Company should be read in conjunction with the consolidated financial statements of the Company including the related notes thereto, included elsewhere herein.

SELECTED FIVE-YEAR CONSOLIDATED FINANCIAL DATA

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ AT OR FOR THE YEAR ENDED DECEMBER 31, ​

​ ​ (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) ​

SUMMARY OF INCOME STATEMENT DATA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

PER COMMON SHARE DATA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

BALANCE SHEET AND OTHER DATA: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SELECTED FINANCIAL RATIOS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

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RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

PERFORMANCE OVERVIEW. The following table summarizes some of the Company’s key profitability performance indicators.

​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ YEAR ENDED DECEMBER 31,

​ ​ (IN THOUSANDS, EXCEPT

​ ​ PER SHARE DATA AND RATIOS)

Diluted earnings per share ​ 0.34 ​ 0.21 ​

Return on average assets ​ 0.39 % 0.26 %

Return on average equity ​ 5.03 ​ 3.46 ​

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The Company reported net income of $5,612,000, or $0.34 per diluted common share, for 2025. This compares to net income of $3,601,000, or $0.21 per diluted common share, for 2024. Overall, the Company’s earnings performance in 2025 exceeded the earnings for 2024 by $2.0 million, or 55.8%. The improved financial performance in 2025 was driven by increased revenue which allowed the Company to achieve earnings growth while absorbing a higher provision for credit losses which was needed to bring final resolution to its largest non-performing loan. The increase in total revenue was caused by meaningful improvement in net interest income due to effective balance sheet management. Specifically, the Company’s net interest margin increased by 34-basis points for 2025 leading to a $6.2 million increase in net interest income, which is important since this category represented approximately 70% of total revenue. Additionally, non-interest expense favorably declined in 2025 as management worked to carefully control operating costs and gain efficiency improvements. Finally, both book value per share and tangible book value(1) per share experienced growth in 2025 increasing by 11.2% to $7.22 and 12.9% to $6.39, respectively, during the past year.

The Company reported net income of $3.6 million, or $0.21 per diluted common share, in 2024. This compared to a net loss of $3.3 million, or $0.20 per diluted common share, in 2023. The earnings improvement between years was driven by a favorable comparison in the provision for credit losses, improved total revenue, and lower non-interest expense. Specifically, the lower provision for credit losses in 2024 reflected provision recoveries recognized in both the loan and securities portfolios during the first and third quarters while the 2023 provision was significantly higher due to the negative impact that the Rite Aid bankruptcy had on several commercial real estate properties.

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 years ended December 31, 2025 and 2024:

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31, ​ ​ ​ ​ ​ ​

​ ​ (IN THOUSANDS, EXCEPT RATIOS)

​

The Company’s net interest income for 2025 increased by $6.2 million, or 17.2%, when compared to 2024. The Company’s net interest margin was 3.15% for 2025 representing a 34-basis point improvement from 2024. Along with the significantly improved net interest margin performance, the increase also reflected controlled balance sheet growth, as both total earning assets and total deposits were at higher average levels due to effective balance sheet management and business development strategies. This, combined with effective pricing strategies, resulted in both the total earning asset yield and cost of interest bearing funds improving between years. The Federal Reserve’s action to lower short-term interest rates during 2024 and 2025 favorably impacted total interest bearing deposits and borrowings costs. Also, while the U.S. Treasury yield curve remained modestly inverted on the short end, yields in the mid to long end of the curve were higher and demonstrated a steeper upward slope which favorably impacted earning asset yields. Management believes the net interest margin will continue to improve throughout 2026 given the effective execution of its strategy.

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Overall, in 2025, the average balance of total interest earning assets was higher than the full year of 2024 average, totaling $1.3 billion. Specifically, total loans averaged $1.061 billion in 2025 which was $23.7 million, or 2.3%, higher than the 2024 full year average. Short-term investments and bank deposits averaged $18.6 million in 2025 which was $14.7 million higher than the 2024 full year average. Total investment securities, including the available for sale, held to maturity, and trading portfolios, averaged $257.9 million in 2025 which was $4.4 million, or 1.7%, higher than the 2024 full year average. The increase in the average balance of total interest earning assets along with an improvement in the yield on earning assets, which increased from 5.18% to 5.35%, resulted in total interest income increasing by $4.8 million, or 7.3%, between years.

Total deposits, including non-interest bearing demand deposits, averaged $1.236 billion for the full year of 2025, which was $67.3 million, or 5.8%, higher than the $1.169 billion average for the full year of 2024. The 2025 full year average of short-term and FHLB borrowed funds was $55.6 million, which represented a decrease of $24.0 million, or 30.1%. Overall, the cost of total interest bearing liabilities decreased from 2.77% to 2.53% which resulted in total interest expense decreasing by $1.4 million, or 4.5%, between years.

COMPONENT CHANGES IN NET INTEREST INCOME: 2025 VERSUS 2024. Regarding the separate components of net interest income, the Company’s total interest income in 2025 increased by $4.8 million, or 7.3%, when compared to 2024. Overall, the 2025 full year average balance of total interest earning assets increased over last year’s full year average by $42.8 million, or 3.3%, as there were increased levels of average total loans, short-term investments and bank deposits, and total investment securities. In addition, interest income was favorably impacted by an increase in the earning asset yield which improved by 17-basis points to 5.35%. All of the categories within the earning asset base, particularly loans, demonstrated an interest income increase between years. Specifically, the average total loan portfolio yield increased by 15-basis points from 5.47% to 5.62% in 2025. The Company’s total interest expense in 2025 decreased by $1.4 million, or 4.5%, when compared to 2024. Overall, the 2025 full year average balance of total interest bearing liabilities increased over 2024’s average by $47.4 million, or 4.3%, as there was an increased level of average interest bearing deposits which was partially offset by a lower level of average short-term and FHLB borrowings. Despite the increase in the average balance of total interest bearing liabilities, the cost associated with these interest bearing liabilities decreased by 24-basis points to 2.53% resulting in the decline in total interest expense.

Total average loans for the full year of 2025 grew from the full year average of 2024 by $23.7 million, or 2.3%, due to consistent new loan funding opportunities. However, in the second half of 2025, commercial real estate (CRE) loan payoff activity exceeded originations and resulted in a $35.4 million, or 3.3%, decrease in total loans and loans held for sale since December 31, 2024. Overall, total loans continue to be well above the $1.0 billion threshold, averaging $1.061 billion for 2025. Total loan interest income improved in 2025 compared to 2024 due to the more favorable interest rate environment, and a portion of CRE loans, that were booked during the COVID pandemic when interest rates were low, repricing upward during 2025. Also favorably impacting loan interest income was a higher level of loan fee income primarily due to prepayment fees collected on the increased early CRE payoff activity experienced during 2025. Total 2025 full year loan fee income was $553,000, or 58.8%, higher when compared to the full year of 2024. These favorable items resulted in 2025 total loan interest income improving by $3.4 million, or 6.0%, when compared to 2024.

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Total investment securities, including the available for sale, held to maturity, and trading portfolios, averaged $257.9 million for 2025, which was $4.4 million, or 1.7%, higher than the $253.5 million average for 2024. Additionally, average short-term investments and bank deposits were sharply higher by $14.7 million in 2025. These increases reflect the higher level of loan prepayment activity, as well as the Company’s liquidity position strengthening during 2025 due to deposit growth. Therefore, more funds were available to invest in the securities portfolios during a time when security yields improved, making purchases more attractive. As a result, the securities portfolios grew by $36.3 million, or 16.5%, 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 fund deposits. In addition, during 2025, the Company established a $7.0 million investment trading account. The higher balances and improved yields for new securities purchases caused interest income from investment securities and trading securities to increase by $872,000, or 9.2%, for the full year of 2025 compared to last year. Overall, the full year average balance of total interest earning assets increased from last year’s full year average by $42.8 million, or 3.3%, while total interest income increased by $4.8 million, or 7.3%, from the 2024 year.

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On the liability side of the balance sheet, total average deposits for the full year of 2025 were $67.3 million, or 5.8%, higher when compared to the full year average of 2024 due to the Company’s successful business development efforts. Additionally, the Company’s core deposit base continues to demonstrate the strength and stability that it has for

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many years due to customer loyalty and confidence in AmeriServ Financial Bank. Specifically, total deposits grew during 2025 by $47.1 million, or 3.9%, on an end of period basis since December 31, 2024. 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 83.8% in the fourth 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.

