AMERISERV FINANCIAL REPORTS INCREASED EARNINGS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 2026 AND ANNOUNCES QUARTERLY COMMON STOCK CASH DIVIDEND

JOHNSTOWN, Pa., Oct. 20, 2026 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ: ASRV) reported third quarter 2026 net income of $3,100,000, or $0.18 per diluted common share. This earnings performance represented a $556,000, or 21.9%, improvement from the third quarter of 2025 when net income totaled $2,544,000, or $0.15 per diluted common share. For the nine-month period ended September 30, 2026, the Company reported net income of $7,632,000, or $0.45 per diluted common share. This represented an 80.0% increase in earnings per share from the nine-month period of 2025 when net income totaled $4,170,000, or $0.25 per diluted common share. The following table details the Company's financial performance for the three- and nine-month periods ended September 30, 2026 and 2025:

Jeffrey A. Stopko, President and Chief Executive Officer, commented on the third quarter 2026 financial results: "AmeriServ Financial achieved record quarterly earnings in the third quarter of 2026 due to growth in total revenue and favorable asset quality trends. The increase in total revenue was caused by improvement in our net interest income for both the third quarter and first nine months of 2026 because of effective balance sheet management. Specifically, our net interest margin increased by 21-basis points in the first nine months of 2026 leading to a $2.3 million increase in net interest income, which is important since it represents approximately 72% of our total revenue. The reengineering of our wealth management business is yielding positive results and contributed to growth in non-interest revenue. Our Company is well positioned for growth in the future as we have solid capital and improving efficiency."

All third quarter and nine months 2026 financial performance metrics within this document are compared to the third quarter and nine months of 2025 unless otherwise noted.

Net interest income in the third quarter of 2026 increased by $438,000, or 4.0%, from the prior year's third quarter and, for the first nine months of 2026, increased by $2.3 million, or 7.3%, when compared to the first nine months of 2025.  The Company's net interest margin of 3.41% for the third quarter of 2026 and 3.34% for the nine months of 2026 represents a 14-basis point improvement for the quarter and a 21-basis point increase for the nine-months.  Along with the sharply improved net interest margin performance, the increase also reflects controlled balance sheet growth, as both total earning assets and total deposits are at higher average levels due to effective balance sheet management. This, combined with effective pricing strategies and a steeper U.S. Treasury yield curve, resulted in both the total earning asset yield and cost of interest-bearing funds improving between years. Management believes the favorable net interest margin performance experienced in the first nine months of 2026 will continue into the fourth quarter. Earnings performance in 2026 was also favorably impacted by a lower provision for credit losses reflecting improvement in the bank's asset quality.  An increase in non-interest expense for both 2026 time periods was partially offset by improved non-interest income for the same time frames. Overall, the improvement in the Company's financial performance was caused by increased total revenue and a lower provision for credit losses which more than offset higher non-interest expense resulting in earnings through nine months of 2026 exceeding earnings through nine months of 2025 by $3.5 million, or 83%. 

Total investment securities averaged $311.5 million for the third quarter of 2026, which was $55.8 million, or 21.8%, higher than the $255.8 million average for the third quarter of 2025.  Similar trends were noted for the nine-month period. These increases reflect a higher level of loan prepayment activity as well as our liquidity position strengthening due to deposit growth.  Therefore, more funds were available to invest in the securities portfolio during a time when security yields improved, making purchases more attractive. As a result, the securities portfolio grew by $44.6 million, or 17.9%, since December 31, 2025.  New investment security purchases were also necessary to replace cash flow from maturing securities to maintain appropriate balances for pledging purposes related to public fund deposits. The higher balances and improved yields for new securities purchases caused interest income from investments to increase by $719,000, or 25.7%, for the third quarter and by $2.0 million, or 25.3%, for the first nine months of 2026 compared to the same time periods last year.

