AmeriServ Financial, Inc. (NASDAQ: ASRV) reported third quarter 2025 net income of $2,544,000, or $0.15 per diluted common share. This earnings performance represented a $1,361,000, or 115.0%, improvement from the third quarter of 2024 when net income totaled $1,183,000, or $0.07 per diluted common share. For the nine-month period ended September 30, 2025, the Company reported net income of $4,170,000, or $0.25 per diluted common share. This represented a 56.3% increase in earnings per share from the nine-month period of 2024 when net income totaled $2,712,000, or $0.16 per diluted common share. The following table details the Company's financial performance for the three- and nine-month periods ended September 30, 2025 and 2024:
Jeffrey A. Stopko, President and Chief Executive Officer, commented on the third quarter 2025 financial results: “AmeriServ Financial achieved record quarterly earnings in the third quarter of 2025 due to our continued focus on generating positive operating leverage. The increase in total revenue was caused by meaningful improvement in our net interest income for both the third quarter and first nine months of 2025 because of effective balance sheet management. Specifically, our net interest margin increased by 41-basis points for the first nine months of 2025 leading to a $4.8 million increase in net interest income which is important since this category represents approximately 70% of our total revenue. Additionally, our non-interest expense has favorably declined for the first nine months of 2025. We will continue to diligently focus on both revenue growth and expense control to further improve the Company's operating efficiency.”
All third quarter and nine months 2025 financial performance metrics within this document are compared to the third quarter and nine months of 2024 unless otherwise noted.
The Company's strong third quarter earnings reflected continued improvement in core performance along with higher than typical revenue from good income sources such as loan prepayment fees and bank owned life insurance (BOLI). Net interest income in the third quarter of 2025 increased by $2.1 million, or 23.9%, from the prior year's third quarter and, for the first nine months of 2025, increased by $4.8 million, or 18.2%, when compared to the first nine months of 2024. The Company's net interest margin of 3.27% for the third quarter of 2025 and 3.13% for the nine months of 2025 represents a 56-basis point improvement for the quarter and a 41-basis point increase for the nine months. Along with the significantly improved net interest margin performance, the increase also reflects controlled balance sheet growth, as both total loans and total deposits are at higher average 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 remainder of 2025 given the effective execution of our strategy along with the Federal Reserve's action to ease monetary policy in September 2025, which should further reduce funding costs. While non-interest expense is up for the quarter, it is lower through the first nine months of 2025 and favorably impacted year-to-date earnings performance as management works to carefully control operating costs. Conversely, non-interest income in 2025 is lower than what was recognized in the first nine months of last year but compares favorably quarter over quarter. Unfavorably impacting earnings was the Company recognizing a higher provision for credit losses for both the third quarter and nine months of 2025 when compared to both time periods of 2024. Overall, the Company's earnings performance through the first nine months of 2025 exceeds earnings through the first nine months of 2024 by $1.5 million, or 53.8%, and results from increased net interest income and lower total non-interest expense which more than offset the higher provision for credit losses and lower level of non-interest income.
Total average loans in the first nine months of 2025 grew from the 2024 nine-month average by $35.9 million, or 3.5%, due to consistent new loan funding opportunities throughout 2024. So far in 2025, loan payoff activity has exceeded originations and resulted in a $12.7 million, or 1.2%, decrease in total loans since December 31, 2024. Overall, total loans continue to be well above the $1.0 billion threshold, averaging $1.067 billion for the third quarter of 2025. Total loan interest income improved in the first nine months of 2025 compared to the first nine months 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, repricing upward during the first nine months of 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 payoff activity experienced so far this year. Total 2025 year to date loan fee income is $544,000, or 95.8%, higher when compared to the same timeframe in 2024. These favorable items resulted in total loan interest income improving by $3.0 million, or 7.2%, when the first nine months of 2025 is compared to first nine months of 2024.
Total investment securities averaged $242.9 million for the third quarter of 2025, which was $4.4 million, or 1.8%, higher than the $238.5 million average for the third quarter of 2024. The increase reflects the higher level of loan prepayment activity, as well as our liquidity position strengthening during the first nine 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 $17.3 million, or 7.9%, 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 as well as several subordinated debt instruments being called during 2025 and replaced with higher yielding investments caused interest income from investments to increase by $388,000, or 16.1%, for the quarter and by $704,000, or 9.6%, for the first nine months of 2025 compared to last year. Overall, through nine months, the average balance of total interest earning assets increased from last year's average by $47.7 million, or 3.7%, while total interest income increased by $3.8 million, or 7.6%, from the first nine months of 2024.
On the liability side of the balance sheet, total average deposits through the first nine months of 2025 were $69.5 million, or 6.0%, higher when compared to the first nine 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 third 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 $345,000, or 4.4%, for the third quarter of 2025 and decreased by $1.1 million, or 4.7%, for the nine months when compared to both time periods of 2024. Deposit interest expense declined by $22,000, or 0.1%, through the first nine months of 2025 despite total average interest-bearing deposits growing by $71.9 million, or 7.3%, compared to the first nine 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. The Federal Reserve's action to ease monetary policy in September 2025 is anticipated to have a favorable impact on fourth quarter interest bearing deposit costs. Overall, total deposit cost (including the benefit of non-interest-bearing demand deposits which declined modestly between years) averaged 2.07% in the first nine months of 2025, which is a 12-basis point improvement from the first nine months of 2024.