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Total interest expense favorably decreased by $1.4 million, or 4.5%, for 2025 when compared to 2024. Deposit interest expense increased slightly by $23,000, or 0.1%, for the full year of 2025 despite total average interest bearing deposits growing significantly by $71.7 million, or 7.2%, compared to the full year of 2024. The small increase in deposit interest expense reflects the benefit of the Federal Reserve easing monetary policy during the final four months of 2024 and the latter portion of 2025. This reduction in interest bearing deposit costs contributed to the previously mentioned improvement in the net interest margin. The Federal Reserve’s action to ease monetary policy by another 75-basis points at their final three Federal Open Market Committee meetings in 2025 is anticipated to continue to have a favorable impact on interest bearing deposit costs as we move into 2026. Overall, total deposit cost (including the benefit of non-interest bearing demand deposits) averaged 2.06% for the full year of 2025, which is a 12-basis point improvement from the full year of 2024.

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Total borrowings interest expense declined by $1.4 million, or 27.7%, for the full year of 2025 when compared to the same period of 2024. The Company’s utilization of overnight borrowed funds for the full year of 2025 was significantly lower than it was for the full year of 2024, resulting in the full year average decreasing by $22.4 million, or 80.1%, 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 as well as their 2025 action to ease monetary policy by an additional 75-basis points which had an immediate and favorable impact on the cost of overnight borrowed funds.

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The table that follows provides an analysis of net interest income on a tax-equivalent basis (non-GAAP) 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) 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) net interest margin (net interest income as a percentage of average total interest earning assets). For purposes of this table, loan balances include non-accrual loans, and interest income on loans includes loan fees or amortization of such fees which have been deferred. Regulatory stock is included within available for sale investment securities for this analysis. Additionally, a tax rate of 21% was used to compute tax-equivalent interest income and yields (non-GAAP). The tax equivalent adjustments to interest income on loans, municipal securities, and trading securities for the years ended December 31, 2025 and 2024 was $75,000 and $26,000, 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.

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31,

​ ​ ​ ​ ​ INTEREST ​ ​ ​ ​ ​ ​ INTEREST ​ ​ ​

​ ​ AVERAGE ​ INCOME/ ​ YIELD/ ​ AVERAGE ​ INCOME/ ​ YIELD/ ​

​ ​ (IN THOUSANDS, EXCEPT PERCENTAGES)

Interest earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Trading securities ​ ​ 3,923 ​ ​ 169 ​ 4.28 ​ ​ — ​ ​ — ​ — ​

Non-interest earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Cash and due from banks ​ 15,305 ​ ​ ​ ​ 14,333 ​ ​ ​ ​

Premises and equipment ​ 17,672 ​ ​ ​ ​ 18,610 ​ ​ ​ ​

Allowance for credit losses ​ (14,868) ​ ​ ​ ​ (15,310) ​ ​ ​ ​

Interest bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Non-interest bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other liabilities ​ 10,970 ​ ​ ​ ​ ​ 12,973 ​ ​ ​ ​ ​

Interest rate spread ​ ​ ​ ​ ​ 2.82 ​ ​ ​ ​ ​ 2.41 ​

Tax-equivalent adjustment ​ ​ ​ (75) ​ ​ ​ ​ ​ (26) ​ ​ ​

Net interest income (GAAP) ​ ​ ​ ​ $ 42,263 ​ ​ ​ ​ ​ $ 36,048 ​ ​ ​

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Net interest income may also be analyzed by segregating the volume and rate components of interest income and interest expense. The table below sets forth an analysis of volume and rate changes in net interest income on a tax-equivalent basis. For purposes of this table, changes in interest income and interest expense are allocated to volume and rate categories based upon the respective percentage changes in average balances and average rates. Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated proportionately to changes in volume and changes in rate.

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ INCREASE (DECREASE) ​ INCREASE (DECREASE)

​ ​ DUE TO CHANGE IN: ​ DUE TO CHANGE IN:

​ ​ AVERAGE ​ ​ ​ ​ ​ ​ ​ AVERAGE ​ ​ ​ ​ ​ ​

​ ​ ​ ​ VOLUME ​ ​ ​ RATE ​ ​ ​ TOTAL ​ ​ ​ VOLUME ​ ​ ​ RATE ​ ​ ​ TOTAL

​ ​ (IN THOUSANDS)

INTEREST EARNED ON: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Short-term investments and bank deposits ​ 680 ​ (104) ​ 576 ​ (5) ​ 4 ​ (1)

Investment securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Trading securities ​ ​ 169 ​ ​ — ​ ​ 169 ​ ​ — ​ ​ — ​ ​ —

INTEREST PAID ON: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Savings deposits ​ 2 ​ — ​ 2 ​ (7) ​ — ​ (7)

Lease liabilities ​ (7) ​ (1) ​ (8) ​ 30 ​ (19) ​ 11

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LOAN QUALITY. The Company’s written lending policies require underwriting, loan documentation, and credit analysis standards to be met prior to funding any loan. After the loan has been approved and funded, continued periodic credit review is required. At a minimum, credit reviews are mandatory for all commercial and commercial mortgage loan relationships with aggregate balances in excess of $1,000,000 within a 12-month period. The Company’s commercial relationship managers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. Risk ratings are assigned by the account officer but require independent review and rating concurrence from the Company’s internal Loan Review Department.

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In addition to loan monitoring by the account officer and Loan Review Department, the Company also requires presentation of all credits rated pass-6 with aggregate balances greater than $2,000,000, all credits rated special mention or substandard with aggregate balances greater than $250,000, and all credits rated doubtful with aggregate balances greater than $100,000 on an individual basis to the Company’s Loan Loss Reserve Committee on a quarterly basis. Additionally, the Asset Quality Task Force, which is a group comprised of senior level personnel, meets monthly to monitor the status of problem loans.

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​ ​ AT DECEMBER 31,

​ ​ (IN THOUSANDS,

​ ​ EXCEPT PERCENTAGES)

Total accruing loan delinquency ​ $ 2,329 ​ $ 4,475 ​

Non-performing loans, as a percentage of total assets (1) ​ 0.57 ​ 0.77 ​

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The decrease in accruing loan delinquency since year-end 2024 was attributable to a lower level of delinquency within the commercial, commercial real estate, and consumer loan segments which was partially offset by a modest increase in residential mortgage loan delinquency. Specifically, two delinquent loans from one commercial borrower relationship were transferred to non-accrual status during 2025 which significantly contributed to the decrease in accruing loan delinquency. Non-performing loans decreased from $10.9 million, or 1.02% of total loans, at December 31, 2024 to $8.3 million, or 0.80% of total loans, at December 31, 2025. The decrease in non-performing loans was due primarily to the transfer of two CRE loans and three C&I loans from one borrower relationship into non-accrual status which was more than offset by the pay-off and final charge-off of a CRE loan secured by a mixed use commercial real estate property. Classified loans decreased $12.2 million, or 52.0%, from December 31, 2024 and totaled $11.3 million at December 31, 2025. Various charge-off and paydown activity impacted classified loan balances during 2025 including the aforementioned pay-off and final charge-off of a CRE loan.

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 December 31, 2025, the 25 largest credits represented 24.6% of total loans outstanding, which represented a slight increase from December 31, 2024 when it was 24.0%.

ALLOWANCE AND PROVISION FOR CREDIT LOSSES. ASC 326, Financial Instruments - Credit Losses, 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. The Company believes this is a critical accounting policy since it involves significant estimates and judgments.

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The following table sets forth the allowance for credit losses and certain ratios for the periods ended.

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​ ​ AT DECEMBER 31, ​

​ ​ (IN THOUSANDS, EXCEPT PERCENTAGES)

Allowance for credit losses - loans ​ $ 13,128 ​ $ 13,912 ​

total loans, net of unearned income ​ 1.27 % 1.30 %

Allowance for credit losses - securities ​ $ 90 ​ $ 449 ​

Allowance for credit losses - unfunded loan commitments ​ ​ 337 ​ 966 ​

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For the full year of 2025, the Company recognized a $4.1 million provision for credit losses after recognizing an $884,000 provision in 2024, resulting in an unfavorable increase of $3.2 million. The significant increase in the provision for credit losses for 2025 primarily related to a $3.1 million charge-off during the year that was necessary to resolve the Company’s largest problem CRE loan.

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The allowance for loan credit losses declined since December 31, 2024 by $784,000, or 5.6%, to $13.1 million at December 31, 2025. Overall, the Company continued to maintain solid coverage of both total loans and non-performing loans as the allowance for loan credit losses provided 158% coverage of non-performing loans and 1.27% of total loans at December 31, 2025. This compares to allowance coverage of non-performing loans of 127% and total loans of 1.30% as of December 31, 2024.

