AmeriServ Financial, Inc. (NASDAQ: ASRV) reported a second quarter 2025 net loss of $282,000, or $0.02 per diluted common share. This earnings performance represented a $93,000 improvement from the second quarter of 2024 when the net loss totaled $375,000, or $0.02 per diluted common share. For the six-month period ended June 30, 2025, the Company reported net income of $1,626,000, or $0.10 per diluted common share. This represented an 11.1% increase in earnings per share from the six-month period of 2024 when net income totaled $1,529,000, or $0.09 per diluted common share. The following table details the Company's financial performance for the three- and six-month periods ended June 30, 2025 and 2024:
Jeffrey A. Stopko, President and Chief Executive Officer, commented on the second quarter 2025 financial results: “The resolution of our largest problem loan in the second quarter of 2025 resulted in an increased provision for credit losses which caused the modest loss reported for the quarter. AmeriServ Financial has achieved positive operating leverage in both quarters of 2025 as our total revenue increased while our non-interest expenses declined. The increase in total revenue was caused by meaningful improvement in our net interest margin which increased by 34 basis points for the first six months of 2025 leading to a $2.7 million increase in net interest income. We believe that our balance sheet is well positioned for further quarterly net interest income growth and net interest margin improvement, which is important since this category represents approximately 70% of our total revenue. Additionally, our non-interest expense has favorably declined in both quarters of 2025. We will continue to diligently focus on both expense control and revenue growth to further improve the Company's operating efficiency.”
All second quarter and six months 2025 financial performance metrics within this document are compared to the second quarter and six months of 2024 unless otherwise noted.
The Company's net interest income in the second quarter of 2025 increased by $1.5 million, or 17.1%, from the prior year's second quarter and, for the first six months of 2025, increased by $2.7 million, or 15.3%, when compared to the first six months of 2024. The Company's net interest margin of 3.10% for the second quarter of 2025 and 3.06% for the six months of 2025 represents a 36-basis point improvement for the quarter and a 34-basis point increase for the six months. The increase reflects controlled balance sheet growth, as both total loans and total deposits are at higher levels due to management's effective business development strategies. This, combined with effective pricing strategies, resulted in both the total earning asset yield and cost of interest-bearing funds improving between years. The Federal Reserve's action to lower short-term interest rates during the latter portion of 2024 favorably impacted total interest-bearing deposits and borrowings costs. Also, while the U.S. Treasury yield curve remains modestly inverted on the short end, yields in the mid to long end of the curve are higher and demonstrate a steeper upward slope which favorably impacted earning asset yields. Management believes the net interest margin will continue to improve through the second half of 2025. Earnings performance so far in 2025 was also favorably impacted by a lower level of total non-interest expense as management works to carefully control operating costs. Unfavorably impacting earnings was the Company recognizing a significantly higher provision for credit losses for both the second quarter and six months of 2025 when compared to both time periods of 2024. Also, non-interest income is lower than what was recognized in both time periods last year. Overall, the improvement in the Company's performance including increased net interest income and lower total non-interest expense more than offset the higher provision for credit losses and lower level of non-interest income resulting in earnings through six months of 2025 exceeding earnings through the first six months of 2024 by $97,000, or 6.3%.
Total average loans in the first six months of 2025 grew from the 2024 six-month average by $37.2 million, or 3.6%, due to consistent new loan funding opportunities throughout 2024. So far in 2025, loan originations modestly exceed payoff activity and resulted in an $811,000, or 0.1%, increase in total loans since December 31, 2024. Overall, total loans continue to be well above the $1.0 billion threshold, averaging $1.069 billion for the second quarter of 2025. Total loan interest income improved in the first half of 2025 compared to the first half of 2024 due to the increased level of average total loans outstanding, and a portion of commercial real estate (CRE) loans, that were booked at the onset of the COVID pandemic when interest rates were low, have been repricing upward during the first six months of 2025. These favorable items resulted in total loan interest income improving by $1.7 million, or 6.0%, when the first half of 2025 is compared to first half of 2024.
Total investment securities averaged $236.8 million for the first half of 2025, which was $1.5 million, or 0.6%, lower than the $238.3 million average for the first half of 2024. The decrease reflects management's 2024 strategy to allocate more cash flow from the securities portfolio to higher yielding loans while the Company controlled the amount of high cost overnight borrowed funds. However, our liquidity position strengthened during the first six months of 2025 due to deposit growth. Therefore, more funds were available to invest in the securities portfolio during a time when security yields improved, making purchases more attractive. As a result, the securities portfolio grew by $17.9 million, or 8.1%, since December 31, 2024. 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 improved yields for new securities purchases caused interest income from investments to increase by $316,000, or 6.4%, for the first six months of 2025 compared to last year's first six months. Overall, through six months, the average balance of total interest earning assets increased from last year's average by $45.5 million, or 3.6%, while total interest income increased by $2.0 million, or 6.0%, from the first half of 2024.
On the liability side of the balance sheet, total average deposits through the first six months of 2025 were $67.8 million, or 5.8%, higher when compared to the first six months of 2024 due to the Company's successful business development efforts. Additionally, 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 86.2% in the second quarter of 2025, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is well positioned to support our customers and our community during times of economic volatility.
Total interest expense favorably decreased by $340,000, or 4.5%, for the second quarter of 2025 and decreased by $726,000, or 4.8%, for the six months when compared to both time periods of 2024. Deposit interest expense declined by $56,000, or 0.4%, through the first six months of 2025 despite total average interest-bearing deposits growing by $68.7 million, or 7.0%, compared to the first six months of last year. The year to date decrease in deposit interest expense reflects the benefit of the Federal Reserve easing monetary policy during the final four months of 2024. This reduction in interest-bearing deposit costs contributed to the previously mentioned improvement in the net interest margin. Overall, total deposit cost (including the benefit of non-interest-bearing demand deposits which remained relatively stable between years) averaged 2.06% in the first half of 2025, which is a 12-basis point improvement from the first half of 2024.
Total borrowings interest expense decreased by $359,000, or 28.8%, for the second quarter of 2025 and declined by $670,000, or 26.5%, for the first six months when compared to both time periods of 2024. The Company's utilization of overnight borrowed funds in the first half of 2025 was significantly lower than the first half of 2024 by $26.0 million, or 83.8%, due to the higher level of total average deposits. The decrease in borrowings interest expense also reflects the Federal Reserve's 2024 action to ease monetary policy by 100 basis points which had an immediate and favorable impact on the cost of overnight borrowed funds. Advances from the Federal Home Loan Bank averaged $52.9 million for the first half of 2025, which is $3.6 million, or 7.3%, higher than the $49.3 million average for the first half of 2024. Management's strategy to increase term advances to lock in lower rates than overnight borrowings is due to the inversion in the short end of the yield curve and has favorably impacted net interest income.
The Company recorded a $3.1 million provision for credit losses in the second quarter of 2025 after recording provision expense of $434,000 in the second quarter of 2024, resulting in an increase in expense of $2.7 million. For the first six months of 2025, the Company recognized a $3.0 million provision for credit losses after recognizing a $123,000 provision for credit losses recovery in the first six months of 2024, resulting in a net unfavorable change of $3.2 million. The provision for credit losses expense in the second quarter of 2025 primarily reflects the resolution of the Company's largest problem asset, a mixed use commercial real estate retail/office property in the Pittsburgh market. The provision covers an additional $2.8 million charge-off that was necessary to write this property down to a court approved sales price at a hearing that was held in late June. The second quarter provision for credit losses also reflects an increase in historical loss rates, due to this large charge-off, used to calculate the allowance for loan credit losses in accordance with current expected credit losses (CECL).
Non-performing assets increased since March 31, 2025, by $1.4 million, or 9.7%, and totaled $16.4 million. The increase reflects the net impact of the charge-off of the mixed use CRE loan, mentioned in the previous paragraph, which was more than offset by the transfer of three C&I loans from one borrower relationship and one additional $935,000 CRE loan into non-accrual status. Non-performing loans represented 1.42% of total loans at June 30, 2025. The Company recognized net loan charge-offs of $3.0 million, or 0.56% of total average loans, in the first six months of 2025 compared to net loan charge-offs of $332,000, or 0.06% of total average loans, in the first six months of 2024. Overall, the Company's allowance for loan credit losses provided 93% coverage of non-performing loans and 1.32% of total loans at June 30, 2025.