Total borrowings interest expense decreased by $379,000, or 29.0%, for the third quarter of 2025 and declined by $1.0 million, or 27.4%, for the first nine months when compared to both time periods of 2024. The Company's utilization of overnight borrowed funds for the nine months of 2025 was significantly lower than the first nine months of 2024, resulting in the year-to-date average decreasing by $23.8 million, or 78.8%, 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.
The Company recorded a $360,000 provision for credit losses in the third quarter of 2025 after recording a provision recovery of $51,000 in the third quarter of 2024, resulting in an increase in expense of $411,000. For the first nine months of 2025, the Company recognized a $3.4 million provision for credit losses after recognizing a $174,000 provision for credit losses recovery in the first nine months of 2024, resulting in a net unfavorable change of $3.6 million. The provision for credit losses in the third quarter was primarily related to an increase in specific reserves related to a commercial/owner- occupied CRE loan relationship. The significant increase in the provision for credit losses for the nine-month period related to an additional $2.8 million charge-off that was necessary to resolve the Company's largest problem asset, which was disclosed in our second quarter 2025 press release.
Non-performing assets decreased since June 30, 2025, by $1.5 million, or 8.9%, and totaled $15.0 million. The decrease primarily reflects the charge off of an impaired corporate security. A reserve was previously established for this investment. Also contributing to the decrease in non-performing assets was the payoff of a CRE loan that was previously classified as non-performing. Non-performing loans represented 1.39% of total loans at September 30, 2025. The Company recognized net loan charge-offs of $2.9 million, or 0.37% of total average loans, in the first nine months of 2025 compared to net loan charge-offs of $488,000, or 0.06% of total average loans, in the first nine months of 2024. Overall, the Company's allowance for loan credit losses provided 98% coverage of non-performing loans and 1.36% of total loans at September 30, 2025.
Total non-interest income in the third quarter of 2025 increased by $198,000, or 4.7%, from the prior year's third quarter but declined by $904,000, or 6.7%, in the first nine months of 2025 when compared to the first nine months of 2024. Wealth management fees were lower in both time periods of 2025, by $201,000, or 6.6%, for the quarter and by $880,000, or 9.4%, for the nine months. 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 and third quarters 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 benefited from several large new business cases in 2024. Overall, the fair market value of wealth management assets totaled $2.7 billion at September 30, 2025 and increased by $102.1 million, or 4.0%, since December 31, 2024. Also, contributing to the unfavorable comparison for total non-interest income in the first nine months were lower levels of other income by $183,000, or 8.3%, after the Company recognized 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. Mortgage banking revenue was lower by $46,000, or 54.1%, for the quarter and by $106,000, or 45.9%, for the nine months and resulted from a decreased level of residential mortgage production in 2025. Positively impacting non-interest income in both time periods was a higher level of BOLI revenue by $289,000 for the quarter and by $220,000, or 26.8%, for the nine months due to the Company receiving two death claims during the third quarter of 2025. Finally, the Company recognized gains on trading securities of $55,000 for the quarter and $90,000 for the nine months from a $5 million trading account established in the second quarter of 2025.
Total non-interest expense in the third quarter of 2025 increased by $243,000, or 2.1%, when compared to the third quarter of 2024 but decreased by $1.4 million, or 3.9%, during the first nine months of 2025 when compared to the first nine months of 2024. Professional fees decreased by $191,000, or 24.1%, for the third quarter and were $1.7 million, or 43.7%, lower for the nine 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 for the nine months were lower other expenses by $147,000, or 3.7%, primarily driven by the Company having to recognize a $410,000 pension settlement charge in 2024 while no such charge was required so far in 2025. This was partially offset by the bank having to recognize additional workout expenses related to a loan relationship secured by an owner-occupied CRE property. The additional costs related to this property were the primary reason for the unfavorable quarter over quarter comparison for other expenses. Salaries & employee benefits increased by $269,000, or 1.3%, compared to last year's first nine months. Within this broad category, health care costs are $364,000, or 15.1%, 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 $411,000, or 2.7%, due to annual salary merit increases. Additionally, helping to offset the higher costs within total salaries & employee benefits were reduced levels of incentive compensation by $444,000, or 37.8%, in the wealth management and commercial lending divisions.
The Company recorded income tax expense of $948,000 in the first nine months of 2025, or an effective tax rate of 18.5%, which compares to income tax expense of $611,000, or an effective tax rate of 18.4%, in the first nine months of 2024.
The Company had total assets of $1.46 billion, shareholders' equity of $114.6 million, a book value of $6.94 per common share and a tangible book value of $6.11(1) per common share on September 30, 2025. Book value per common share increased by $0.39, or 6.0%, and tangible book value per common share increased by $0.39, or 6.8%, since September 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 along with the Company's improved earnings. The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status as of September 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 November 17, 2025 to shareholders of record on November 3, 2025. This cash dividend represents a 4.0% annualized yield using the October 17, 2025 closing stock price of $3.01 and a 36% 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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