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The following table sets forth changes specific to the allowance for loan credit losses and certain ratios for the periods ended.

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​ ​ YEAR ENDED DECEMBER 31,

​ ​ (IN THOUSANDS, EXCEPT RATIOS AND PERCENTAGES)

Loans and loans held for sale, net of unearned income: ​ ​ ​ ​ ​

Average for the year: ​ ​ ​ ​ ​ ​ ​

Commercial real estate (owner occupied) ​ $ 87,747 ​ $ 84,705 ​

Commercial real estate (non-owner occupied) - retail ​ ​ 178,628 ​ ​ 172,347 ​

Other commercial real estate (non-owner occupied) ​ ​ 232,296 ​ ​ 235,125 ​

As a percentage of average loans: ​ ​ ​ ​ ​

Net charge-offs (recoveries): ​ ​ ​ ​ ​ ​

Commercial real estate (owner occupied) ​ ​ (0.03) % ​ (0.03) %

Commercial and industrial ​ ​ 1.20 ​ ​ 0.26 ​

Commercial real estate (non-owner occupied) - retail ​ ​ — ​ ​ — ​

Commercial real estate (non-owner occupied) - multi-family ​ ​ — ​ ​ — ​

Other commercial real estate (non-owner occupied) ​ ​ 1.35 ​ ​ 0.66 ​

Residential mortgages ​ ​ — ​ ​ (0.01) ​

Total loans and loans held for sale, net of unearned income ​ ​ 0.46 ​ ​ 0.19 ​

Provision for credit losses ​ 0.39 ​ 0.08 ​

Allowance, as a multiple of net charge-offs ​ 2.68x ​ 6.88x ​

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The following schedule sets forth the allocation of the allowance for loan credit losses among the various loan categories. The entire allowance for loan credit losses is available to absorb future losses in any loan category.

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ AT DECEMBER 31,

​ ​ ​ ​ ​ PERCENT ​ ​ ​ ​ PERCENT ​

​ ​ ​ ​ ​ OF LOANS ​ ​ ​ ​ OF LOANS ​

​ ​ ​ ​ IN EACH ​ ​ ​ IN EACH ​

​ ​ ​ ​ CATEGORY ​ ​ ​ ​ CATEGORY ​

​ ​ ​ ​ ​ TO TOTAL ​ ​ ​ TO TOTAL ​

​ ​ ​ ​ AMOUNT ​ ​ ​ LOANS ​ ​ ​ AMOUNT ​ ​ ​ LOANS ​ ​ ​

​ (IN THOUSANDS, EXCEPT PERCENTAGES)

Commercial real estate (owner occupied) ​ ​ ​ $ 319 ​ 8.3 % $ 398 ​ 8.1 %

Commercial (owner occupied real estate and other) ​ ​ — ​ — ​ ​ — ​ — ​

Other commercial real estate (non-owner occupied) ​ 3,725 21.1 ​ 3,451 21.9 ​

Allocation to general risk ​ — — ​ — — ​

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The disproportionately higher allocations for commercial loans, including commercial loans secured by owner occupied real estate and commercial & industrial loans, and commercial loans secured by non-owner occupied real estate, reflect the increased credit risk associated with those types of lending, the Company’s historical loss experience in these categories, and other qualitative factors.

The allowance for credit losses on the investment securities portfolio was comprised of no reserve on available for sale securities and $90,000 on held to maturity securities as of December 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 decrease reflects the charge-off of an impaired corporate security within the available for sale portfolio during 2025 for which a reserve

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was previously established. Finally, the decrease in the allowance for credit losses on unfunded commitments since year-end 2024 resulted primarily from an adjustment to the calculation method for utilization rates used to determine the amount expected to be funded.

Based on the Company’s current allowance for credit losses methodology and the related assessment of the inherent risk factors contained within the Company’s investment securities and loan portfolios, we believe that the allowance for credit losses was adequate at December 31, 2025 to cover losses within the Company’s investment securities and loan portfolios.

NON-INTEREST INCOME. Non-interest income for 2025 totaled $17.0 million, a decrease of $986,000, or 5.5%, from 2024. Factors contributing to the lower level of non-interest income in 2025 included:

Non-interest income for 2024 totaled $18.0 million, an increase of $1.6 million, or 9.7%, from 2023. Factors contributing to the higher level of non-interest income in 2024 included:

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NON-INTEREST EXPENSE. Non-interest expense for 2025 totaled $48.3 million and decreased by $404,000, or 0.8%, from 2024. Factors contributing to the lower non-interest expense in 2025 included:

Non-interest expense for 2024 totaled $48.7 million and decreased by $628,000, or 1.3%, from 2023. Factors contributing to the lower non-interest expense in 2024 included:

INCOME TAX EXPENSE. The Company recorded income tax expense of $1.2 million, or an effective tax rate of 17.4%, in 2025 compared to income tax expense of $798,000, or an effective tax rate of 18.1%, in 2024. The lower effective tax rate in 2025 resulted from the additional tax-free income from BOLI. The Company’s deferred tax liability was $1.6 million at December 31, 2025 compared to a deferred tax asset of $1.4 million at December 31, 2024, resulting

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primarily from the change in the allowance for credit losses, the fair value of the available for sale investment securities portfolio, and the pension liability.

SEGMENT REPORTING. The chief operating decision maker of the Company is our President and Chief Executive Officer (CEO). The CEO has authority over all divisions within the Company. While the CEO monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Additionally, the Company’s Board of Directors evaluates performance on a macro level basis and reviews financial reports that describe the consolidated operating performance of all the divisions of the Company. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

BALANCE SHEET. The Company’s total consolidated assets of $1.454 billion at December 31, 2025 increased by $31.5 million, or 2.2%, from the $1.422 billion level at December 31, 2024. This change was related primarily to higher levels of cash and cash equivalents and investment securities which were partially offset by reduced levels of loans and loans held for sale and other real estate owned (OREO) and repossessed assets. Investment securities, including available for sale, held to maturity, and trading, increased by $36.3 million, or 16.5%, as the Company’s liquidity position strengthened during 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 $33.1 million, or 186.8%. Loans and loans held for sale decreased by $35.4 million, or 3.3%, due to payoff activity exceeding new loan originations. OREO and repossessed assets decreased $1.5 million, or 87.5%, due primarily to the sale of a foreclosed office property during the first quarter of 2025.

Total deposits increased by $47.1 million, or 3.9%, during 2025. Management believes this demonstrates customer confidence as well as the strength and loyalty of the Company’s core deposit base along with successful business development efforts. As of December 31, 2025, the 25 largest depositors represented 28.5% of total deposits, which is an increase from December 31, 2024 when it was 27.6%. As of December 31, 2025 and 2024, the estimated amount of uninsured deposits was $476.2 million and $435.7 million, respectively. The estimate of uninsured deposits was done at a 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 with investment securities or FHLB letters of credit to protect these depositor funds. Total short-term and FHLB borrowings were reduced by $26.1 million, or 36.9%, since year-end 2024 as a result of the higher level of deposits. Specifically, short-term borrowings decreased $14.6 million, while FHLB term advances decreased $11.4 million, or 20.4%, in 2025.

The Company’s total shareholders’ equity increased by $12.1 million, or 11.2%, since year-end 2024. Capital was increased during 2025 by the Company’s $5.6 million of net income and the positive impact on accumulated other comprehensive loss from the revaluation of the pension obligation totaling $2.2 million, the increased market value of the available for sale investment securities portfolio totaling $5.5 million, and the fair value adjustment on the interest rate hedges totaling $41,000. In addition, capital was increased by $691,000 as a result of the common stock issuable under the amended and restated consulting agreement with SB Value Partners (as disclosed in the Company’s Current Report on Form 8-K filed on January 6, 2026). These increases were partially offset by the $2.0 million common stock cash dividend. The Company returned approximately 35.3% of its 2025 earnings to its shareholders through the quarterly common stock cash dividend.

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The Bank continues to be considered well capitalized for regulatory purposes with a total risk based capital ratio of 12.88% and an asset leverage ratio of 9.32% at December 31, 2025. The Company’s book value per common share was $7.22 while its tangible book value(1) per common share was $6.39 at December 31, 2025. The increase in the Company’s book value and tangible book value per share in 2025 reflected the favorable adjustment for both the unrealized loss on available for sale securities and the Company’s defined benefit pension plan along with the Company’s improved earnings. In addition, the Company’s equity to assets ratio was 8.21% and its tangible common equity to tangible assets ratio(1) was 7.34% at December 31, 2025.