Total non-interest income in the second quarter of 2025 decreased by $276,000, or 6.3%, from the prior year's second quarter and declined by $1.1 million, or 11.8%, in the first half of 2025 when compared to the first half of 2024. The decrease in both time periods was due to lower levels of wealth management fees by $277,000, or 9.1%, for the quarter and by $679,000, or 10.7%, for the six months. Also, contributing to the unfavorable comparison for the six months were lower levels of other income by $285,000, or 16.9%, bank owned life insurance (BOLI) by $69,000, or 12.0%, and mortgage banking revenue by $60,000, or 41.1%. The decrease in wealth management fees is attributed to the volatility and uncertainty that existed in the financial markets due to government fiscal policy, particularly earlier in 2025. While equity markets rebounded during the second quarter of 2025, the first quarter 2025 decline in major market indexes unfavorably impacted equity securities resulting in management fees declining. Additionally, the Financial Services division benefitted from several large new business cases in 2024. Overall, the fair market value of wealth management assets totaled $2.6 billion at June 30, 2025 and increased by $24.7 million, or 1.0%, since December 31, 2024. The decrease in other income for the six months of 2025 was primarily due to the Company recognizing a $250,000 signing bonus from the renewal of a contract with Visa in the first quarter of 2024 while there was no such bonus in 2025. The decrease to BOLI revenue for the six months resulted from the bank receiving a larger death claim in the first quarter of 2024 while the lower level of mortgage banking revenue resulted from a decreased level of residential mortgage production in 2025.
Total non-interest expense in the second quarter of 2025 decreased by $1.6 million, or 11.9%, when compared to the second quarter of 2024 and decreased by $1.7 million, or 6.7%, during the first half of 2025 when compared to the first half of 2024. Professional fees decreased by $1.2 million, or 56.9%, for the second quarter and were $1.5 million, or 48.7%, lower for the six months as 2024 legal and professional services costs were unfavorably impacted by litigation and responses to the actions of an activist investor. This matter was resolved in June 2024 as a result of a Settlement Agreement. Also favorably impacting total non-interest expense were lower other expenses by $395,000, or 25.0%, for the second quarter of 2025 and by $417,000, or 15.2%, for the six months. The lower level of other expenses was primarily driven by the Company having to recognize a $376,000 pension settlement charge in the second quarter of 2024 while no such charge was required so far in 2025. For the six-month time-period, data processing and IT expenses increased by $104,000, or 4.5%, compared to the first six months of 2024 due to additional expenses related to monitoring our computing and network environment. Salaries & employee benefits increased by $74,000, or 0.5%, compared to last year's first six months. Within this broad category, health care costs are $332,000, or 22.2%, higher as the Company did not have to recognize any premium costs in January 2024 due to the effective negotiations with our health care provider last year. Total salaries increased by $177,000, or 1.8%, due to annual salary merit increases which were somewhat offset by a lower number of employees. Additionally, helping to offset the higher costs within total salaries & employee benefits were reduced levels of incentive compensation by $393,000, or 45.1%, largely in the Wealth Management division.
The Company recorded income tax expense of $408,000 in the first half of 2025, or an effective tax rate of 20.1%, which compares to income tax expense of $374,000, or an effective tax rate of 19.7%, in the first half of 2024.
The Company had total assets of $1.45 billion, shareholders' equity of $110.9 million, a book value of $6.71 per common share and a tangible book value of $5.89(1) per common share on June 30, 2025. Book value per common share increased by $0.43, or 6.8%, and tangible book value per common share increased by $0.44, or 8.1%, since June 30, 2024, due to a favorable adjustment for both the unrealized loss on available for sale securities and the Company's defined benefit pension plan. The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status as of June 30, 2025.
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 August 18, 2025 to shareholders of record on August 4, 2025. This cash dividend represents a 3.9% annualized yield using the July 18, 2025 closing stock price of $3.08 and a 60% payout ratio based upon 2025 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; 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, 2024. 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.
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SOURCE AmeriServ Financial, Inc.
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