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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2026

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________ to_____________

Commission File Number 0-11204

AmeriServ Financial, Inc.

(Exact name of registrant as specified in its charter)


	Pennsylvania		25-1424278
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Main & Franklin Streets, P.O. Box 430, Johnstown, PA			15907-0430
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code (814) 533-5300

Securities registered pursuant to Section 12(b) of the Act:


Title Of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Stock	ASRV	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ◻	Accelerated Filer ◻	Non-accelerated Filer ⌧	Smaller Reporting Company ☒
			Emerging growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at May 12, 2026
Common Stock, par value $0.01		16,964,267

Table of Contents

AmeriServ Financial, Inc.

INDEX


	Page No.

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Consolidated Balance Sheets (Unaudited) – March 31, 2026 and December 31, 2025	3
Consolidated Statements of Operations (Unaudited) – Three months ended March 31, 2026 and 2025	4
Consolidated Statements of Comprehensive Income (Unaudited) – Three months ended March 31, 2026 and 2025	5
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) – Three months ended March 31, 2026 and 2025	6
Consolidated Statements of Cash Flows (Unaudited) – Three months ended March 31, 2026 and 2025	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3. Quantitative and Qualitative Disclosure About Market Risk	52
Item 4. Controls and Procedures	52
PART II. OTHER INFORMATION	53
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3. Defaults Upon Senior Securities	53
Item 4. Mine Safety Disclosures	53
Item 5. Other Information	53
Item 6. Exhibits	54

Table of Contents

Item 1. Financial Statements

AmeriServ Financial, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


	March 31, 2026		December 31, 2025
ASSETS
Cash and due from depository institutions	$	13,064	$	11,473
Interest bearing deposits and short-term investments		41,039		39,418
Cash and cash equivalents		54,103		50,891
Investment securities, net of allowance for credit losses:
Available for sale, at fair value (allowance for credit losses $34 on March 31, 2026)		185,075		176,228
Held to maturity (fair value $73,917 on March 31, 2026 and $68,916 on December 31, 2025; allowance for credit losses $83 on March 31, 2026 and $90 on December 31, 2025)		78,010		72,256
Trading securities		7,164		7,253
Loans held for sale		423		241
Loans (net of unearned income $477 on March 31, 2026 and $466 on December 31, 2025)		1,031,059		1,032,727
Less: Allowance for credit losses		13,206		13,128
Net loans		1,017,853		1,019,599
Premises and equipment:
Operating lease right-of-use asset		1,347		1,395
Financing lease right-of-use asset		2,050		2,106
Other premises and equipment, net		13,881		13,929
Accrued interest income receivable		6,034		5,557
Intangible assets:
Goodwill		13,611		13,611
Core deposit intangible		51		56
Bank owned life insurance		39,443		39,308
Federal Home Loan Bank stock		3,711		3,785
Federal Reserve Bank stock		2,161		2,161
Other real estate owned and repossessed assets		216		216
Other assets		47,521		45,221
TOTAL ASSETS	$	1,472,654	$	1,453,813
LIABILITIES
Non-interest bearing deposits	$	162,142	$	159,198
Interest bearing deposits		1,107,808		1,088,930
Total deposits		1,269,950		1,248,128
Advances from Federal Home Loan Bank		40,895		44,615
Operating lease liabilities		1,379		1,426
Financing lease liabilities		2,452		2,501
Subordinated debt		26,778		26,767
Total borrowed funds		71,504		75,309
Net deferred tax liability		1,750		1,636
Other liabilities		8,747		9,428
TOTAL LIABILITIES		1,351,951		1,334,501
SHAREHOLDERS' EQUITY
Common stock, par value $0.01 per share; 30,000,000 shares authorized; 27,221,089 shares issued and 16,964,267 shares outstanding on March 31, 2026 and 26,779,089 shares issued, 216,500 shares issuable, and 16,522,267 shares outstanding on December 31, 2025		272		270
Treasury stock at cost, 10,256,822 shares on March 31, 2026 and December 31, 2025		(84,791)		(84,791)
Capital surplus		147,802		147,070
Retained earnings		65,398		64,112
Accumulated other comprehensive loss		(7,978)		(7,349)
TOTAL SHAREHOLDERS' EQUITY		120,703		119,312
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,472,654	$	1,453,813

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)