(1) Non-GAAP financial information, see “Reconciliation of Non-GAAP Financial Measures” later in this MD&A.

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LIQUIDITY. The Company’s liquidity position strengthened during 2025 due to a higher level of loan prepayment activity as well as deposit growth. Specifically, total average deposits for the full year of 2025 were $67.3 million, or 5.8%, higher compared to the 2024 full year average. The increase was reflective of the Company’s successful business

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development efforts. The Company’s core deposit base continued to demonstrate the strength and stability that it has for many years. Total deposits grew during 2025 by $47.1 million, or 3.9%, on an end of period basis since December 31, 2024, demonstrating customer loyalty and confidence in AmeriServ Financial Bank. The Company does not utilize brokered deposits as a funding source. In addition to its strong, 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. Overall, 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.

Further demonstrating the strength of the Company’s liquidity position, average short-term investments grew during 2025 compared to last year, increasing by $14.7 million, or 381.9%. Advances from the FHLB averaged $50.0 million in 2025 which was $1.6 million, or 3.0%, lower than the $51.6 million average in 2024. 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 during 2025 was lower than the 2024 level. Short-term borrowings averaged $5.6 million in 2025 after averaging $28.0 million in 2024. 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 in 2025 more attractive. In addition, loan pipelines are currently at a typical level. Total average loans in 2025 were higher than the 2024 average by $23.7 million, or 2.3%. We strive to operate our loan to deposit ratio in a range of 80% to 100%. The Company’s loan to deposit ratio averaged 85.9% in 2025, which indicates that the Company has ample capacity to grow its loan portfolio and is well positioned to support its customers and community during times of economic volatility. We are also well positioned to service our existing loan pipeline and grow our loan to deposit ratio while remaining within our guideline parameters.

Liquidity can also be analyzed by utilizing the Consolidated Statements of Cash Flows. Cash and cash equivalents increased by $33.1 million from December 31, 2024 to $50.9 million at December 31, 2025, due to $18.9 million of net cash provided by financing activities, $11.1 million of net cash provided by investing activities, and $3.2 million of net cash provided by operating activities. Within investing activities, cash advanced for new loans originated totaled $146.0 million while cash received from loan principal payments was $176.5 million leading to a net decrease in loans of $30.5 million. Within financing activities, total short-term borrowings decreased by $14.6 million, total borrowings on advances from FHLB decreased by $11.4 million while total deposits increased by $47.1 million.

The holding company had $5.4 million of cash, short-term investments, and investment securities at December 31, 2025, which represented a $1.4 million decrease from the holding company’s cash position since December 31, 2024. Dividend payments from our subsidiary provided ongoing cash to the holding company. At December 31, 2025, our subsidiary Bank had $4.3 million of cash available for immediate dividends to the holding company under applicable regulatory formulas. Additionally, during 2025, the holding company established a $3 million line of credit with an unrelated financial institution which can be used for general corporate purposes. There were no borrowings under the line at December 31, 2025. Overall, we believe that the holding company has sufficient liquidity to meet its subordinated debt interest payments and its dividend payout level with respect to its common stock.

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 $50.9 million and $17.7 million at December 31, 2025 and 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.

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 December 31, 2025, the Company had $311 million of overnight borrowing availability at the FHLB, $41 million of short-term borrowing availability at

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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.

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 11.70%, the tier 1 capital ratio was 11.70%, and the total capital ratio was 12.88% at December 31, 2025. The Bank’s tier 1 leverage ratio was 9.32% at December 31, 2025. We anticipate that we will maintain our strong capital ratios throughout 2026.

Capital generated from earnings will be utilized to pay the common stock cash dividend and will support controlled balance sheet growth. 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 352% of regulatory capital at December 31, 2025. It should be noted that this ratio decreased from 379% at December 31, 2024 due to contraction in non-owner occupied commercial real estate loan balances combined with an increase in total regulatory capital between years.

Our focus is on preserving capital to support customer lending and allow the Company to take advantage of business opportunities as they arise. The Company’s Board of Directors expects to continue the common stock dividend at its current level of $0.03 per quarter given the Company’s strong capital position and projected earnings power. While the Company has frequently executed common stock buyback programs in the past, we presently do not have one in place. At December 31, 2025, the Company had approximately 16.5 million common shares outstanding.

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.

Under the Basel III capital standards, the minimum capital ratios are:

​ ​ ​ ​ ​ ​

​ ​ ​ ​ MINIMUM CAPITAL RATIO

​ ​ MINIMUM ​ PLUS CAPITAL

​ ​ ​ ​ CAPITAL RATIO ​ ​ ​ CONSERVATION BUFFER

Common equity tier 1 capital to risk-weighted assets ​ 4.5 % 7.0 %

Tier 1 capital to risk-weighted assets 6.0 8.5 ​

Total capital to risk-weighted assets 8.0 10.5 ​

Tier 1 capital to total average consolidated assets 4.0 N/A ​

​

INTEREST RATE SENSITIVITY. Asset/liability management involves managing the risks associated with changing interest rates and the resulting impact on the Company’s net interest income, net income and capital. The management and measurement of interest rate risk at the Company is performed by using the following tools: (i) simulation modeling, which analyzes the impact of interest rate changes on net interest income, net income and capital levels over specific future time periods. The simulation modeling forecasts earnings under a variety of scenarios that incorporate changes in the absolute level of interest rates, the shape of the yield curve, prepayments and changes in the volumes and rates of various loan and deposit categories. The simulation modeling incorporates assumptions about reinvestment and the repricing characteristics of certain assets and liabilities without stated contractual maturities; (ii) market value of portfolio equity sensitivity analysis; and (iii) static GAP analysis, which analyzes the extent to which interest rate sensitive assets and interest rate sensitive liabilities are matched at specific points in time. The overall interest rate risk position and strategies are reviewed by senior management and the Company’s Board of Directors on an ongoing basis.

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The following table presents a summary of the Company’s static GAP positions at December 31, 2025:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ OVER ​ OVER ​ ​ ​ ​ ​ ​

​ ​ ​ ​ 3 MONTHS 6 MONTHS ​ ​ ​ ​ ​ ​

​ ​ 3 MONTHS OR THROUGH THROUGH ​ OVER ​ ​ ​

​ (IN THOUSANDS, EXCEPT RATIOS AND PERCENTAGES)

RATE SENSITIVE ASSETS: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Regulatory stock ​ — ​ — ​ — ​ 5,946 ​ 5,946

Bank owned life insurance ​ — ​ — ​ — ​ 39,308 ​ 39,308

RATE SENSITIVE LIABILITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Non-interest bearing demand deposits ​ $ — ​ $ — ​ $ — ​ $ 159,198 ​ $ 159,198

INTEREST SENSITIVITY GAP: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Ratio of cumulative GAP to total assets ​ (4.63) % (1.75) % 0.63 % 3.44 % ​

​

When December 31, 2025 is compared to December 31, 2024, the Company’s cumulative GAP ratio through three months indicates that the Company’s balance sheet remained liability sensitive and demonstrated a slight decrease in the level of sensitivity. This liability sensitivity primarily resulted from a substantial increase in the level of interest bearing deposits which was tempered by a decrease in short-term borrowings and an increase in total rate sensitive assets. Specifically, the Company experienced a higher level of money market accounts and time deposits which more than offset a decline in the level of interest bearing demand deposits. In addition, the strengthening of the Company’s liquidity position during 2025 led to an increase in total rate sensitive assets as well as a decrease in short-term borrowings of $14.6 million from the prior year. The Company’s interest rate sensitivity position shifts from being liability sensitive to an asset sensitive position over three months and beyond as more of its rate sensitive assets begin to reprice. In particular, a portion of commercial real estate loans that were booked during the COVID pandemic when interest rates were significantly lower are repricing.

Management places primary emphasis on simulation modeling to manage and measure interest rate risk. The Company’s Asset/Liability Management Policy seeks to limit net interest income variability over the first twelve months of the forecast period to -5.0% and -7.5%, which include interest rate movements of 100 and 200 basis points, respectively. Additionally, the Company also uses market value sensitivity measures to further evaluate the balance sheet exposure to changes in interest rates. The Company monitors the trends in market value of portfolio equity sensitivity analysis on a quarterly basis.