Total average loans for the third quarter of 2026 declined from the third quarter of 2025 by $62.5 million, or 5.9%, due to increased loan payoff activity, particularly from the commercial real estate (CRE) portfolio, which exceeded loan originations.  A similar trend was noted for the nine-month period as total average loans dropped $49.1 million, or 4.6%.  As a result of this decline in the CRE loan portfolio and growth in the bank's capital, the bank's CRE loan concentration in relation to capital has dropped from 352% at December 31, 2025, to 319% at September 30, 2026.  Total loan interest income decreased by $933,000, or 5.9%, for the third quarter and by $1.4 million, or 3.0%, for the first nine months of 2026 compared to the same time periods last year.  This decline reflects the lower average loan balance more than offsetting the benefits of a better interest rate environment in 2026, and a portion of CRE loans, that were booked during the COVID pandemic when interest rates were low, repricing upward in 2026.  Overall, through nine months of 2026, the average balance of total interest earning assets increased from last year's average by $7.3 million, or 0.5%, while total interest income increased by $676,000, or 1.3%, from the first nine months of 2025 due to the increased revenue contribution from the investment securities portfolio.

On the liability side of the balance sheet, total deposits averaged $1.24 billion for the third quarter of 2026 which was modestly higher than the third quarter of 2025 average 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 many years due to customer loyalty and confidence in AmeriServ Financial Bank.  The Company does not utilize brokered deposits as a funding source.  The loan to deposit ratio averaged 81.0% in the third quarter of 2026, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is well positioned to support our customers and our community during times of economic volatility.

Total interest expense decreased by $652,000, or 8.7%, for the third quarter of 2026 and decreased by $1.6 million, or 7.3%, for the nine months when compared to both time periods of 2025.  Deposit interest expense declined by $1.1 million, or 5.8%, through the first nine months of 2026 despite total average interest-bearing deposits growing by $29.0 million, or 2.7%, compared to the first nine months of last year.  The decrease in deposit interest expense reflects management's effective deposit pricing strategies along with the benefit of the Federal Reserve easing monetary policy during the final four months of 2025.  This reduction in interest-bearing deposit costs contributed to the previously mentioned improvement in the net interest margin.  Overall, total deposit cost (including the benefit of non-interest-bearing demand deposits) averaged 1.92% for both the third quarter and first nine months of 2026, which is an 18-basis point improvement from the third quarter of 2025. 

 Total borrowings interest expense decreased by $93,000, or 10.0%, for the third quarter of 2026 and declined by $493,000, or 17.7%, for the first nine months when compared to both time periods of 2025.  Due to the higher level of total average deposits, management elected not to replace maturing Federal Home Loan Bank (FHLB) advances during the first nine months of 2026. Therefore, the total average balance of FHLB borrowings for the first nine months of 2026 decreased by $15.9 million, or 27.7%, from the same period of last year. The cost of the company's subordinated debt increased as of September 1, 2026, from its previous five-year fixed rate of 3.75% to a floating rate of 6.94% (311-basis points over three-month term SOFR) which increased interest expense by $72,000 in the third quarter of 2026.

The Company recorded a $3,000 provision for credit losses recovery in the third quarter of 2026 after recording a $360,000 provision for credit losses in the third quarter of 2025, resulting in a favorable shift of $363,000.  For the first nine months of 2026, the Company recognized an $80,000 provision for credit losses recovery after recognizing a $3.4 million provision for credit losses in the first nine months of 2025, resulting in a net favorable change of $3.5 million. The provision recovery in both the third quarter and first nine months of 2026 reflected a continuing favorable trend for historical loan loss rates along with a softening of reserve requirements due to the contraction in the size of the loan portfolio.  The large provision for credit losses in the first nine months of 2025 was needed to resolve the Company's largest non-performing loan which also included a related $2.8 million loan charge-off in the second quarter of last year.  

Non-performing assets totaled $8.2 million at September 30, 2026, which represented a decrease of $326,000, or 3.8%, since year-end 2025. Non-performing loans represented 0.77% of total loans on September 30, 2026.  The Company recognized net loan charge-offs of $228,000, or 0.03% of total average loans, in the first nine months of 2026 compared to net loan charge-offs of $2.9 million, or 0.37% of total average loans, in the first nine months of 2025.  Overall, the Company's allowance for loan credit losses provided 169% coverage of non-performing loans and represented 1.29% of total loans at September 30, 2026.   