		Three months ended
		March 31,
		2026			2025
INTEREST INCOME
Interest and fees on loans		$	14,406		$	14,508
Interest bearing deposits and short-term investments			258			114
Investment securities:
Available for sale			2,013			1,810
Held to maturity			763			590
Trading securities			62			—
Total Interest Income			17,502			17,022
INTEREST EXPENSE
Deposits			5,919			6,124
Short-term borrowings			9			76
Advances from Federal Home Loan Bank			459			602
Financing lease liabilities			24			26
Subordinated debt			263			263
Total Interest Expense			6,674			7,091
Net Interest Income			10,828			9,931
Provision (recovery) for credit losses			217			(97)
Net Interest Income after Provision (Recovery) for Credit Losses			10,611			10,028
NON-INTEREST INCOME
Wealth management fees			2,860			2,864
Service charges on deposit accounts			302			275
Mortgage banking revenue			50			28
Trading securities revenue			(63)			—
Bank owned life insurance			238			264
Other income			580			690
Total Non-Interest Income			3,967			4,121
NON-INTEREST EXPENSE
Salaries and employee benefits			7,225			7,223
Net occupancy expense			843			841
Equipment expense			408			390
Professional fees			1,165			685
Data processing and IT expense			1,267			1,252
Supplies, postage and freight			192			174
Miscellaneous taxes and insurance			364			348
Federal deposit insurance expense			210			240
Other expense			684			610
Total Non-Interest Expense			12,358			11,763

PRETAX INCOME			2,220			2,386
Provision for income taxes			426			478
NET INCOME		$	1,794		$	1,908
PER COMMON SHARE DATA:
Basic:
Net income		$	0.11		$	0.12
Average number of shares outstanding			16,927,456			16,519,267
Diluted:
Net income		$	0.11		$	0.12
Average number of shares outstanding			16,928,095			16,519,267

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


		Three months ended
		March 31,
		2026			2025
COMPREHENSIVE INCOME
Net income		$	1,794		$	1,908
Other comprehensive (loss) income
Pension obligation change for defined benefit plan			438			—
Income tax effect			(92)			—
Unrealized holding (losses) gains on available for sale securities arising during period			(1,315)			2,687
Income tax effect			276			(563)
Fair value change for interest rate hedge			25			(12)
Income tax effect			(5)			3
Reclassification adjustment for increase (reduction) of interest expense related to interest rate hedge			56			(20)
Income tax effect			(12)			4
Other comprehensive (loss) income			(629)			2,099
COMPREHENSIVE INCOME		$	1,165		$	4,007

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands, except share and per share data)

(Unaudited)


	Three months ended March 31, 2026
	Common Stock			Treasury Stock			Surplus		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at December 31, 2025	$	270		$	(84,791)		$	147,070	$	64,112		$	(7,349)		$	119,312
Net income		—			—			—		1,794			—			1,794
Common stock issued for exercise of stock options (9,000 shares)		—			—			27		—			—			27
Common stock issued (433,000 shares)		2			—			705		—			—			707
Other comprehensive loss		—			—			—		—			(629)			(629)
Cash dividend declared on common stock ($0.03 per share)		—			—			—		(508)			—			(508)
Balance at March 31, 2026	$	272		$	(84,791)		$	147,802	$	65,398		$	(7,978)		$	120,703


	Three months ended March 31, 2025
	Common Stock			Treasury Stock			Surplus		Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at December 31, 2024	$	268		$	(84,791)		$	146,372	$	60,482		$	(15,083)		$	107,248
Net income		—			—			—		1,908			—			1,908
Other comprehensive income		—			—			—		—			2,099			2,099
Cash dividend declared on common stock ($0.03 per share)		—			—			—		(496)			—			(496)
Balance at March 31, 2025	$	268		$	(84,791)		$	146,372	$	61,894		$	(12,984)		$	110,759

See accompanying notes to unaudited consolidated financial statements.

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AmeriServ Financial, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three months ended
	March 31,
	2026		2025
OPERATING ACTIVITIES
Net income	$	1,794	$	1,908
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (recovery) for credit losses		217		(97)
Depreciation and amortization expense		552		524
Amortization expense of core deposit intangible		5		6
Amortization of fair value adjustment on acquired time deposits		—		(1)
Net accretion of investment securities		(51)		(17)
Net accretion of deferred loan fees		(37)		(34)
Net gains on loans held for sale		(25)		(21)
Origination of mortgage loans held for sale		(2,093)		(487)
Sales of mortgage loans held for sale		1,936		968
Increase in accrued interest receivable		(477)		(331)
Decrease in accrued interest payable		(470)		(368)
Earnings on bank owned life insurance		(238)		(264)
Deferred income taxes		281		167
Common stock issued		707		—
Net change in trading securities		89		—
Net change in operating leases		(47)		(44)
Other, net		(1,787)		(1,310)
Net cash provided by operating activities		356		599
INVESTING ACTIVITIES
Purchase of investment securities — available for sale		(18,166)		(12,702)
Purchase of investment securities — held to maturity		(7,743)		(3,979)
Proceeds from maturities of investment securities — available for sale		7,979		6,182
Proceeds from maturities of investment securities — held to maturity		2,039		558
Purchase of regulatory stock		(633)		(3,674)
Proceeds from redemption of regulatory stock		707		3,890
Net decrease in loans		1,499		5,544
(Purchase) sale of premises and equipment		(400)		65
Proceeds from sale of other real estate owned and repossessed assets		2		1,327
Proceeds from life insurance policies		—		351
Net cash used in investing activities		(14,716)		(2,438)
FINANCING ACTIVITIES
Net increase in deposit balances		21,822		15,844
Net decrease in other short-term borrowings		—		(4,269)
Principal borrowings on advances from Federal Home Loan Bank		—		908
Principal repayments on advances from Federal Home Loan Bank		(3,720)		(4,218)
Principal payments on financing lease liabilities		(49)		(46)
Stock options exercised		27		—
Common stock dividend paid		(508)		(496)
Net cash provided by financing activities		17,572		7,723
NET INCREASE IN CASH AND CASH EQUIVALENTS		3,212		5,884
CASH AND CASH EQUIVALENTS AT JANUARY 1		50,891		17,746
CASH AND CASH EQUIVALENTS AT MARCH 31	$	54,103	$	23,630

See accompanying notes to unaudited consolidated financial statements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Principles of Consolidation

The accompanying consolidated financial statements include the accounts of AmeriServ Financial, Inc. (the Company) 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 $2.6 billion and $2.7 billion that are not reported on the Company’s Consolidated Balance Sheets at March 31, 2026 and December 31, 2025, 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).

2. Basis of Preparation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. In the opinion of management, all adjustments consisting of normal recurring entries considered necessary for a fair presentation have been included. They are not, however, necessarily indicative of the results of consolidated operations for a full-year.

For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

3. Revenue Recognition

Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, requires the Company to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers at the time the transfer of goods or services takes place. Management determined that the primary sources of revenue associated with financial instruments, including interest and fee income on loans and interest on investments, along with certain non-interest revenue sources including net realized gains (losses) on investment securities, mortgage banking revenue, trading securities revenue, and bank owned life insurance are not within the scope of Topic 606. These sources of revenue cumulatively comprise 83.2% of the total gross revenue of the Company.

Non-interest income within the scope of Topic 606 is as follows:

●

Wealth management fees - Wealth management fee income is primarily comprised of fees earned from the management and administration of trusts and customer investment portfolios. The Company’s performance obligation is generally satisfied over a period of time and the resulting fees are billed monthly or quarterly, based upon the month end market value of the assets under management. Payment is generally received after month end through a direct charge to customers’ accounts. Due to this delay in payment, a receivable of $850,000 was established as of March 31, 2026 and included in other assets on the Consolidated Balance Sheets in order to properly recognize the revenue earned but not yet received. Other performance obligations (such as delivery of account statements to customers) are generally considered immaterial to the overall transactions’ price. Commissions on transactions are recognized on a trade-date basis as the performance obligation is satisfied at the point in time in which the trade is processed. Also included within wealth management fees are commissions from the sale of mutual funds, annuities, and life insurance products. Commissions on the sale of

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mutual funds, annuities, and life insurance products are recognized when sold, which is when the Company has satisfied its performance obligation.

●

Service charges on deposit accounts - The Company has contracts with its deposit account customers where fees are charged for certain items or services. Service charges include account analysis fees, monthly service fees, overdraft fees, and other deposit account related fees. Revenue related to account analysis fees and service fees is recognized on a monthly basis as the Company has an unconditional right to the fee consideration. Fees attributable to specific performance obligations of the Company (i.e. overdraft fees, etc.) are recognized at a defined point in time based on completion of the requested service or transaction.

●

Other non-interest income - Other non-interest income consists of other recurring revenue streams such as safe deposit box rental fees, gain (loss) on sale of other real estate owned, ATM and VISA debit card fees, and other miscellaneous revenue streams. Safe deposit box rental fees are charged to the customer on an annual basis and recognized when billed. However, if the safe deposit box rental fee is prepaid (i.e. paid prior to issuance of the annual bill), the revenue is recognized upon receipt of payment. The Company has determined that since rentals and renewals occur consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Gains and losses on the sale of other real estate owned are recognized at the completion of the property sale when the buyer obtains control of the real estate and all the performance obligations of the Company have been satisfied. The Company offers ATM and VISA debit cards to deposit account holders, which allows our customers to access their account electronically at ATMs and POS terminals. Fees related to ATM and VISA debit card transactions are recognized when the transactions are completed and the Company has satisfied its performance obligation.

The following presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three-month periods ending March 31, 2026 and 2025 (in thousands).


	Three months ended
	March 31,
	2026		2025
Non-interest income:
In-scope of Topic 606
Wealth management fees	$	2,860	$	2,864
Service charges on deposit accounts		302		275
Other		449		331
Non-interest income (in-scope of Topic 606)		3,611		3,470
Non-interest income (out-of-scope of Topic 606)		356		651
Total non-interest income	$	3,967	$	4,121

4. Earnings Per Common Share

Basic earnings per share include only the weighted average common shares outstanding. Diluted earnings per share include the weighted average common shares outstanding and any potentially dilutive common stock equivalent shares in the calculation. Treasury shares are excluded for earnings per share purposes. For the three-month periods ending March 31, 2026 and 2025, options to purchase 147,000 common shares, with an exercise price of $3.83 to $4.22, and options to purchase 179,000 common shares, with an exercise price of $2.96 to $4.22, respectively, were outstanding but were not included in the computation of diluted earnings per common share because to do so would be anti-dilutive.

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	Three months ended
	March 31,
	2026		2025

	(In thousands, except share and per share data)
Numerator:
Net income	$	1,794	$	1,908
Denominator:
Weighted average common shares outstanding (basic)		16,927,456		16,519,267
Effect of stock options		639		—
Weighted average common shares outstanding (diluted)		16,928,095		16,519,267
Earnings per common share:
Basic	$	0.11	$	0.12
Diluted		0.11		0.12

5. Consolidated Statement of Cash Flows

On a consolidated basis, cash and cash equivalents include cash and due from depository institutions, interest bearing deposits, and short-term investments in money market funds. The Company made no income tax payments in the first three months of 2026 and 2025. The Company made total interest payments of $7.1 million in the first three months of 2026 compared to $7.5 million in the same 2025 period. The Company had no non-cash transfers to other real estate owned (OREO) and repossessed assets in the first three months of 2026 compared to $49,000 of non-cash transfers in the same 2025 period.

6. 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 trading account, which is managed by an outside third party, is invested in U.S. Treasury and municipal securities. As of March 31, 2026 and December 31, 2025, there was $100,000 and $99,000, respectively, of cash held 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 ordinary shares issued by a borrower in satisfaction of debt previously contracted. The shares 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.

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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 March 31, 2026 and December 31, 2025, the allowance for credit losses on the held to maturity securities portfolio totaled $83,000 and $90,000, 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 (recovery) for credit losses on the Consolidated Statements of Operations.

Accrued interest receivable on held to maturity debt securities totaled $491,000 and $384,000 at March 31, 2026 and December 31, 2025, 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 March 31, 2026 and December 31, 2025. The underlying issuers continue to make timely principal and interest payments on the securities.

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 the specific circumstances surrounding the security. At March 31, 2026, the Company had an allowance for credit losses on the available for sale securities portfolio totaling $34,000 compared to no allowance at December 31, 2025.

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 (recovery) 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 $1.2 million and $977,000 at March 31, 2026 and December 31, 2025, 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

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Company had one available for sale debt security in non-accrual status at March 31, 2026 totaling $500,000 with an associated allowance for credit losses of $34,000. 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 during the first three months of 2026 totaled $50,000. The Company had no available for sale debt securities in non-accrual status at December 31, 2025.

The cost basis and fair values of available for sale and held to maturity investment securities are summarized as follows:

Investment securities available for sale (AFS):

March 31, 2026

Gross

Allowance

Unrealized

For Credit

Fair

Cost Basis

 

Gains

 

Losses

 

Value

(In Thousands)

U.S. Agency

5,135

—

(400)

—

4,735

U.S. Agency mortgage-backed securities

125,237

265

(9,894)

—

115,608

Municipal

15,014

(510)

—

14,589

Corporate bonds

50,981

334

(1,138)

(34)

50,143

Total

196,367

684

(11,942)

(34)

185,075

Investment securities held to maturity (HTM):

March 31, 2026

Allowance

Gross

For Credit

Carrying

Unrealized

Fair

 

Cost Basis

 

Losses

Value

 

Gains

Losses

 

Value

(In Thousands)

U.S. Agency

2,500

—

2,500

—

(230)

2,270

U.S. Agency mortgage-backed securities

41,626

—

41,626

(2,198)

39,482

Municipal

31,466

(1)

31,465

—

(1,630)

29,835

Corporate bonds and other securities

2,501

(82)

2,419

(93)

2,330

Total

78,093

(83)

78,010

(4,151)

73,917

Investment securities available for sale (AFS):


	December 31, 2025
				Gross			Gross		Allowance
				Unrealized			Unrealized		For Credit			Fair
	Cost Basis			Gains			Losses		Losses			Value

	(In Thousands)
U.S. Agency	$	5,162		$	—		$	(372)	$	—		$	4,790
U.S. Agency mortgage-backed securities		119,381			639			(9,164)		—			110,856
Municipal		10,155			140			(361)		—			9,934
Corporate bonds		51,473			387			(1,212)		—			50,648
Total	$	186,171		$	1,166		$	(11,109)	$	—		$	176,228

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Investment securities held to maturity (HTM):


	December 31, 2025
				Allowance					Gross		Gross
				For Credit		Carrying			Unrealized		Unrealized			Fair
	Cost Basis			Losses		Value			Gains		Losses			Value

	(In Thousands)
U.S. Agency	$	2,500		$	—	$	2,500		$	—	$	(216)		$	2,284
U.S. Agency mortgage-backed securities		36,592			—		36,592			210		(1,820)			34,982
Municipal		30,754			(1)		30,753			6		(1,415)			29,344
Corporate bonds and other securities		2,500			(89)		2,411			—		(105)			2,306
Total	$	72,346		$	(90)	$	72,256		$	216	$	(3,556)		$	68,916

The Company sold no AFS securities during the first quarter of 2026 and 2025.

The carrying value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits was $145.4 million at March 31, 2026 and $142.7 million at December 31, 2025. In addition, the Company has pledged $3.7 million of available for sale securities as collateral for a revolving line of credit from an unrelated financial institution.

The interest rate environment and market yields can have a significant impact on the yield earned on mortgage-backed securities (MBS). Prepayment speed assumptions are an important factor to consider when evaluating the returns on an MBS. Generally, as interest rates decline, borrowers have more incentive to refinance into a lower rate, so prepayments will rise. Conversely, as interest rates increase, prepayments will decline. When an MBS is purchased at a premium, the yield will decrease as prepayments increase and the yield will increase as prepayments decrease. As of March 31, 2026, the Company had low premium risk as the book value of our mortgage-backed securities purchased at a premium was only 100.7% of the par value.

Contractual maturities of securities, cost basis for available for sale and carrying value for held to maturity as well as fair market values, at March 31, 2026 are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The weighted average duration of the total investment securities portfolio at March 31, 2026 was 46.4 months and was slightly longer than the duration at December 31, 2025 which was 45.1 months. The duration remains within our internally established guideline to not exceed 60 months which we believe was appropriate to maintain proper levels of liquidity, interest rate risk, market valuation sensitivity and profitability.

Total investment securities:

March 31, 2026

Available for sale

Held to maturity

Cost Basis

Fair Value

Carrying Value

Fair Value

Within 1 year

7,761

7,729

2,406

2,390

After 1 year but within 5 years

24,980

24,245

16,139

15,753

After 5 years but within 10 years

37,997

37,088

17,809

16,279

Over 10 years

125,629

116,013

41,656

39,495

Total

196,367

185,075

78,010

73,917

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The following tables summarize the available for sale debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded as of March 31, 2026 and December 31, 2025, aggregated by security type and length of time in a continuous loss position (in thousands):

March 31, 2026

Less Than 12 Months

12 Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

U.S. Agency

—

4,735

(400)

4,735

(400)

U.S. Agency mortgage-backed securities

33,490

(428)

54,532

(9,466)

88,022

(9,894)

Municipal

6,021

(117)

5,339

(393)

11,360

(510)

Corporate bonds

10,804

(93)

18,271

(1,045)

29,075

(1,138)

Total

50,315

(638)

82,877

(11,304)

133,192

(11,942)


	December 31, 2025
	Less Than 12 Months						12 Months or Longer						Total
	Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
	Value			Losses			Value			Losses			Value			Losses
U.S. Agency	$	—		$	—		$	4,790		$	(372)		$	4,790		$	(372)
U.S. Agency mortgage-backed securities		9,198			(28)			60,272			(9,136)			69,470			(9,164)
Municipal		—			—			5,670			(361)			5,670			(361)
Corporate bonds		5,086			(64)			20,416			(1,148)			25,502			(1,212)
Total	$	14,284		$	(92)		$	91,148		$	(11,017)		$	105,432		$	(11,109)

At March 31, 2026 within the available for sale debt securities portfolio, the Company had 30 U.S. Agency mortgage-backed securities, seven municipal, and 21 corporate bonds that have been in a gross unrealized loss position for less than 12 months with depreciation of 1.3% from its amortized cost basis. Additionally, at March 31, 2026, within the available for sale debt securities portfolio, the Company had six U.S. Agency, 121 U.S. Agency mortgage-backed securities, 15 municipal, and 35 corporate bonds that have been in a gross unrealized loss position for greater than 12 months with depreciation of 12.0% from its amortized cost basis.

These unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields decrease, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, no allowance for credit losses has been recorded for these securities. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, 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.

The following tables present the activity in the allowance for credit losses on available for sale debt securities by major security type for the three months ended March 31, 2026 and 2025 (in thousands).


	Three months ended March 31, 2026
	Balance at December 31, 2025		Charge-Offs		Recoveries		Provision (Recovery)		Balance at March 31, 2026
Corporate bonds	$	—	$	—	$	—	$	34	$	34
Total	$	—	$	—	$	—	$	34	$	34


	Three months ended March 31, 2025
	Balance at December 31, 2024		Charge-Offs		Recoveries		Provision (Recovery)		Balance at March 31, 2025
Corporate bonds	$	360	$	—	$	—	$	640	$	1,000
Total	$	360	$	—	$	—	$	640	$	1,000

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The Company recorded a provision for credit losses on available for sale debt securities of $34,000 during the first quarter of 2026 in order to create a partial reserve for a senior debt corporate investment that was deemed to be credit impaired. The $640,000 provision for credit losses recognized during the first quarter of 2025 was the result of the establishment of a full reserve for a corporate security within the available for sale portfolio due to further credit deterioration and heightened doubts surrounding the issuer’s ability to meet its payment obligations.

The following tables present the activity in the allowance for credit losses on held to maturity debt securities by major security type for the three months ended March 31, 2026 and 2025 (in thousands).


	Three months ended March 31, 2026
	Balance at December 31, 2025		Charge-Offs		Recoveries		Provision (Recovery)		Balance at March 31, 2026
Municipal	$	1	$	—	$	—	$	—	$	1
Corporate bonds and other securities		89		—		—		(7)		82
Total	$	90	$	—	$	—	$	(7)	$	83


	Three months ended March 31, 2025
	Balance at December 31, 2024		Charge-Offs		Recoveries		Provision (Recovery)		Balance at March 31, 2025
Municipal	$	2	$	—	$	—	$	(1)	$	1
Corporate bonds and other securities		87		—		—		8		95
Total	$	89	$	—	$	—	$	7	$	96

As stated previously, 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 PD/LGD method. The calculation is completed on a quarterly basis using the default studies provided by an industry leading source.

Maintaining investment quality is a primary objective of the Company’s Investment Policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s or Standard & Poor’s rating of A. The Company monitors the credit ratings of its debt securities on a quarterly basis. At March 31, 2026, 2.2% of the total investment securities portfolio was rated AAA as compared to 1.7% at December 31, 2025. At March 31, 2026, 78.0% of the total investment securities portfolio was rated AA or higher compared to 76.5% at December 31, 2025. Approximately 12.9% of the total investment securities portfolio was either rated below A or unrated at March 31, 2026 as compared to 13.5% at December 31, 2025.

Specifically, the following table summarizes the amortized cost of held to maturity debt securities at March 31, 2026, aggregated by credit quality indicator (in thousands).

March 31, 2026

Credit Rating

AAA/AA/A

BBB/BB/B

Unrated

Total

U.S. Agency

2,500

—

 

—

 

2,500

U.S. Agency mortgage-backed securities

41,626

—

41,626

Municipal

31,465

—

31,465

Corporate bonds and other securities

1,000

—

1,419

2,419

Total

76,591

—

1,419

78,010

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Trading Securities

The following table presents the Company’s trading securities, at estimated fair value (in thousands).


	March 31, 2026		December 31, 2025
U.S. Treasury	$	3,139	$	3,401
Municipal		4,025		3,852
Total	$	7,164	$	7,253

The following table presents the net gain (loss) on trading securities included in trading securities revenue for the three- month periods ended March 31, 2026 and 2025 (in thousands).


	Three months ended
	March 31,
	2026		2025

Net realized gain on sales	$	4	$	—
Net unrealized loss		(52)		—
Net loss on trading securities		(48)		—
Less: Portfolio expenses and management fees		15		—
Trading securities revenue	$	(63)	$	—

7. 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. As of March 31, 2026 and December 31, 2025, accrued interest receivable on loans totaled $4.3 million and $4.2 million, respectively, which is reported in accrued interest income receivable on the Consolidated Balance Sheets and is excluded from the estimate of credit losses. 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.

The segments of the Company’s loan portfolio are disaggregated into classes that allow management to monitor risk and performance. The loan classes used are consistent with the internal reports evaluated by the Company’s management and Board of Directors to monitor risk and performance within various segments of its loan portfolio. The commercial loan segment includes both the owner occupied commercial real estate loan and the commercial and industrial loan classes. The commercial real estate loan segment includes the non-owner occupied commercial real estate loan classes of retail, multi-family, and other. The residential mortgage loan segment is comprised of first lien amortizing residential mortgage loans while the consumer loan segment consists primarily of home equity loans secured by residential real estate, installment loans, and overdraft lines of credit associated with customer deposit accounts.

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The loan portfolio of the Company consisted of the following (in thousands):


	March 31, 2026		December 31, 2025
Commercial:
Commercial real estate (owner occupied) ⁽¹⁾	$	85,986	$	85,233
Commercial and industrial		140,686		144,325
Commercial real estate (non-owner occupied):
Retail ⁽¹⁾		173,662		171,530
Multi-family ⁽¹⁾		126,422		131,085
Other ⁽¹⁾		223,973		217,935
Residential mortgages ⁽¹⁾		168,083		169,814
Consumer		112,247		112,805
Loans, net of unearned income	$	1,031,059	$	1,032,727

(1)	Real estate construction loans constituted 5.6% and 5.0% of the Company’s total loans, net of unearned income as of March 31, 2026 and December 31, 2025, respectively.

Loan balances at March 31, 2026 and December 31, 2025 are net of unearned income of $477,000 and $466,000, respectively.

8. 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, that 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 allows 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

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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.

The following tables summarize the roll forward of the allowance for credit losses by loan portfolio segment for the three-month periods ended March 31, 2026 and 2025 (in thousands).

Three months ended March 31, 2026

Balance at

Charge-

Provision

Balance at

December 31, 2025

Offs

Recoveries

(Recovery)

March 31, 2026

Commercial real estate (owner occupied)

319

 

—

 

(4)

 

321

Commercial and industrial

2,987

—

(54)

2,935

Commercial real estate (non-owner occupied) - retail

3,248

(241)

—

279

3,286

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

1,403

—

(146)

1,257

Other commercial real estate (non-owner occupied)

3,725

—

114

3,846

Residential mortgages

296

—

372

Consumer

1,150

(13)

1,189

Total

13,128

(254)

284

13,206


	Three months ended March 31, 2025
	Balance at		Charge-				Provision		Balance at
	December 31, 2024		Offs		Recoveries		(Recovery)		March 31, 2025
Commercial real estate (owner occupied)	$	398	$	—	$	6	$	(75)	$	329
Commercial and industrial		2,860		—		11		8		2,879
Commercial real estate (non-owner occupied) - retail		3,695		—		—		122		3,817
Commercial real estate (non-owner occupied) - multi-family		1,478		—		—		141		1,619
Other commercial real estate (non-owner occupied)		3,451		—		3		132		3,586
Residential mortgages		839		—		1		(449)		391
Consumer		1,191		(104)		19		85		1,191
Total	$	13,912	$	(104)	$	40	$	(36)	$	13,812

The Company recorded a $284,000 provision for credit losses for loans in the first quarter of 2026 as compared to a $36,000 provision for credit losses recovery in the first quarter of 2025. The increased provision for credit losses expense in 2026 reflects updates to both historical loss rates and qualitative adjustments. In addition, contraction in portfolio balances since the first quarter of 2025 contributed to the allowance for loan credit losses at March 31, 2026 being $606,000, or 4.4%, lower than the allowance for loan credit losses at March 31, 2025.

Non-performing assets from the loan portfolio, which are discussed in detail below, decreased from $8.5 million at December 31, 2025 to $8.2 million at March 31, 2026. The decrease primarily reflects the partial charge-down of a CRE loan secured by retail property. Non-performing assets from the loan portfolio were at 0.80% of total loans as of March 31, 2026. During the first three months of 2026, the Company experienced net loan charge-offs of $206,000, or 0.08% of total average loans, compared to net charge-offs of $64,000, or 0.02% of total average loans, in the first three months of 2025. In summary, the allowance for credit losses on the loan portfolio provided 165% coverage of non-performing loans and 1.28% of total loans at March 31, 2026 compared to 158% coverage of non-performing loans and 1.27% of total loans at December 31, 2025.

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

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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:

●

changes in lending policies and procedures;

●

changes in economic conditions;

●

changes in the nature and volume of the portfolio;

●

staff experience;

●

changes in volume and severity of delinquency, non-performing loans, and classified loans;

●

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, 43% of the first quarter of 2026 general reserve represented qualitative adjustment with 57% 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 method. 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;

●

new improvements to, or lack of maintenance of, the subject property or competing properties upon physical inspection by the Bank;

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●

changes in underlying economic and market assumptions, such as material changes in current and projected vacancy, absorption rates, capitalization rates, lease terms, rental rates, sales prices, concessions, construction overruns and delays, zoning changes, etc.; and/or

●

environmental contamination.

The value of the property is adjusted to appropriately reflect the above listed factors and the value is discounted to reflect the value impact of a forced or distressed sale, any outstanding senior liens, any outstanding unpaid real estate taxes, transfer taxes and closing costs that would occur with sale of the real estate. If the Chief Credit Officer determines that a reasonable value cannot be derived based on available information, a new appraisal is ordered. The determination of the need for a new appraisal, versus completion of a property valuation by the Bank’s Collections and Assigned Risk Department personnel, rests with the Chief Credit Officer and not the originating account officer.

The following tables summarize the loan portfolio and allowance for credit losses (in thousands).

At March 31, 2026

Commercial real estate (owner occupied)

Commercial and industrial

Commercial real estate (non-owner occupied) - retail

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

Other commercial real estate (non-owner occupied)

Residential mortgages

Consumer

Total

Loans:

Individually evaluated

2,870

2,131

171

—

2,014

204

—

7,390

Collectively evaluated

83,116

138,555

173,491

126,422

221,959

167,879

112,247

1,023,669

Total loans

85,986

140,686

173,662

126,422

223,973

168,083

112,247

1,031,059

Allowance for credit losses:

Specific reserve allocation

—

549

—

549

General reserve allocation

321

2,386

3,286

1,257

3,846

372

1,189

12,657

Total allowance for credit losses

321

2,935

3,286

1,257

3,846

372

1,189

13,206


	At December 31, 2025
	Commercial real estate (owner occupied)		Commercial and industrial		Commercial real estate (non-owner occupied) - retail			Commercial real estate (non-owner occupied) - multi-family	Other commercial real estate (non-owner occupied)		Residential mortgages		Consumer		Total
Loans:
Individually evaluated	$	2,875	$	2,148	$	415	$	—	$	2,034	$	155	$	—	$	7,627
Collectively evaluated		82,358		142,177		171,115		131,085		215,901		169,659		112,805		1,025,100
Total loans	$	85,233	$	144,325	$	171,530	$	131,085	$	217,935	$	169,814	$	112,805	$	1,032,727
Allowance for credit losses:
Specific reserve allocation	$	—	$	558	$	—	$	—	$	—	$	—	$	—	$	558
General reserve allocation		319		2,429		3,248		1,403		3,725		296		1,150		12,570
Total allowance for credit losses	$	319	$	2,987	$	3,248	$	1,403	$	3,725	$	296	$	1,150	$	13,128

The following tables present the amortized cost basis of collateral-dependent loans which were individually evaluated for a specific reserve allocation in the allowance for credit losses by class of loans (in thousands).


	Collateral Type
March 31, 2026	Real Estate		Business Assets
Commercial:
Commercial real estate (owner occupied)	$	2,769	$	101
Commercial and industrial		1,362		72
Commercial real estate (non-owner occupied):
Retail		171		—
Other		2,014		—
Residential mortgages		204		—
Total	$	6,520	$	173

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	Collateral Type
December 31, 2025	Real Estate		Business Assets
Commercial:
Commercial real estate (owner occupied)	$	2,774	$	101
Commercial and industrial		1,362		72
Commercial real estate (non-owner occupied):
Retail		415		—
Other		2,034		—
Residential mortgages		155		—
Total	$	6,740	$	173

Non-Performing Assets from the Loan Portfolio

Non-performing assets from the loan portfolio are comprised of (i) loans which are on a non-accrual basis, (ii) loans which are contractually past due 90 days or more as to interest or principal payments, and (iii) other real estate owned (OREO – real estate acquired through foreclosure and in-substance foreclosures) and repossessed assets.

Loans will be transferred to non-accrual status when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating the loan include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The following table presents non-accrual loans, loans past due 90 days or more still accruing interest, and OREO and repossessed assets by portfolio class (in thousands).


	At March 31, 2026
	Non-accrual with no ACL			Non-accrual with ACL			Total non-accrual			Loans past due 90 days or more still accruing		OREO and repossessed assets			Total non-performing assets
Commercial real estate (owner occupied)	$	2,870		$	—		$	2,870		$	—	$	—		$	2,870
Commercial and industrial		1,437			698			2,135			—		216			2,351
Commercial real estate (non-owner occupied) - retail		171			—			171			—		—			171
Other commercial real estate (non-owner occupied)		2,014			—			2,014			—		—			2,014
Residential mortgages		—			54			54			131		—			185
Consumer		—			631			631			—		—			631
Total	$	6,492		$	1,383		$	7,875		$	131	$	216		$	8,222


	At December 31, 2025
	Non-accrual with no ACL			Non-accrual with ACL			Total non-accrual			Loans past due 90 days or more still accruing		OREO and repossessed assets			Total non-performing assets
Commercial real estate (owner occupied)	$	2,875		$	—		$	2,875		$	—	$	—		$	2,875
Commercial and industrial		1,437			714			2,151			—		216			2,367
Commercial real estate (non-owner occupied) - retail		415			—			415			—		—			415
Other commercial real estate (non-owner occupied)		2,034			—			2,034			—		—			2,034
Residential mortgages		155			51			206			10		—			216
Consumer		—			611			611			—		—			611
Total	$	6,916		$	1,376		$	8,292		$	10	$	216		$	8,518

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public

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information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk.

Management uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized. The first five pass categories are aggregated, while the pass-6, special mention, substandard and doubtful categories are disaggregated to separate pools. The criticized rating categories utilized by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a substandard classification. Loans in the substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans in the doubtful category have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. All loans greater than 90 days past due, or for which any portion of the loan represents a specific allocation of the allowance for credit losses, are typically placed in substandard or doubtful.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process, which dictates that, 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. Generally, consumer and residential mortgage loans are included in the pass categories unless a specific action, such as bankruptcy, delinquency, or death occurs to raise awareness of a possible credit event. 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. The Loan Review Department is an experienced, independent function which reports directly to the Board’s Audit Committee. The scope of commercial portfolio coverage by the Loan Review Department is defined and presented to the Audit Committee for approval on an annual basis. The approved scope of coverage for the year ending December 31, 2026 requires review of approximately 38% of the commercial loan portfolio.

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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AMERISERV FINANCIAL INC /PA/ 10-Q