The following table presents an analysis of the sensitivity inherent in the Company’s net interest income and market value of portfolio equity. The interest rate scenarios in the table compare the Company’s base forecast, which was prepared using a flat interest rate scenario, to scenarios that reflect immediate interest rate changes of 100 and 200 basis

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points. Each rate scenario contains unique prepayment and repricing assumptions that are applied to the Company’s existing balance sheet that was developed under the flat interest rate scenario.

​

​ ​ ​ ​ ​ ​

​

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 currently at a targeted range of 3.50% to 3.75% as the Federal Reserve took action during the third and fourth quarters of 2025 to ease monetary policy and decrease the target fed funds rate a total of 75-basis points.

The variability of net interest income was slightly negative in the upward rate scenarios as the Company was marginally more exposed to liabilities repricing upward to a greater extent than assets. Specifically, the cost of funds was immediately impacted when short-term national interest rates increased because certain deposit products and overnight borrowed funds move with the market. This was partially offset by the Company’s investment securities portfolio and the scheduled repricing of loans tied to an index, such as SOFR or prime. In addition 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. Regarding interest bearing liabilities, the Company will continue its disciplined approach to price its core deposit accounts in a controlled but competitive manner and control the amount of overnight borrowed funds. The variability of net interest income is negative in the downward rate scenarios at 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.

Within the investment securities portfolio at December 31, 2025, 72.0% of the portfolio was classified as available for sale and 28.0% as held to maturity. The available for sale classification provides management with greater flexibility to manage the securities portfolio to better achieve overall balance sheet rate sensitivity goals and provide liquidity if needed. The mark to market of the available for sale securities does inject more volatility in the book value of equity, but has no impact on regulatory capital. There were 204 available for sale securities that were in an unrealized loss position at December 31, 2025. These unrealized losses were primarily a result of increases in market yields from the time of purchase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, no provision for credit losses has been recorded for these securities. Management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value or mature. Furthermore, it is the Company’s intent to manage its long-term interest rate risk by continuing to sell a portion of newly originated fixed-rate 30-year mortgage loans into the secondary market (excluding construction and any jumbo loans). The Company sells 15-year fixed-rate mortgage loans into the secondary market as well, depending on market conditions. For the year ended December 31, 2025, 60.5% of all residential mortgage loan production was sold into the secondary market.

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The amount of loans outstanding by category as of December 31, 2025, which are due in (i) one year or less, (ii) more than one year through five years, (iii) more than five years through 15 years, and (iv) over 15 years, are shown in the following table.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ MORE ​ MORE ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ THAN ONE ​ THAN FIVE ​ ​ ​ ​ ​ ​

​ ​ ONE ​ YEAR ​ YEARS ​ ​ ​ ​ ​ ​

​ ​ YEAR OR ​ THROUGH ​ THROUGH ​ OVER 15 ​ TOTAL ​

​ ​ ​ ​ LESS ​ ​ ​ FIVE YEARS ​ ​ ​ 15 YEARS ​ YEARS ​ ​ ​ LOANS ​

​ (IN THOUSANDS, EXCEPT RATIOS) ​

Fixed-rate loans as a percentage of total loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 46.0 %

​

The loan maturity information was based upon original loan terms. In the ordinary course of business, loans maturing within one year may be renewed, in whole or in part, as to principal amount at interest rates prevailing at the date of renewal.

The following table summarizes the fixed-rate and floating-rate loans due in more than one year by portfolio segment.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ FIXED-RATE ​ FLOATING-RATE ​ ​ ​

​ ​ ​ ​ LOANS ​ ​ ​ LOANS ​ ​ ​ TOTAL

​ (IN THOUSANDS)

​

OFF BALANCE SHEET ARRANGEMENTS. The Company incurs off-balance sheet risks in the normal course of business in order to meet the financing needs of its customers. These risks derive from commitments to extend credit and standby letters of credit. Such commitments and standby letters of credit involve, to varying degrees, elements of credit risk. The Company’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. The Company had various outstanding commitments to extend credit approximating $239.9 million and standby letters of credit of $8.8 million as of December 31, 2025.

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The Company can also use various interest rate contracts, such as interest rate swaps, caps, and floors to help manage interest rate and market valuation risk exposure, which is incurred in normal recurrent banking activities. As of December 31, 2025, the Company had $60.8 million in the notional amount of interest rate swap assets outstanding, with a fair value of $2.6 million. Simultaneously, the Company had $60.8 million in the notional amount of interest rate swap liabilities outstanding, with a negative fair value of $2.6 million. The Company entered into a risk participation agreement (RPA) with the lead bank of a commercial real estate loan arrangement. As a participating bank, the Company guarantees the performance on a borrower-related interest rate swap contract. The notional amount of the RPA outstanding at December 31, 2025 was $4.9 million, with a negative fair value of $303,000. In addition, the Company has entered into three interest rate swaps with a total notional value of $70 million in order to hedge the interest rate risk associated with certain floating-rate time deposit accounts. At December 31, 2025, the hedges had a negative fair value of $118,000.

As of December 31, 2025 and 2024, municipal deposit letters of credit issued by the Federal Home Loan Bank of Pittsburgh on behalf of AmeriServ Financial Bank naming applicable municipalities as beneficiaries totaled $182.2 million and $174.4 million, respectively. The letters of credit serve as collateral, in place of pledged securities, for municipal deposits maintained at AmeriServ Financial Bank.

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.

The following table sets forth the calculation of the Company’s tangible common equity ratio and tangible book value per share at December 31, 2025 and 2024 (in thousands, except share and ratio data):

​ ​ ​ ​ ​ ​ ​

​ AT DECEMBER 31, ​

Tangible common equity ratio (non-GAAP) 7.34 % 6.64 %

Tangible book value per share (non-GAAP) $ 6.39 ​ $ 5.66 ​

​

CRITICAL ACCOUNTING POLICIES AND ESTIMATES. The accounting and reporting policies of the Company are in accordance with Generally Accepted Accounting Principles (GAAP) and conform to general practices within the banking industry. Accounting and reporting policies for the pension liability, allowance for credit losses (related to investment securities, loans, and unfunded commitments), and derivatives (interest rate swaps/hedges) are deemed critical because they involve the use of estimates and require significant management judgments. Application of assumptions different than those used by the Company could result in material changes in the Company’s financial position or results of operation.

ACCOUNT — Pension liability

BALANCE SHEET REFERENCE — Other assets

INCOME STATEMENT REFERENCE — Salaries and employee benefits and Other expense

DESCRIPTION

Pension costs and liabilities are dependent on assumptions used in calculating such amounts. These assumptions include discount rates, benefits earned, interest costs, expected return on plan assets, mortality rates, and other factors. In

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accordance with GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation of future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the Company’s pension obligations and future expense. Additionally, pension expense can also be impacted by settlement accounting charges if the amount of employee selected lump sum distributions exceed the total amount of service and interest component costs of the net periodic pension cost in a particular year. Our pension benefits are described further in Note 15 of the Notes to Consolidated Financial Statements.

ACCOUNT — Allowance for credit losses

BALANCE SHEET REFERENCE — Investment securities, net of allowance for credit losses, Allowance for credit losses – loans, Other liabilities

INCOME STATEMENT REFERENCE — Provision for credit losses

DESCRIPTION

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.

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

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.

The allowance for credit losses (ACL) is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible.

​

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.

The allowance for credit losses is calculated with the objective of maintaining reserve levels believed by management to be sufficient to absorb current expected credit losses. Management’s determination of the adequacy of the allowance is based on periodic evaluations of the credit portfolio and other relevant factors. However, this quarterly evaluation is inherently subjective as it requires material estimates. This process also considers economic conditions, for a reasonable and supportable forecast period of two years. All of these factors may be susceptible to significant change.

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To the extent actual outcomes differ from management estimates, additional provision for credit losses may be required that would adversely impact earnings in future periods.

Changes in the U3 U.S. Citizen Unemployment Rate (“Unemployment Rate”), which measures labor underutilization, could have a material impact on the model's estimation of the allowance. An immediate shock of approximately 60% to the December 31, 2025 Unemployment Rate would increase the model's total calculated allowance by approximately $2.8 million, or 21%, to $15.8 million as of December 31, 2025, assuming the remaining qualitative adjustments are kept at current levels. Additionally, a deterioration in the credit quality of the loan portfolio could also have a material impact on the model’s estimation of the allowance. Incorporating a severe shock to the qualitative adjustment related to Credit Quality into the Unemployment Rate Stress analysis, increases the model’s total calculated reserve by an additional 15%, or $1.9 million, to $17.8 million as of December 31, 2025, assuming the remaining qualitative adjustments are kept at current levels. While management's current evaluation of the allowance for credit losses indicates that the allowance is appropriate, the allowance may need to be increased under adversely different conditions or assumptions. Additionally, changes in those factors and inputs may not occur at the same rate and inputs may be directionally inconsistent, such that improvements in one factor may offset deterioration in another.