Total non-interest income in the third quarter of 2026 increased by $117,000, or 2.7%, from the prior year's third quarter and increased by $434,000, or 3.4%, in the first nine months of 2026 when compared to the first nine months of 2025.  The increase in both time periods was due primarily to higher levels of wealth management fees in 2026 which increased by $595,000 in the third quarter and $903,000, or 10.6%, for the nine-month period.  The third quarter increase included the receipt of a $402,000 transition payment for moving our broker dealer to Ameriprise Financial Services.  The remainder of the increase for both periods was due to market appreciation of customer assets as the equity markets moved to record levels throughout 2026.  Overall, the fair market value of wealth management assets totaled $2.8 billion at September 30, 2026, and increased by $121.9 million, or 4.5%, since December 31, 2025.  Other income also increased by $366,000 for the third quarter and $328,000 for the nine months of 2026 due largely to positive adjustments to the fair market value of interest rate swaps related to a risk participation agreement for a commercial banking customer.  These favorable items were partially offset by a decrease in BOLI revenue of $291,000 for the third quarter and $199,000 for the nine months due to fewer death claims in 2026.  The Company also recognized a loss on trading securities of $438,000 for the third quarter and $441,000 for the nine months of 2026 as rising interest rates negatively impacted the performance of this asset.   

Total non-interest expense in the third quarter of 2026 increased by $176,000, or 1.5%, when compared to the third quarter of 2025 and increased by $1.9 million, or 5.2%, during the first nine months of 2026 when compared to the same period in 2025.  Professional fees increased by $664,000 for the third quarter and by $1.7 million, or 76.0%, for the nine months due to additional expenses related to expanded consulting services provided to the Company by SB Value Partners in accordance with the amended and restated consulting agreement. The costs related to the migration and upgrade of the bank's core processing system caused data processing and IT expense to increase by $110,000 for the third quarter and $202,000 for the first nine months of 2026. A reduced number of employees in 2026 caused salaries and employee benefits to decrease by $90,000 in the third quarter and to increase by only $248,000, or 1.1%, for the nine-month period.  Other expenses decreased by $500,000 in the third quarter and $266,000, or 7.0%, for the nine months as the bank recognized a favorable settlement charge credit of $410,000 on the bank's defined benefit pension plan in the third quarter of 2026. 

The Company recorded income tax expense of $1.8 million in the first nine months of 2026, or an effective tax rate of 19.2%, which compares to income tax expense of $948,000, or an effective tax rate of 18.5%, in the first nine months of 2025. The higher income tax expense in 2026 was caused by the Company's increased pre-tax earnings this year.

The Company had total assets of $1.45 billion, shareholders' equity of $122 million, a book value of $7.18 per common share and a tangible book value of $6.38(1) per common share on September 30, 2026.  Book value per common share increased by $0.24, or 3.5%, and tangible book value per common share also increased by $0.27, or 4.4%, over the past 12 months. The Company and Bank continued to maintain a strong capital position that exceeds the regulatory defined well-capitalized status as of September 30, 2026.

QUARTERLY COMMON STOCK DIVIDEND

The Company's Board of Directors declared a $0.03 per share quarterly common stock cash dividend. The cash dividend is payable November 16, 2026, to shareholders of record on November 2, 2026. This cash dividend represents a 2.6% annualized yield using the October 16, 2026, closing stock price of $4.54 and a 20% payout ratio based upon 2026 year to date earnings.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology, market conditions, dividend program, and future payment obligations. These statements may be identified by such forward-looking terminology as "continuing," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy," or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, changes in the financial markets, the level of inflation, and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; unanticipated effects to our banking platform, including risks and unanticipated costs related to a core system migration; developments in technology, such as artificial intelligence, and our ability to incorporate innovative technologies in our business and provide products and services that satisfy our customers' expectations for convenience and security; and the inability to successfully implement or expand new lines of business or new products and services.  These forward-looking statements involve risks and uncertainties that could cause AmeriServ's results to differ materially from management's current expectations. Such risks and uncertainties are detailed in AmeriServ's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2025. Forward-looking statements are based on the beliefs and assumptions of AmeriServ's management and on currently available information. The statements in this press release are made as of the date of this press release, even if subsequently made available by AmeriServ on its website or otherwise. AmeriServ undertakes no responsibility to publicly update or revise any forward-looking statement.