​

The Company estimates expected credit losses over the contractual period in which it is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

ACCOUNT — Derivatives (interest rate swaps/hedges)

BALANCE SHEET REFERENCE — Other assets and Other liabilities

INCOME STATEMENT REFERENCE — Other income

DESCRIPTION

The Company periodically enters into derivative instruments to meet the financing, interest rate and equity risk management needs of its customers or the Bank.

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

To accommodate the needs of our customers and support the Company’s asset/liability positioning, we may enter into interest rate swap agreements with customers and a large financial institution that specializes in these types of transactions. The Company enters into offsetting positions to minimize interest rate and equity risk to the Company. These derivative financial instruments are reported at fair value with any resulting gain or loss recorded in current period earnings in amounts that offset. These instruments and their offsetting positions are recorded in other assets and other liabilities on the Consolidated Balance Sheets.

FORWARD LOOKING STATEMENTS

THE STRATEGIC FOCUS:

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:

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This Form 10-K 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-K, 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-K. 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.

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

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substitute competitors’ products and services for those of the Company and vice versa; (x) changes in consumer spending and savings habits; (xi) unanticipated regulatory or judicial proceedings; (xii) the ability to attract new or retain existing deposits or to retain or grow loans, including growth from unfunded closed loans; (xiii) the ability to generate future revenue growth or to control future growth in non-interest expense, including, but not limited to, those related to technological changes, including changes regarding artificial intelligence and cybersecurity, changes affecting oversight of the financial services industry, and changes intended to manage or mitigate climate and related environmental risks; (xiv) the impact of failure in, or breach of, our operational or security systems or those of third parties with whom we do business, including as a result of cyberattacks or an increase in the incidence of fraud, illegal payments, security breaches or other illegal acts impacting us or our customers; (xv) unanticipated effects to our banking platform, including risks and unanticipated costs related to a core system migration; and (xvi) other external developments which could materially impact the Company’s operational and financial performance.

The foregoing list of important factors is not exclusive, and neither such list, nor any forward-looking statement takes into account the impact that any future acquisition may have on the Company and on any such forward-looking statement.

​

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk identification and management are essential elements for the successful management of the Company. In the normal course of business, the Company is subject to various types of risk, including interest rate, credit, and liquidity risk. The Company seeks to identify, manage and monitor these risks with policies, procedures, and various levels of managerial and Board oversight. The Company’s objective is to optimize profitability while managing and monitoring risk within Board approved policy limits.

Interest rate risk is the sensitivity of net interest income and the market value of portfolio equity to the magnitude, direction, and frequency of changes in interest rates. Interest rate risk results from various repricing frequencies and the maturity structure of assets, liabilities, and hedges. The Company uses its Asset/Liability Management Policy and Hedging Policy to control and manage interest rate risk. For information regarding the effect of changing interest rates on the Company’s net interest income and market value of its portfolio equity, see “Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations — Interest Rate Sensitivity.”

Liquidity risk represents the inability to generate cash or otherwise obtain funds at reasonable rates to satisfy commitments to borrowers, as well as the obligations to depositors, debtholders and to fund operating expenses. The Company uses its Asset/Liability Management Policy and Contingency Funding Plan to control and manage liquidity risk. See “Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations — Liquidity.”

Credit risk represents the possibility that a customer may not perform in accordance with contractual terms. Credit risk results from extending credit to customers, purchasing securities, and entering into certain off-balance sheet loan funding commitments. The Company’s primary credit risk occurs in the loan portfolio and to a lesser extent in the corporate and municipal portions of the investment portfolio. The Company uses its Credit Policy and disciplined approach to evaluating the adequacy of the allowance for credit losses to control and manage credit risk. The Company’s Investment Policy and Hedging Policy strictly limit the amount of credit risk that may be assumed in the investment portfolio and through hedging activities.

For information regarding the market risk of the Company’s financial instruments, see “Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations — Interest Rate Sensitivity.” The Company’s principal market risk exposure is to interest rates.

​

​

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ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AMERISERV FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

​

​ ​ ​ ​ ​ ​ ​

​ ​ AT DECEMBER 31,

​ ​ (IN THOUSANDS,

​ ​ EXCEPT SHARE DATA)

ASSETS ​ ​ ​ ​

Cash and due from depository institutions ​ $ 11,473 ​ $ 13,891

Interest bearing deposits and short-term investments ​ 39,418 ​ 3,855

Investment securities, net of allowance for credit losses: ​ ​ ​ ​

Trading securities ​ ​ 7,253 ​ ​ —

Loans held for sale ​ 241 ​ 460

Less: Allowance for credit losses ​ 13,128 ​ 13,912

Premises and equipment: ​ ​ ​ ​

Operating lease right-of-use asset ​ ​ 1,395 ​ ​ 1,550

Financing lease right-of-use asset ​ ​ 2,106 ​ ​ 2,331

Other premises and equipment, net ​ ​ 13,929 ​ ​ 14,228

Accrued interest income receivable ​ 5,557 ​ 5,486

Intangible assets: ​ ​ ​ ​

Core deposit intangible ​ 56 ​ 77

Net deferred tax asset ​ — ​ 1,412

Federal Home Loan Bank stock ​ 3,785 ​ 4,759

Federal Reserve Bank stock ​ 2,161 ​ 2,125

Other real estate owned and repossessed assets ​ 216 ​ 1,724

LIABILITIES ​ ​ ​ ​ ​ ​

Short-term borrowings ​ — ​ 14,642

Advances from Federal Home Loan Bank ​ 44,615 ​ 56,058

Operating lease liabilities ​ ​ 1,426 ​ ​ 1,572

Financing lease liabilities ​ ​ 2,501 ​ ​ 2,689

Net deferred tax liability ​ 1,636 ​ —

SHAREHOLDERS' EQUITY ​ ​ ​ ​

Accumulated other comprehensive loss ​ (7,349) ​ (15,083)

​

Seeaccompanyingnotestoconsolidatedfinancialstatements.

​

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AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

​

​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31,

​ ​ (IN THOUSANDS,

​ ​ EXCEPT PER SHARE DATA)

INTEREST INCOME ​ ​ ​ ​

Interest and fees on loans ​ ​ ​ ​

Interest bearing deposits and short-term investments ​ 826 ​ 250

Investment securities: ​ ​ ​ ​

Trading securities ​ ​ 144 ​ ​ —

INTEREST EXPENSE ​ ​ ​ ​

Advances from Federal Home Loan Bank ​ 2,200 ​ 2,265

Financing lease liabilities ​ ​ 100 ​ ​ 108

Provision for credit losses ​ 4,120 ​ 884

Net Interest Income after Provision for Credit Losses ​ 38,143 ​ 35,164

NON-INTEREST INCOME ​ ​ ​ ​

Service charges on deposit accounts ​ 1,145 ​ 1,188

Mortgage banking revenue ​ 184 ​ 304

Trading securities revenue ​ ​ 118 ​ ​ —

Bank owned life insurance ​ 1,284 ​ 1,067

NON-INTEREST EXPENSE ​ ​ ​ ​

Data processing and IT expense ​ ​ 4,953 ​ ​ 4,815

Supplies, postage and freight ​ 701 ​ 670

Miscellaneous taxes and insurance ​ 1,446 ​ 1,308

Federal deposit insurance expense ​ 987 ​ 1,021

​ ​ ​ ​ ​ ​ ​

Provision for income taxes ​ ​ 1,184 ​ ​ 798

​

​

​

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AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

​

​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31,

​ ​ (IN THOUSANDS,

​ ​ EXCEPT PER SHARE DATA)

PER COMMON SHARE DATA: ​ ​ ​ ​

Basic: ​ ​ ​ ​

Average number of shares outstanding ​ ​ 16,520 ​ ​ 16,802

Diluted: ​ ​ ​ ​ ​ ​

Average number of shares outstanding ​ ​ 16,530 ​ ​ 16,802

​

Seeaccompanyingnotestoconsolidatedfinancialstatements.

​

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AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

​

​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31,

​ ​ (IN THOUSANDS)

COMPREHENSIVE INCOME ​ ​ ​ ​

Other comprehensive income ​ ​ ​ ​

Pension obligation change for defined benefit plan ​ 2,804 ​ 5,415

Fair value change for interest rate hedge ​ 80 ​ 962

Income tax effect ​ (17) ​ (202)

Income tax effect ​ ​ 6 ​ ​ 144

Other comprehensive income ​ 7,734 ​ 4,893

​

See accompanying notes to consolidated financial statements.

​

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AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31, 2025

​ ​ (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Net income ​ — ​ — ​ — ​ ​ 5,612 ​ — ​ 5,612

Common stock issuable (216,500 shares) ​ 2 ​ — ​ 689 ​ ​ — ​ — ​ 691

Other comprehensive income ​ — ​ — ​ — ​ ​ — ​ 7,734 ​ 7,734

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31, 2024

​ ​ (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Net income ​ — ​ — ​ — ​ ​ 3,601 ​ — ​ 3,601

Treasury stock purchased (628,003 shares) ​ — ​ (1,511) ​ — ​ ​ — ​ — ​ (1,511)

Stock option expense ​ — ​ — ​ 8 ​ ​ — ​ — ​ 8

Other comprehensive income ​ — ​ — ​ — ​ ​ — ​ 4,893 ​ 4,893

​

​

See accompanying notes to consolidated financial statements.

​

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AMERISERV FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

​

​ ​ ​ ​ ​ ​ ​

​ ​ YEAR ENDED DECEMBER 31,

​ (IN THOUSANDS)

OPERATING ACTIVITIES ​ ​ ​ ​ ​ ​

Provision for credit losses ​ 4,120 ​ 884

Depreciation and amortization expense ​ 2,077 ​ 2,059

Amortization expense of core deposit intangible ​ 21 ​ 24

Amortization of fair value adjustment on acquired time deposits ​ (1) ​ (8)

Net (accretion) amortization of investment securities ​ (98) ​ 76

Net amortization of deferred loan fees ​ (234) ​ (132)

Net gains on loans held for sale ​ (116) ​ (174)

Origination of mortgage loans held for sale ​ (7,358) ​ (11,426)

Sales of mortgage loans held for sale ​ 7,693 ​ 11,270

(Increase) decrease in accrued interest receivable ​ (71) ​ 43

Increase (decrease) in accrued interest payable ​ 552 ​ (335)

Earnings on bank owned life insurance ​ (1,284) ​ (1,067)

Deferred income taxes ​ 992 ​ (34)

Stock compensation expense ​ — ​ 8

Common stock issuable ​ 691 ​ —

Net change in trading securities ​ ​ (7,253) ​ ​ —

Net change in operating leases ​ ​ (178) ​ ​ (169)

Net cash provided by operating activities ​ 3,187 ​ 2,687

INVESTING ACTIVITIES ​ ​ ​ ​

Purchase of investment securities — available for sale ​ (54,649) ​ (16,353)

Purchase of investment securities — held to maturity ​ (15,743) ​ (6,449)

Proceeds from sale of investment securities — available for sale ​ — ​ 935

Proceeds from redemption of regulatory stock ​ 13,282 ​ 15,665

Net decrease (increase) in loans ​ 30,515 ​ (33,499)

Purchase of premises and equipment ​ (1,124) ​ (1,711)

Proceeds from life insurance policies ​ 1,911 ​ 711

Net cash provided by (used in) investing activities ​ 11,070 ​ (23,099)

FINANCING ACTIVITIES ​ ​ ​ ​

Net decrease in other short-term borrowings ​ (14,642) ​ (26,309)

Principal borrowings on advances from Federal Home Loan Bank ​ 1,908 ​ 28,703

Principal payments on financing lease liabilities ​ ​ (188) ​ ​ (168)

Stock options exercised ​ 9 ​ —

Purchases of treasury stock ​ — ​ (1,511)

Common stock dividend paid ​ (1,982) ​ (2,020)

Net cash provided by financing activities ​ 18,888 ​ 24,131

NET INCREASE IN CASH AND CASH EQUIVALENTS ​ 33,145 ​ 3,719

CASH AND CASH EQUIVALENTS AT JANUARY 1 ​ 17,746 ​ 14,027

CASH AND CASH EQUIVALENTS AT DECEMBER 31 ​ $ 50,891 ​ $ 17,746

​

See accompanying notes to consolidated financial statements.

​

​

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND NATURE OF OPERATIONS

AmeriServ Financial, Inc. (the Company) is a bank holding company, headquartered in Johnstown, Pennsylvania. Through its banking subsidiary, the Company operates 16 banking locations in five southwestern Pennsylvania counties and Hagerstown, Maryland. These branches provide a full range of consumer, mortgage, and commercial financial products and wealth management services.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of AmeriServ Financial, Inc. and its wholly owned subsidiary, AmeriServ Financial Bank (the Bank). The Bank is a Pennsylvania state-chartered full-service bank with 15 locations in Pennsylvania and 1 location in Maryland. Through its AmeriServ Wealth and Capital Management Division, the Bank offers a complete range of trust and financial services and administers assets valued at approximately $2.7 billion and $2.6 billion that are not reported on the Company’s Consolidated Balance Sheets at December 31, 2025 and 2024, respectively. AmeriServ Wealth Advisors, Inc., an SEC-registered investment advisor, is a subsidiary of the Bank.

In addition, the Parent Company is an administrative group that provides support in such areas as audit, finance, investments, loan review, general services, and marketing. Intercompany accounts and transactions have been eliminated in preparing the Consolidated Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (generally accepted accounting principles, or GAAP) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results may differ from these estimates and the differences may be material to the Consolidated Financial Statements. The Company’s most significant estimates relate to the allowance for credit losses (related to investment securities, loans, and unfunded commitments), pension, and derivatives (interest rate swaps/hedges).

OPERATING SEGMENTS

While the chief decision-maker monitors the revenue streams of the various products and services, operations are managed, and financial performance is evaluated on a Company-wide basis. Discrete financial information is not available other than on a Company-wide basis. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment. Segment reporting is described further in Note 21.

INVESTMENT SECURITIES

Securities are classified at the time of purchase as investment securities held to maturity if it is management’s intent and the Company has the ability to hold the securities until maturity. These held to maturity securities are carried on the Company’s books at cost, adjusted for amortization of premium and accretion of discount which is computed using the level yield method which approximates the effective interest method. Alternatively, securities are classified as available for sale if it is management’s intent at the time of purchase to hold the securities for an indefinite period of time and/or to use the securities as part of the Company’s asset/liability management strategy. Securities classified as available for sale include securities which may be sold to effectively manage interest rate risk exposure, prepayment risk, and other factors (such as liquidity requirements). These available for sale securities are reported at fair value with unrealized aggregate appreciation/depreciation excluded from income and credited/charged to accumulated other comprehensive income (loss) within shareholders’ equity on a net of tax basis. Realized gains or losses on securities sold are computed upon the adjusted cost of the specific securities sold.

Securities classified as trading assets are purchased with the intent of selling them in the near term (less than 30 days) to generate profits from short-term changes in price. Trading securities are reported at fair value with unrealized gains and losses included in income. The Company participates in limited trading activity. Specifically, during 2025, the Company established a $7.0 million investment trading account which is managed by an outside third party. The trading account is invested in U.S. Treasury and municipal securities. As of December 31, 2025, there was $99,000 of cash held

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

in the account available for future trading security purchases. This cash balance is included in cash and cash equivalents on the Consolidated Balance Sheets.

Additionally, the Company holds equity securities which are comprised of mutual funds held within a rabbi trust for the executive deferred compensation plan and ordinary shares issued by a borrower in satisfaction of debt previously contracted. The deferred compensation plan equity securities are reported at fair value within other assets on the Consolidated Balance Sheets and unrealized holding gains and losses are included in earnings. The ordinary shares issued in satisfaction of debt previously contracted do not have a readily determinable fair value. Therefore, they are reported at cost within other assets on the Consolidated Balance Sheets and are adjusted when observable price changes are identified or an impairment charge is recognized.

Allowance for Credit Losses – Held to Maturity Securities

The Company measures expected credit losses on held to maturity debt securities, which are comprised of U.S. government agency and mortgage-backed securities as well as municipal, corporate, and other bonds. The Company’s agency and mortgage-backed securities are issued by U.S. government entities and agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. As such, no allowance for credit losses has been established for these securities. The allowance for credit losses on the municipal, corporate, and other bonds within the held to maturity securities portfolio is calculated using the probability of default/loss given default (PD/LGD) method. The calculation is completed on a quarterly basis using the default studies provided by an industry leading source. At December 31, 2025 and 2024, the allowance for credit losses on the held to maturity securities portfolio totaled $90,000 and $89,000, respectively.

The allowance for credit losses on held to maturity debt securities is included within investment securities held to maturity on the Consolidated Balance Sheets. Changes in the allowance for credit losses are recorded within provision for credit losses on the Consolidated Statements of Operations.

Accrued interest receivable on held to maturity debt securities totaled $384,000 and $403,000 at December 31, 2025 and 2024, respectively, and is included within accrued interest income receivable on the Consolidated Balance Sheets. This amount is excluded from the estimate of expected credit losses. Held to maturity debt securities are typically classified as non-accrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When held to maturity debt securities are placed on non-accrual status, unpaid interest credited to income is reversed. The Company had no held to maturity debt securities in non-accrual status or past due over 90 days still accruing interest at December 31, 2025 and 2024.

Allowance for Credit Losses – Available for Sale Securities

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 specific circumstances surrounding the security. At December 31, 2025, the Company had no allowance for credit losses on the available for sale securities portfolio compared to an allowance totaling $360,000 at December 31, 2024.

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The allowance for credit losses on available for sale debt securities is included within investment securities available for sale on the Consolidated Balance Sheets. Changes in the allowance for credit losses are recorded within provision for credit losses on the Consolidated Statements of Operations. Losses are charged against the allowance when the Company believes the collectability of an available for sale security is in jeopardy or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available for sale debt securities totaled $977,000 and $833,000 at December 31, 2025 and 2024, respectively, and is included within accrued interest income receivable on the Consolidated Balance Sheets. This amount is excluded from the estimate of expected credit losses. Available for sale debt securities are typically classified as non-accrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When available for sale debt securities are placed on non-accrual status, unpaid interest credited to income is reversed. It should be noted that the Company had no available for sale debt securities in non-accrual status at December 31, 2025 due to the third quarter 2025 charge-off of a non-performing security totaling $1.0 million against a previously established allowance for credit losses. This is compared to one available for sale debt security in non-accrual status at December 31, 2024 totaling $1.0 million with an associated allowance for credit losses of $360,000. When this corporate security was transferred to non-accrual status, interest income from investments was unfavorably impacted due to the reversal of previously recognized income. Specifically, unpaid interest on this security which was reversed totaled $84,000 in 2024.

FEDERAL HOME LOAN BANK STOCK

The Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB), and as such, is required to maintain a minimum investment in stock of the FHLB that varies with the level of advances outstanding with the FHLB. The stock is bought from and sold to the FHLB based upon its $100 par value. The stock does not have a readily determinable fair value and as such is classified as restricted stock, carried at cost and evaluated for impairment by management. The stock’s value is determined by the ultimate recoverability of the par value rather than by recognizing temporary declines. The determination of whether the par value will ultimately be recovered is influenced by criteria such as the following: (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount and the length of time any such situation has persisted; (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance; (3) the impact of legislative and regulatory changes on the customer base of the FHLB; and (4) the liquidity position of the FHLB. Management evaluated the stock and concluded that the stock was not impaired for the periods presented herein.

LOANS HELD FOR SALE

Certain newly originated residential mortgage loans are classified as held for sale, because it is management’s intent to sell these residential mortgage loans. The residential mortgage loans held for sale are carried at the lower of aggregate cost or fair value.

LOANS

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balances, net of any deferred fees or costs and an allowance for credit losses. Interest income is accrued on the unpaid principal balance and is recognized using the level yield method. As of December 31, 2025 and 2024, accrued interest receivable on loans totaled $4.2 million, which is reported in accrued interest income receivable on the Consolidated Balance Sheets and is excluded from the estimate of credit losses.

The Company typically discontinues the accrual of interest income when loans become 90 days past due in either principal or interest. In addition, if circumstances warrant, the accrual of interest may be discontinued prior to 90 days. Payments received on non-accrual loans are credited to principal until full recovery of principal has been recognized or the loan has been returned to accrual status. The only exception to this policy is for residential mortgage loans wherein interest income is recognized on a cash basis as payments are received. Generally, a non-accrual commercial or

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

consumer loan is returned to accrual status after becoming current and remaining current for twelve consecutive payments. Residential mortgage loans are typically returned to accrual status upon becoming current.

LOAN FEES

Loan origination and commitment fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) over the contractual life of the loan.

ALLOWANCE FOR CREDIT LOSSES – LOANS

The allowance for credit losses (ACL) is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

​

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.

​

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company has aligned our segmentation to the quarterly Call Report. This allowed the Company to use not only our data but also peer institutions’ data to supplement loss observations in determining our qualitative adjustments. Some further sub-segmenting was performed on the commercial and industrial (C&I) and commercial real estate (CRE) portfolios based on collateral type. The Company has identified the following portfolio segments:

​

● Commercial Real Estate Owner Occupied

● Commercial and Industrial

● Commercial Real Estate Non-Owner Occupied – Retail

● Commercial Real Estate Non-Owner Occupied – Multi-Family

● Commercial Real Estate Non-Owner Occupied – Other

● Residential Mortgages

● Consumer

​

The Company is utilizing the static pool analysis (cohort) method for our current expected credit losses (CECL) model. The static pool analysis methodology captures loans that qualify for a segment (i.e. balance of a pool of loans with similar risk characteristics) as of a point in time to form a cohort, then tracks that cohort over their remaining lives to determine their loss behavior. The remaining lifetime loss rate is then applied to current loans that qualify for the same segmentation criteria to form a remaining life expectation on current loans. Once historical cohorts are established, the loans in each individual cohort are tracked over their remaining lives for loss and recovery events. Each cohort is evaluated individually, and as a result, a loss may be counted in several different quarterly cohort periods, as long as the specific loan existed in the population of each of those cohort periods.

Historical credit loss experience is the basis for the estimation of expected credit losses. The Company applies historical loss rates to pools of loans with similar risk characteristics. After consideration of the historic loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already captured in the historical loss information at the balance sheet date. Our reasonable and supportable forecast adjustment is based on a blend of peer and Company data as well as management judgment. Including peer data addresses the Company’s lack of loss history in some pools of loans. For periods beyond our reasonable and supportable forecast period of two years, loss expectations revert to the long-run historical mean. The qualitative adjustments for current conditions are based upon the following factors:

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

● changes in lending policies and procedures;

● changes in economic conditions;

● changes in the nature and volume of the portfolio;

● staff experience;

● changes in the quality of the Company’s loan review system;

● trends in underlying collateral value;

● concentration risk; and

● external factors: competition, legal, regulatory.

​

These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve. Ultimately, 41% of the fourth quarter of 2025 general reserve represented qualitative adjustment with 59% representing quantitative reserve.

In accordance with ASC 326, Financial Instruments – Credit Losses, the Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. In contrast to legacy accounting standards, this criterion is broader than the impairment concept and management may evaluate loans individually even when no specific expectation of collectability is in place. Loans will not be included in both collective and individual analysis. The individual analysis will establish a specific reserve for loans in scope. It should be noted that there is a review threshold of $150,000 or more for loans being subject to individual evaluation within the consumer and residential mortgage segments.

​

Specific reserves are established based on the following three acceptable methods for measuring the ACL: 1) the present value of expected future cash flows discounted at the loan’s original effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral dependent. The method is selected on a loan-by-loan basis, with management primarily utilizing either the discounted cash flows or the fair value of collateral methods. The evaluation of the need and amount of a specific allocation of the allowance is made on a quarterly basis.

​

The need for an updated appraisal on collateral dependent loans is determined on a case-by-case basis. The useful life of an appraisal or evaluation will vary depending upon the circumstances of the property and the economic conditions in the marketplace. A new appraisal is not required if there is an existing appraisal which, along with other information, is sufficient to determine a reasonable value for the property and to support an appropriate and adequate allowance for credit losses. At a minimum, annual documented reevaluation of the property is completed by the Bank’s internal Collections and Assigned Risk Department to support the value of the property.

When reviewing an appraisal associated with an existing real estate collateral dependent transaction, the Bank’s Chief Credit Officer must determine if there have been material changes to the underlying assumptions in the appraisal which affect the original estimate of value. Some of the factors that could cause material changes to reported values include:

● the passage of time;

● the volatility of the local market;

● the availability of financing;

● natural disasters;

● the inventory of competing properties;

● environmental contamination.

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS