AMERISERV FINANCIAL INC /PA/ - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

[ ] 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 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

MAIN & FRANKLIN STREETS, P.O. BOX 430, JOHNSTOWN, 15907-0430
PENNSYLVANIA
(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:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, $2.50 PAR VALUE SHARE PURCHASE RIGHTS
(TITLE OF CLASS) (TITLE OF CLASS)

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. [X] Yes [ ] No

Indicate by check mark whether the registrant is an accelerated filer (as
described in Rule 12b-2 of the Act). [ ] Yes [X] No

State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
(See definition of affiliate in Rule 405.) $35,010,449.84 as of January 31,
2003.

NOTE -- If a determination as to whether a particular person or entity is an
affiliate cannot be made without involving unreasonable effort and expense, the
aggregate market value of the common stock held by non-affiliates may be
calculated on the basis of assumptions reasonable under the circumstances,
provided that the assumptions are set forth in this Form.

Applicable only to registrants involved in bankruptcy proceedings during the
preceding five years: Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Sections 12, 13, or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. [ ] Yes [ ] No

(Applicable only to corporate registrants) Indicate the number of shares
outstanding of each of the registrant's classes of common stock, as of the
latest practicable date. 13,920,656 shares were outstanding as of January 31,
2003.

DOCUMENTS INCORPORATED BY REFERENCE. List hereunder the following documents
if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part
II, etc.) into which the document is incorporated: (1) Any annual report to
security holders; (2) Any proxy or information statement; and (3) Any prospectus
filed pursuant to Rule 424(b) or (e) under the Securities Act of 1933. The
listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1980).

Portions of the annual shareholders' report for the year ended December 31,
2002, are incorporated by reference into Parts I and II.

Portions of the proxy statement for the annual shareholders' meeting are
incorporated by reference in Part III.

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

Exhibit Index is located on page 78.
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FORM 10-K INDEX

PART I
Item 1. Business.................................................... 2
Item 2. Properties.................................................. 9
Item 3. Legal Proceedings........................................... 9
Item 4. Submission of Matters to a Vote of Security Holders......... 9

PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters......................................... 10
Item 6. Selected Consolidated Financial Data........................ 11
Item 7. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations............... 14
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk........................................................ 31
Item 8. Consolidated Financial Statements and Supplementary Data.... 31
Item 9. Changes In and Disagreements With Accountants On Accounting
and Financial Disclosure.................................... 76

PART III
Item 10. Directors and Executive Officers of the Registrant.......... 76
Item 11. Executive Compensation...................................... 76
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 76
Item 13. Certain Relationships and Related Transactions.............. 76
Item 14. Controls and Procedures..................................... 76

PART IV
Item 15. Exhibits, Consolidated Financial Statement Schedules, and
Reports on Form 8-K......................................... 77
Signatures.................................................. 80

1

PART I

ITEM 1. BUSINESS

GENERAL

AmeriServ Financial, Inc. (the Company) is a bank holding company,
organized under the Pennsylvania Business Corporation Law. The Company became a
holding company upon acquiring all of the outstanding shares of AmeriServ
Financial Bank (the Bank) on January 5, 1983. The Company also acquired all of
the outstanding shares of Three Rivers Bank and Trust Company (Three Rivers
Bank) in June 1984, McKeesport National Bank (McKeesport Bank) in December 1985
(which was subsequently merged into Three Rivers Bank), Community Bancorp, Inc.
in March 1992 (which was also subsequently merged into Three Rivers Bank in July
1997), and Johnstown Savings Bank (JSB) in June 1994 (which was immediately
merged into AmeriServ Financial Bank). In addition, the Company formed AmeriServ
Life Insurance Company (AmeriServ Life) in October 1987, AmeriServ Trust and
Financial Services Company (the Trust Company) in October 1992, and AmeriServ
Associates, Inc. (AmeriServ Associates), in January 1997.

On April 1, 2000, the Company executed its Board approved tax-free spin-off
of its Three Rivers Bank subsidiary. Shareholders received one share of the new
Three Rivers Bancorp (NASDAQ: TRBC) common stock for every two shares of
AmeriServ Financial common stock that they owned. The distribution of the Three
Rivers Bancorp shares did not change the number of the Company's common shares
outstanding. Standard Mortgage Corporation of Georgia (SMC -- a mortgage banking
company that services residential mortgage loans), previously a subsidiary of
Three Rivers Bank, was internally spun-off from Three Rivers Bank to the Company
prior to consummation of the Three Rivers Bank spin-off. In the fourth quarter
of 2001, SMC was sold by the Company to the Bank. For more detailed pro forma
information see Note #26 to the Consolidated Financial Statements.

The Company's principal activities consist of owning and operating its four
wholly owned subsidiary entities. At December 31, 2002, the Company had, on a
consolidated basis, total assets, deposits, and shareholders' equity of $1.18
billion, $670 million and $78 million, respectively. The Company and the
subsidiary entities derive substantially all of their income from banking and
bank-related services. The Company functions primarily as a coordinating and
servicing unit for its subsidiary entities in general management, accounting and
taxes, loan review, auditing, investment accounting, marketing and insurance
risk management.

On January 24, 2003, the Company's Board of Directors chose to de-elect
Financial Holding Company status per Gramm-Leach-Bliley. The Company had not
been using any of the additional powers given to a financial holding company. As
previously stated, the Company remains a bank holding company.

AMERISERV FINANCIAL BANKING SUBSIDIARY

AmeriServ Financial Bank

AmeriServ Financial Bank is a state bank chartered under the Pennsylvania
Banking Code of 1965, as amended. Through 23 locations in Allegheny, Cambria,
Centre, Dauphin, Somerset, and Westmoreland Counties, Pennsylvania, AmeriServ
Financial Bank conducts a general banking business. It is a full-service bank
offering (i) retail banking services, such as demand, savings and time deposits,
money market accounts, secured and unsecured loans, mortgage loans, safe deposit
boxes, holiday club accounts, collection services, money orders, and traveler's
checks; (ii) lending, depository and related financial services to commercial,
industrial, financial, and governmental customers, such as real estate-mortgage
loans, short- and medium-term loans, revolving credit arrangements, lines of
credit, inventory and accounts receivable financing, real estate-construction
loans, business savings accounts, certificates of deposit, wire transfers, night
depository, and lock box services.

AmeriServ Financial Bank also operates 29 automated bank teller machines
(ATMs) through its 24-Hour Banking Network that is linked with STAR, a regional
ATM network and CIRRUS, a national ATM network. AmeriServ Financial Bank also
has two wholly owned mortgage banking subsidiaries -- SMC

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and AmeriServ Mortgage Company. AmeriServ Mortgage Company originates and sells
retail mortgage loans primarily in west-central Pennsylvania. SMC is a
residential mortgage loan servicer based in Atlanta, GA. Additionally, AmeriServ
Financial Services Corporation was formed on May 23, 1997 and engages in the
sale of annuities, mutual funds, and insurance.

AmeriServ Financial Bank's deposit base is such that loss of one depositor
or a related group of depositors would not have a materially adverse effect on
its business. In addition, the loan portfolio is also diversified so that one
industry or group of related industries does not comprise a material portion of
the loan portfolio. AmeriServ Financial Bank's business is not seasonal nor does
it have any risks attendant to foreign sources.

AmeriServ Financial Bank is subject to supervision and regular examination
by the Federal Reserve and the Pennsylvania Department of Banking. See Note #24,
Regulatory Matters, for a discussion of the Memorandum Of Understanding which
the Company and its Board of Directors recently entered into with its primary
regulators. Various federal and state laws and regulations govern many aspects
of its banking operations. The following is a summary of key data (dollars in
thousands) and ratios at December 31, 2002:

Headquarters................................................ Johnstown, PA
Chartered................................................... 1933
Total Assets................................................ $1,165,807
Total Investment Securities................................. $ 500,931
Total Loans (net of unearned income)........................ $ 572,977
Total Deposits.............................................. $ 669,929
Total Net Income (Loss)..................................... $ (2,648)
Asset Leverage Ratio........................................ 7.24%
2002 Return on Average Assets............................... (0.22)%
2002 Return on Average Equity............................... (2.52)%
Total Full-time Equivalent Employees........................ 348

AMERISERV FINANCIAL NON-BANKING SUBSIDIARIES

AmeriServ Trust and Financial Services Company

AmeriServ Trust and Financial Services Company is a trust company organized
under Pennsylvania law in October 1992. The Trust Company offers a complete
range of trust and financial services and has $1.1 billion in assets under
management. The Trust Company also offers the ERECT Funds and BUILD Fund which
are collective investment funds for trade union controlled pension fund assets.

AmeriServ Life

AmeriServ Life is a captive insurance company organized under the laws of
the State of Arizona. AmeriServ Life engages in underwriting as reinsurer of
credit life and disability insurance within the Company's market area.
Operations of AmeriServ Life are conducted in each office of the Company's
banking subsidiary. AmeriServ Life is subject to supervision and regulation by
the Arizona Department of Insurance, the Insurance Department of the
Commonwealth of Pennsylvania, and the Federal Reserve. At December 31, 2002,
AmeriServ Life had total assets of $2.7 million and total shareholder's equity
of $1.7 million.

AmeriServ Associates

AmeriServ Associates is a registered investment advisory firm that
administers investment portfolios, offers operational support systems and
provides asset and liability management services to small and mid-sized
financial institutions. At December 31, 2002, AmeriServ Associates had total
assets of $285,000 and total shareholder's equity of $249,000.

3

MONETARY POLICIES

Commercial banks are affected by policies of various regulatory authorities
including the Federal Reserve System. An important function of the Federal
Reserve System is to regulate the national supply of bank credit. Among the
instruments of monetary policy used by the Board of Governors are: open market
operations in U.S. Government securities, changes in the discount rate on member
bank borrowings, and changes in reserve requirements on bank deposits. These
means are used in varying combinations to influence overall growth of bank
loans, investments, and deposits, and may also affect interest rate charges on
loans or interest paid for deposits. The monetary policies of the Board of
Governors have had a significant effect on the operating results of commercial
banks in the past and are expected to continue to do so in the future.

COMPETITION

The subsidiary entities face strong competition from other commercial
banks, savings banks, savings and loan associations, and several other financial
or investment service institutions for business in the communities they serve.
Several of these institutions are affiliated with major banking and financial
institutions which are substantially larger and have greater financial resources
than the subsidiary entities. As the financial services industry continues to
consolidate, the scope of potential competition affecting the subsidiary
entities will also increase. For most of the services that the subsidiary
entities perform, there is also competition from credit unions and issuers of
commercial paper and money market funds. Such institutions, as well as brokerage
houses, consumer finance companies, insurance companies, and pension trusts, are
important competitors for various types of financial services. In addition,
personal and corporate trust investment counseling services are offered by
insurance companies, other firms, and individuals.

MARKET AREA

The Company's local economy, while continuing to diversify, has not been
immune to the national economic slowdown. The economy in Cambria and Somerset
counties continue to perform below the national average. Nationally, the
unemployment rate at year-end 2002 averaged 6.0%, while the unemployment rate in
the Cambria/Somerset market was over 2.0% higher at slightly over 8.0%. Local
market conditions were noticeably slower at the end of the year than at the
beginning. Loan demand has mirrored this general slowdown in recent months.
Overall, economic conditions in the Johnstown Metro are expected to continue
slowing in 2003 with unemployment expected to rise to a range between 8.5% and
9.5%.

Economic conditions are much better in the State College area that
comprises Centre County. The unemployment rate, the lowest in the state of
Pennsylvania, remains around 3.0%, well below the national average. The State
College market presents the Company with a more vibrant economic market and a
different demographic. The 18 to 34 year old age group makes up a much greater
percentage of the population in State College than in the Cambria/Somerset
market, while the population of people 50 years of age or older is significantly
less in State College. Overall, opportunities in the State College market are
quite different and challenging, providing a promising growing source of
business to profitably grow the Company.

During 2002, the Company maintained union niche offices in Harrisburg in
Dauphin County to the east of Johnstown and west into Pittsburgh in Allegheny
County. There has been growth in both counties even as the national economy
slowed.

Nationally, the economic environment remains sluggish at best. Geopolitical
forces in the Middle East continue to overshadow all economic gains realized
within the geographic boundaries of the United States. While most economist are
projecting significant improvement in the domestic economy by the last quarter
of 2003, most of the Company's market area is expected to be slow in recovery.

EMPLOYEES

The Company employed approximately 493 persons as of December 31, 2002, in
full- and part-time positions. Approximately 288 non-supervisory employees of
AmeriServ Financial Bank are represented by the United Steelworkers of America,
AFL-CIO-CLC, Local Union 2635-06/07. AmeriServ Financial Bank and

4

such employees are parties to a labor contract pursuant to which employees have
agreed not to engage in any work stoppage during the term of the contract which
has been extended for one year and will expire on October 15, 2004. AmeriServ
Financial unionized employees voted overwhelmingly to accept the extension at a
meeting held January 13, 2003. The contract extension, ratified by the general
membership, includes a wage increase of 27 cents an hour or 2.25% of the average
wage effective October 16, 2003. AmeriServ Financial Bank has not experienced a
work stoppage since 1979.

COMMITMENTS AND LINES OF CREDIT

The Company's subsidiaries are obligated under commercial, standby, and
trade-related irrevocable letters of credit aggregating $5.3 million at December
31, 2002. In addition, the Company's AmeriServ Financial Bank subsidiary has
issued lines of credit to customers generally for periods of up to one year.
Borrowings under such lines of credit are usually for the working capital needs
of the borrower. At December 31, 2002, AmeriServ Financial Bank had unused loan
commitments of approximately $98.2 million. The Company has ample liquidity
available to fund all outstanding loan commitments if they were fully drawn
upon.

STATISTICAL DISCLOSURES FOR BANK HOLDING COMPANIES

The following Guide 3 information is included in this Form 10-K as listed
below:

I. Distribution of Assets, Liabilities, and Stockholders'
Equity; Interest Rates and Interest Differential
Information.
Information required by this section is presented on pages
18-19 and 27-29.

II. Investment Portfolio
Information required by this section is presented on pages
5, 6, 44, 45 and 46.

III. Loan Portfolio
Information required by this section appears on pages 7, 8,
47, 48 and 49.

IV. Summary of Loan Loss Experience
Information required by this section is presented on pages
21-23 and 47.

V. Deposits
Information required by this section follows on pages 8, 9
and 51.

VI. Return on Equity and Assets
Information required by this section is presented on page
12.

VII. Short-Term Borrowings
Information required by this section is presented on page
50.

INVESTMENT PORTFOLIO

Investment securities held to maturity are carried at amortized cost while
investment securities classified as available for sale are reported at fair
value.

5

The following table sets forth the cost basis and market value of AmeriServ
Financial's investment portfolio as of the periods indicated:

Investment Securities Available for Sale at:

Investment Securities Held to Maturity at:

The total securities portfolio increased by approximately $7.2 million
between December 31, 2001 and December 31, 2002. This increase was due to
management's decision to purchase securities as a result of loan run-off
experience in the fourth quarter.

The total securities portfolio decreased by approximately $52 million
between December 31, 2000 and December 31, 2001. This decrease was due to
management's decision to delever the securities portfolio through a combination
of securities sales and cash flow from mortgage-backed securities pay-downs. The
Company used this cash from the securities portfolio to primarily paydown
short-term borrowings.

At December 31, 2002, investment securities having a book value of $257.3
million were pledged as collateral for public funds, and FHLB borrowings.

The Company and its subsidiaries, collectively, did not hold securities of
any single issuer, excluding U.S. Treasury and U.S. Agencies, that exceeded 10%
of shareholders' equity at December 31, 2002.

Maintaining investment quality is a primary objective of the Company's
investment policy which, subject to certain minor exceptions, prohibits the
purchase of any investment security below a Moody's Investor Service or Standard
& Poor's rating of A. At December 31, 2002, 97.1% of the portfolio was rated AAA
compared to 94.4% at December 31, 2001. Approximately 1.2% was rated below A or
unrated at December 31, 2002.

6

LOAN PORTFOLIO

The following table sets forth the Company's loans by major category as of
the dates set forth below:

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(1) At December 31, 2002 and 2001, real estate-construction loans constituted
7.2% and 5.6% of the Company's total loans, net of unearned income,
respectively.

Total loans, net of unearned income, decreased by $24.5 million between
December 31, 2001, and December 31, 2002. This decline occurred in commercial
loans which decreased by $34.4 million, or 2.8%. This decline occurred in
commercial loans due primarily to heightened prepayments and payoffs experienced
in the fourth quarter of 2002. Total loans, net of unearned income, increased by
$13 million between December 31, 2000, and December 31, 2001. This growth
occurred in commercial mortgage loans which increased by $15.6 million, or 8.0%,
and commercial loans which grew by $6.9 million, or a 5.9%.

The amount of loans outstanding by category as of December 31, 2002, which
are due in (i) one year or less, (ii) more than one year through five years, and
(iii) over five years, are shown in the following table. Loan balances are also
categorized according to their sensitivity to changes in interest rates.

The loan maturity information is based upon original loan terms and is not
adjusted for principal paydowns and rollovers. In the ordinary course of
business, loans maturing within one year may be renewed, in whole or in part, as
to principal amount at interest rates prevailing at the date of renewal. For
additional information regarding interest rate sensitivity, see Management's
Discussion and Analysis of Consolidated Financial Condition and Results of
Operations -- Interest Rate Sensitivity.

7

COMMERCIAL

This category includes credit extensions and leases to commercial and
industrial borrowers. Business assets, including accounts receivable, inventory
and/or equipment, typically secure these credits. In appropriate instances,
extensions of credit in this category are subject to collateral advance
formulas. Balance sheet strength and profitability are considered when analyzing
these credits, with special attention given to historical, current and
prospective sources of cash flow, and the ability of the customer to sustain
cash flow at acceptable levels. Policy permits flexibility in determining
acceptable debt service coverage ratios, with a minimum level of 1.1 to 1
desired. Personal guarantees are frequently required; however, as the financial
strength of the borrower increases, our ability to obtain personal guarantees
decreases. In addition to economic risk, this category is impacted by the
management ability of the borrower and industry risk, which are also considered
during the underwriting process.

COMMERCIAL LOANS SECURED BY REAL ESTATE

This category includes various types of loans, including acquisition and
construction of investment property, owner-occupied property and operating
property. Maximum term, minimum cash flow coverage, leasing requirements,
maximum amortization and maximum loan to value ratios are controlled by our
credit policy and follow industry guidelines and norms, and regulatory
limitations. Personal guarantees are normally required during the construction
phase on construction credits, and are frequently obtained on mid to smaller
commercial real estate loans. In addition to economic risk, this category is
subject to geographic and portfolio concentration risk, which are monitored and
considered at underwriting.

REAL ESTATE -- MORTGAGE

This category includes mortgages that are secured by residential property.
Underwriting of loans within this category is pursuant to Freddie Mac/Fannie Mae
underwriting guidelines, with the exception of CRA loans, which exhibit more
liberal standards. The major risk in this category is that a significant
downward economic trend would increase unemployment and cause payment default.

CONSUMER

This category includes consumer installment loans and revolving credit
plans. Underwriting is pursuant to industry norms and guidelines and is achieved
through a process, which is inclusive of the Fair Isaac Credit Scoring program.
The major risk in this category is a significant economic downturn.

DEPOSITS

The following table sets forth the average balance of the Company's
deposits and the average rates paid thereon for the past three calendar years:

Total average deposits increased by $18.1 million or 2.7% in 2002. Factors
contributing to the overall increase were the full-year operation of two new
union niche offices and a full service community office in State College, the
acquisition of escrow deposits from our mortgage banking operation and increased
market share within the Company's core Cambria County market. Total average
deposits decreased by $135 million

8

in 2001, but $143 million of this decline was due to the April 1, 2000, spin-off
of Three Rivers Bank (TRB). Excluding TRB, there was an $8 million increase in
average deposits due to the addition of two new union niche offices and the
opening of a full service branch in State College. This more than offset the
sale of $15.7 million of deposits with the Company's Coalport office.

The following table indicates the maturities and amounts of certificates of
deposit issued in denominations of $100,000 or more as of December 31, 2002:

MATURING IN:

ITEM 2. PROPERTIES

The principal offices of the Company and AmeriServ Financial Bank occupy a
five-story building at the corner of Main and Franklin Streets in Johnstown plus
nine floors of the building adjacent thereto. The Company occupies the main
office and its subsidiary entities have 16 other locations which are owned in
fee. Eleven additional locations are leased with terms expiring from February
14, 2003 to March 31, 2018.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to a number of asserted and unasserted potential
legal claims encountered in the normal course of business. In the opinion of
both management and legal counsel, there is no present basis to conclude that
the resolution of these claims will have a material adverse effect on the
Company's consolidated financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted by the Company to its shareholders through the
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.

9

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

As of January 31, 2003, the Company had 4,877 shareholders of its Common
Stock. Other information required by this section is presented on pages 59, 60
and 61. On February 28, 2003, the Company and the Bank entered into a Memorandum
of Understanding (MOU) with the Federal Reserve Bank of Philadelphia (Federal
Reserve) and the Pennsylvania Department of Banking (Department). Under the
terms of the MOU, the Company and the Bank cannot declare dividends, the Company
may not redeem any of its own stock, and the Company cannot incur any additional
debt other than in the ordinary course of business, in each case, without the
prior written approval of the Federal Reserve and the Department. Accordingly,
the Board of Directors of the Company cannot reinstate the previously suspended
common stock dividend, or reinstitute its stock repurchase program without the
concurrence of the Federal Reserve and the Department.

COMMON STOCK

AmeriServ Financial, Inc.'s Common Stock is traded on the NASDAQ National
Market System under the symbol ASRV. The following table sets forth the actual
high and low closing prices and the cash dividends declared per share for the
periods indicated:

10

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

SELECTED TEN-YEAR CONSOLIDATED FINANCIAL DATA

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(1) All per share and share data have been adjusted to reflect a 3 for 1 stock
split in the form of a 200% stock dividend which was distributed on July 31,
1998, to shareholders of record on July 16, 1998.
(2) The ratio of earnings to fixed charges and preferred dividends is computed
by dividing the sum of income before taxes, fixed charges, and preferred
dividends by the sum of fixed charges and preferred dividends. Fixed charges
represent interest expense and are shown as both excluding and including
interest on deposits.
(3) Beginning in 2002, the Company adopted SFAS #142 which ceased the
amortization expense of goodwill. For further discussion see Note #21 of the
Consolidated Financial Statements.

12

SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA

The following table sets forth certain unaudited quarterly consolidated
financial data regarding the Company:

13

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (M. D. & A.)

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

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

PERFORMANCE OVERVIEW. . .The following tables summarize some of the
Company's key performance indicators for each of the past three years. The
Company successfully spun-off its Three Rivers Bank subsidiary on April 1, 2000.
Consequently, the Company's financial results for 2000 include Three Rivers Bank
for the first quarter of that year.

The Company reported a net loss of $5.2 million or $0.37 per share in 2002
compared to net income of $2.0 million or $0.15 in 2001. The Company's 2002 net
income was negatively impacted by an increased provision for loan losses, higher
non-interest expense, and reduced net interest income. Specifically, the
provision for loan losses totaled $9.3 million in 2002; an increase of $7.9
million over the 2001 provision. The higher 2002 provision reflects actions
taken to strengthen the allowance for loan losses as a result of the continued
weakness in the economy and deterioration in credit quality. Non-interest
expense increased by $3.8 million due in part to additional mortgage servicing
impairment charges and a $920,000 restructuring charge associated with
implementing the Company's earnings improvement program (See further discussion
within Non-Interest Expense section of this M. D. & A.). This increase was
partially offset by $1.3 million reduction in goodwill amortization expense due
to the adoption of SFAS #142. Net interest income declined by $830,000 as a
smaller level of earning assets more than offset the benefit of an increased net
interest margin. These negative items were partially offset by increased
non-interest income and a benefit for income taxes.

The Company's net income for 2001 totaled $2.0 million or $0.15 per diluted
share compared to net income of $1.7 million or $0.13 per diluted share in 2000.
Factors that contributed to the higher net income in 2001 included increased
non-interest income, lower non-interest expense, and a reduced provision for
loan losses. Specifically, non-interest income increased by $1.5 million due
primarily to increased gains generated on asset sales in 2001. Non-interest
expense declined by $9.2 million and was driven lower primarily by reduced
salaries and employee benefit costs and the non-recurrence of $2.6 million in
costs incurred for the Three Rivers Bank spin-off during 2000. The Company's
2000 expenses were also negatively impacted by a $1.5 million charge to exit the
wholesale mortgage production business. This charge was recorded in the fourth
quarter of 2000 due to the December 20th receipt of a favorable supplemental
private letter ruling from the IRS which ensured that the tax-free treatment of
the Three Rivers Bank spin-off would not be jeopardized by this action. The
provision for loan losses declined by $746,000 in 2001 as the Company increased
its allowance for loan losses in the fourth quarter of 2000 due to a problem
commercial trucking lease that the Company worked out during 2001.

These positive items were partially offset by reduced net interest income
and higher income tax expense in 2001. An 18 basis point reduction in the net
interest margin and a reduced level of earning assets caused net interest income
to decline by $9.3 million from the 2000 level. The higher income tax expense
reflects a more typical income tax provision in 2001. The Company benefited from
a reduction in income tax expense of $925,000 in 2000 due to the successful
conclusion of an Internal Revenue Service examination of the Company's tax
returns.

14

NET INTEREST INCOME AND MARGIN. . .The Company's net interest income
represents the amount by which interest income on earning assets exceeds
interest paid on interest bearing liabilities. Net interest income is a primary
source of the Company's earnings; it is affected by interest rate fluctuations
as well as changes in the amount and mix of earning assets and interest bearing
liabilities. The following table summarizes the Company's net interest income
performance for each of the past three years:

2002 NET INTEREST PERFORMANCE OVERVIEW. . .The Company's 2002 net interest
income on a tax-equivalent basis decreased by $1.8 million or 6.1% from 2001 due
to a lower level of earning assets. This decline more than offset the benefit to
net interest income of a six basis point increase in the net interest margin to
2.51%. The reduced level of earning assets was due to a $107 million reduction
in the investment securities portfolio. This decrease resulted from the
Company's decision to reduce its interest rate risk by delevering its balance
sheet in the fourth quarter of 2001 and maintaining this lower borrowed funds
position in 2002. As a result of this action, the Company's level of Federal
Home Loan Bank advances and short-term borrowings to total assets averaged 31.9%
in 2002 compared to 37.4% in 2001.

COMPONENT CHANGES IN NET INTEREST INCOME: 2002 VERSUS 2001. . .Regarding
the separate components of net interest income, the Company's total
tax-equivalent interest income for 2002 decreased by $16.6 million or 20.1% when
compared to 2001. This decrease was due to a $88 million decline in earning
assets and a 92 basis point drop in the earning asset yield. Within the earning
asset base, the yield on the total investment securities portfolio dropped by
107 basis points to 5.02% while the yield on the total loan portfolio decreased
by 104 basis points to 6.93%. Both of these declines reflect the lower interest
rate environment in place in 2002 as the Federal Reserve reduced the federal
funds rate by an unprecedented 475 basis points during 2001 and by an additional
50 basis points in the fourth quarter of 2002 in an effort to stimulate economic
growth. These significant rate reductions caused accelerated asset prepayments
as borrowers elected to refinance their higher fixed rate loans into lower cost
borrowings. Additionally, the downward repricing of floating rate assets also
contributed to the lower earning asset yield.

The $88 million decline in the volume of earning assets was due to a $107
million reduction in investment securities. The Company took advantage of the
lower interest rate environment to reposition and profitably reduce the size of
its investment securities portfolio during the fourth quarter of 2001 and
throughout 2002. This decline in investment securities was partially offset by a
$22 million or 4.0% increase in total average loans outstanding. The loan growth
occurred primarily in commercial real-estate loans and reflects continued
successful new business generation in the State College market. The Company has
also successfully grown its variable rate open-end home equity product during
the past twelve months.

The Company's total interest expense for 2002 decreased by $14.8 million or
27.7% when compared to 2001. This reduction in interest expense was due to a
lower volume of interest bearing liabilities (specifically borrowed funds) and a
reduced cost of funds. Total average borrowed funds were $101 million or 19.7%
lower in 2002 as fewer borrowings were needed to fund a smaller earning asset
base.

The total cost of funds declined by 100 basis points to 3.89% and was
driven down by a reduced cost of both deposits and borrowings. Specifically, the
cost of interest bearing deposits decreased by 97 basis points to 2.76% and the
cost of borrowings declined by 74 basis points to 5.46%. The lower deposit cost
was caused by lower rates paid in all deposit categories particularly for money
market deposits and certificates of deposit. The April 15, 2002 maturity of an
$80 million interest rate swap that had fixed the cost of certain FHLB

15

borrowings at 6.93% was a key factor responsible for the reduced cost of
borrowings. Those hedged borrowings repriced to current market with an average
cost of approximately 1.79% in 2002.

The lower deposit costs did not negatively impact the Company's deposit
generation strategies, as total average deposits were $18 million or 2.7% higher
in 2002 as compared to 2001. This growth in deposits occurred despite the third
quarter 2001 strategic sale of approximately $16 million of deposits associated
with the Company's Coalport Branch. Factors contributing to the overall gross
$34 million average deposit growth included: $14 million of deposits from the
Company's two new union niche offices, $8 million from the full service
community office opened in State College, the acquisition of an additional $8
million of escrow deposits from our mortgage banking operation, and increased
market share within the Company's core Cambria County market. A series of
strategically focused advertising campaigns to capture business from the
Company's largest Cambria County competitor, which was recently acquired by a
bank holding company headquartered out-of-state, has been beneficial in
increasing deposits. These campaigns resulted in the addition of nearly 1,200
new customers and approximately $4.0 million in new deposits in 2002.

The Company has actively used borrowed funds to purchase investment
securities to leverage its balance sheet. The maximum amount of leveraging the
Company can execute is controlled by internal policy requirements to maintain a
minimum asset leverage ratio of no less than 6.0% (see further discussion under
Capital Resources), to limit net interest income variability to +/-7.5% and net
income variability to +/-20% over a twelve month period (see further discussion
under Interest Rate Sensitivity), and to limit total FHLB advances and
short-term borrowings to no more than 40% of total assets. As a result of
investment security sales executed since the fourth quarter of 2001, the
Company's ratio of FHLB advances and short-term borrowings to total assets
averaged 31.9% in 2002 compared to 37.4% in 2001. The total revenue contribution
from leverage assets (including investment security gains and losses) amounted
to $3.6 million in 2002 compared to $1.6 million in 2001. Since its inception in
1995, the leverage program has produced total pre-tax revenue of $36.2 million.
The Company presently anticipates that the size of the leverage program in 2003
will be comparable with the 2002 average of $379 million or approximately 32% of
total assets. Longer-term the Company would like to reduce the size of its
leverage program to 25% of total assets.

2001 NET INTEREST PERFORMANCE OVERVIEW. . .The Company's 2001 net interest
income on a tax-equivalent basis decreased by $9.9 million or 25.4% from 2000
due to a combination of a reduced net interest margin and a lower volume of
earning assets. An 18 basis point drop in the net interest margin was caused by
a 40 basis point decrease in the earning asset yield which more than offset a
decline of 22 basis points in the cost of funds. The lower volume of earning
assets resulted from a decline in both average loans and investment securities
outstanding. The Three Rivers Bank spin-off and accelerated asset prepayments
were key factors responsible for the drop in total earning assets.

COMPONENT CHANGES IN NET INTEREST INCOME: 2001 VERSUS 2000. . .Regarding
the separate components of net interest income, the Company's total
tax-equivalent interest income for 2001 decreased by $26.3 million or 24.1% when
compared to 2000. This decrease was due to a $290 million decline in the volume
of earning assets and a 40 basis point drop in the earning asset yield. Within
the earning asset base, the yield on the total investment securities portfolio
dropped by 41 basis points to 6.09% while the yield on the total loan portfolio
decreased by 28 basis points to 7.97%. Both of these declines reflect the lower
interest rate environment in place in 2001.

These significant rate reductions caused accelerated asset prepayments as
borrowers elected to refinance their higher fixed rate loans into lower cost
borrowings. Excluding the impact of the Three Rivers Bank spin-off, total
average loans outstanding were $40 million or 6.7% lower in 2001 when compared
to 2000. Within the loan portfolio, $18 million of this decline in average loans
outstanding resulted from the Company's decision to exit the wholesale mortgage
production business. The remainder of the decline is due to loan pay-offs
exceeding new production due to the previously mentioned heightened prepayment
activity. Average investment securities outstanding declined by $142 million or
19.1% due predominantly to the Three Rivers Bank spin-off and fourth quarter
activity. The Company realized $1.1 million of security gains by taking
advantage of the lower interest rate environment to reposition and reduce the
size of its investment portfolio during the fourth quarter of 2001.

16

The Company's total interest expense for 2001 decreased by $16.4 million or
23.5% when compared to 2000. This reduction in interest expense was due to a
lower volume of interest bearing liabilities and a reduced cost of funds. Total
interest bearing liabilities were $272 million lower in 2001 as fewer
liabilities were needed to fund a smaller earning asset base.

The total cost of funds declined by 22 basis points to 4.89% and was driven
down by a reduced cost of deposits. Specifically, the cost of interest bearing
deposits decreased by 46 basis points to 3.73% due to a lower cost for money
market deposits. The Company's cost of FHLB advances and other short-term
borrowings averaged 6.05% in 2001 compared to 5.95% in 2000. The modest increase
in borrowing cost during a period of sharply declining interest rates reflects
strategies previously executed by the Company to hedge and fix its borrowings
cost. Fixed rate swaps, which had protected the Company during the rising
interest rate environment in the year 2000, kept the cost of funds from reducing
proportionately during 2001. However, the late October 2001 maturity of $100
million of interest rate swaps that had fixed the Company's cost of certain
borrowings at 6.42% helped reverse the quarterly net interest margin compression
trend that the Company had experienced during the first three quarters of 2001.
Specifically, the Company's net interest margin expanded by 14 basis points to
2.49% during the fourth quarter of 2001.

The table that follows provides an analysis of net interest income on a
tax-equivalent basis setting forth (i) average assets, liabilities, and
stockholders' equity, (ii) interest income earned on interest earning assets and
interest expense paid on interest bearing liabilities, (iii) average yields
earned on interest earning assets and average rates paid on interest bearing
liabilities, (iv) interest rate spread (the difference between the average yield
earned on interest earning assets and the average rate paid on interest bearing
liabilities), and (v) net interest margin (net interest income as a percentage
of average total interest earning assets). For purposes of these tables, loan
balances include non-accrual loans and interest income on loans includes loan
fees or amortization of such fees which have been deferred, as well as, interest
recorded on non-accrual loans as cash is received. Additionally, a tax rate of
approximately 35% is used to compute tax-equivalent yields.

17

18

The average balance and yield on taxable securities was $491 million and
5.02%, $571 million and 6.10%, and $666 million and 6.53% for 2002, 2001, and
2000, respectively. The average balance and tax-equivalent yield on tax-exempt
securities was $1 million and 5.45%, $29 million and 6.0%, and $74 million and
6.21% for 2002, 2001, and 2000, respectively.

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

19

LOAN QUALITY. . .AmeriServ Financial's written lending policies require
underwriting, loan documentation, and credit analysis standards to be met prior
to funding any loan. After the loan has been approved and funded, continued
periodic credit review is required. Credit reviews are mandatory for all
commercial loans and for all commercial mortgages in excess of $500,000 within a
12-month period. In addition, due to the secured nature of residential mortgages
and the smaller balances of individual installment loans, sampling techniques
are used on a continuing basis for credit reviews in these loan areas. The
following table sets forth information concerning AmeriServ Financial's loan
delinquency and other non-performing assets. At all dates presented, the Company
had no troubled debt restructurings which involve forgiving a portion of
interest or principal on any loans or making loans at a rate materially less
than that of market rates:

- ---------------
(1) Non-performing assets are comprised of (i) loans that are on a non-accrual
basis, (ii) loans that are contractually past due 90 days or more as to
interest and principal payments of which some are insured for credit loss,
and (iii) other real estate owned. All loans, except for loans that are
insured for credit loss, are placed on non-accrual status immediately upon
becoming 90 days past due in either principal or interest.

Between December 31, 2001, and December 31, 2002, total loan delinquency
increased sharply by $6 million to 3.12% of total loans. The majority of the
increase was in commercial mortgage loans that were between 30 and 60 days
delinquent. The increasing trend for loan delinquency over the past two years
reflects the weaker economic conditions experienced both nationally and in the
Company's local markets. The Company's level of non-performing assets dropped
from $10.0 million or 1.67% of total loans at December 31, 2001 to $7.0 million
or 1.22% of total loans at December 31, 2002. The decline between years was
mainly due to increased net charge-offs in 2002 rather than improved credit
quality.

Of the Company's total $7.0 million of non-performing assets at December
31, 2002, $3.7 million are commercial loans (including commercial real-estate)
and leases with the remaining $3.3 million related to residential mortgage
loans. Minimal losses are expected from the residential mortgage portfolio, as
historically residential mortgage losses for the Company have been less than
0.06% of average mortgage loans. Additionally, of the $3.7 million of
non-performing commercial loans and leases, $1.3 million relates to the two
problem credits (one in the lumber industry and one in the food services
industry) for which the Company recorded substantial charge-offs in the third
quarter of 2002. The Company anticipates there will most likely be no further
charge-offs as it completes the workout process on these two credits.

In addition to the non-performing assets, the Company is concerned with the
performance of a $4.8 million commercial mortgage to a borrower in the personal
care industry. As of February 28, 2003, the borrower is in default of their
contractual payments. It is likely that the default will continue and the loan
will become a non-performing asset by March 31, 2003. This credit is supported
by an 80% guarantee by the U.S. Department of Agriculture and is secured by a
first mortgage on the personal care facility. The 20% unguaranteed portion of
the loan was rated doubtful at December 31, 2002 and the Company had established
an allocation of $410,000 within the allowance for loan losses for this credit.

20

The Company is also carefully monitoring the performance of a $3.1 million
commercial lease to a large publicly held company in the semiconductor industry.
Since the inception of the lease in June 2001, the Company has not experienced
any delinquency or payment problems with this credit. The next scheduled payment
is due March 20, 2003 and the borrower has indicated that they intend to
continue to make payments on the loan. However, the commercial lease is secured
by semiconductor manufacturing equipment that is located in a facility that was
recently closed by the borrower. The Company has internally classified this
credit as substandard at December 31, 2002. The Company has allocated its
substandard allocation percentage of 17.4% against this credit meaning that the
loan loss reserve allocation at December 31, 2002 totaled approximately
$540,000.

Between December 31, 2000, and December 31, 2001, non-performing assets
increased by $4 million to 1.67% of total loans. The increase was largely
attributable to a $3.1 million commercial lease to a Company in the steel
industry. The Company experienced a $1.6 million charge-off on the workout of
this problem credit during 2002.

ALLOWANCE AND PROVISION FOR LOAN LOSSES. . .As described in more detail in
Note #1 to the Consolidated Financial Statements, the Company uses a
comprehensive methodology and procedural discipline to maintain an allowance for
loan losses to absorb inherent losses in the loan portfolio. The Company
believes this is a critical accounting policy since it involves significant
estimates and judgments. The allowance can be summarized into three elements; 1)
reserves established on specifically identified problem loans, 2) formula driven
general reserves established for loan categories based upon historical loss
experience and other qualitative factors which include delinquency and
non-performing loan trends, economic trends, concentrations of credit, trends in
loan volume, experience and depth of management, examination and audit results,
effects of any changes in lending policies, and trends in policy, financial
information, and documentation exceptions, and 3) a general unallocated reserve
which provides conservative positioning in the event of variance from our
assessment of the previously listed qualitative factors, provides protection
against credit risks resulting from other inherent risk factors contained in the
bank's loan portfolio, and recognizes the model and estimation risk associated
with the specific and formula driven allowances. Note that the qualitative
factors used in the formula driven general reserves are evaluated quarterly (and
revised if necessary) by the Company's management to establish allocations which
accommodate each of the listed risk factors. The following table sets forth
changes in the allowance for loan losses and certain ratios for the periods
ended:

The Company's provision for loan losses for 2002 totaled $9.3 million or
1.56% of average loans. This represented a significant increase of $7.9 million
from the 2001 provision of $1.4 million or 0.24% of total loans. Net charge-offs
were also higher in 2002 totaling $5.1 million or 0.85% of average loans
compared to net charge-offs of $1.5 million or 0.26% of average loans in 2001.
The higher net charge-offs in 2002 are primarily attributable to: a $2.0 million
charge-off on a food services loan at the Pittsburgh Airport, a $1.6 million
charge-off related to the workout of a commercial lease in the steel industry,
and a $600,000 charge-off on a lumber industry credit. The Company did benefit
from a $415,000 recovery that was collected in the first quarter of 2002 on a
1998 charged-off commercial loan. As a result of the provision exceeding net
charge-offs, the balance in the allowance for loan losses increased by $4.2
million during 2002.

The actions taken to strengthen the allowance for loan losses reflect
continued weakness in the economy and deterioration in credit quality.
Furthermore, the Company concluded that although its credit and credit
administration policies are sound, adherence to these policies has not been
consistent. This resulted in incomplete or dated information in credit files.
The Company did, however, make a concerted effort in the fourth quarter of 2002
to obtain the most current information for the credit files. The resulting
analysis of this updated information led to rating downgrades for numerous
credits which contributed to an increased level of classified loans.
Specifically, the Company noted an increase of $7 million or 50.2% in classified
loans to $21 million. The credit quality deterioration was also evidenced by the
previously discussed increase in the level of both delinquent loans and net
charge-offs. As a result of the increased provisioning, the balance in the
allowance for loan losses and key loan portfolio coverage ratios grew.
Specifically, at December 31, 2002, the loan loss reserve as a percentage of
total loans amounted to 1.75% compared to 0.97% at December 31, 2001 and 1.01%
at December 31, 2000. The Company's loan loss reserve coverage of non-performing
assets also improved to 144% at December 31, 2002 compared to 58% at December
31, 2001 and 100% at December 31, 2000.

To address the credit process concerns noted above, the Company has
implemented changes to more closely monitor adherence to credit and credit
administration policies. The Company has reviewed, redesigned and implemented
procedures and processes to support these policies and strengthen credit
controls. Procedures that were initiated in the fourth quarter 2002 to obtain
timely credit file information are being

22

consistently applied on an ongoing basis. These procedures and controls will
support consistent adherence to sound credit and credit administration policies.

The Company's provision for loan losses in 2001 totaled $1.4 million or
0.24% of total average loans which was comparable with the 2001 net charge-offs
of $1.5 million or 0.26% of total average loans. For the year 2000, the Company
recorded a provision of $2.1 million or 0.29% of total average loans which
exceeded the net charge-offs of $1.5 million or 0.21% of average loans. The
higher provision in 2000 was needed to strengthen the reserve for a problem
commercial trucking lease that the Company worked out of in 2001.

The following schedule sets forth the allocation of the allowance for loan
losses among various categories. This allocation is determined by using the
consistent quarterly procedural discipline that was previously discussed. The
entire allowance for loan losses is available to absorb future loan losses in
any loan category.

Even though residential real estate-mortgage loans comprise 41% of the
Company's total loan portfolio, only $469,000 or 4.7% of the total allowance for
loan losses is allocated against this loan category. The residential real
estate-mortgage loan allocation is based primarily upon the Company's five-year
historical average of actual loan charge-offs experienced in that category and
other qualitative factors. The disproportionately higher allocations for
commercial loans and commercial loans secured by real estate reflect the
increased credit risk associated with this type of lending, the Company's
historical loss experience in these categories, and other qualitative factors.
The Company strengthened its allocations to the commercial segments of the loan
portfolio during the past two years. Factors considered by the Company that led
to increased qualitative allocations to the commercial segments of the portfolio
included: the slowing of the national and regional economies and its
corresponding impact on the Company's loan delinquency trends, the increase in
concentration risk among our 25 largest borrowers compared to total loans, the
overall growth in the average size associated with these credits and an
increased number of financial information and documentation exceptions that is
sometimes symptomatic of borrower distress.

In addition to the specific and formula-driven reserve calculations, the
Company has consistently established a general unallocated reserve to provide
for risk inherent in the loan portfolio as a whole. Management believes that its
judgment with respect to the establishment of the reserve allocated to general
risk has been validated by experience and prudently reflects the model and
estimation risk associated with the specific and formula driven allowances. The
Company determines the unallocated reserve based on a variety of factors, some
of which also are components of the formula-driven methodology. These include,
without limitation, the previously mentioned qualitative factors along with
general economic data, management's assessment of the direction of interest
rates, and credit concentrations. In conjunction with the establishment of the
general unallocated reserve, the Company also looks at the total allowance for
loan losses in relation to the size of the total loan portfolio, the level of
non-performing assets, and its coverage of these items as compared to peer
comparable banking companies.

23

Based on the Company's loan loss reserve methodology and the related
assessment of the inherent risk factors contained within the Company's loan
portfolio, management believes that the allowance for loan losses was adequate
for each of the fiscal years presented in the table above.

NON-INTEREST INCOME. . .Non-interest income for 2002 totaled $19.7 million;
a $1.6 million or 8.9% increase from the 2001 performance. Factors contributing
to the net increase in non-interest income in 2002 included:

- a $2.4 million increase in gains realized on the sale of investment
securities as the Company took advantage of volatility in the market in
2002 to shorten the investment portfolio duration and also capture
profits on securities that had risks of accelerated prepayments or
extension. These gains were also used to help offset the heightened
mortgage servicing impairment charge.

- the non-recurrence of a $1.4 million gain realized on the sale of the
Coalport branch in 2001.

- a $731,000 increase in deposit service charges due to the full year
benefit of a first in the market overdraft privilege program that was
implemented in the fourth quarter of 2001.

- a $244,000 increase in revenue from bank owned life insurance due to the
receipt of a death benefit for an employee insured under the program.

- a $386,000 decrease in other income due in part to the Company's receipt
of a $300,000 payment for the legal rights to its former name in Western
Pennsylvania in 2001. No such payment was received in 2002. Reduced fees
on the early termination of leased equipment and fixed asset sales also
negatively impacted this line item. These negative items overshadowed a
$399,000 increase in revenue from the financial services unit. The higher
revenue contribution from the financial services unit resulted from
increased fixed annuity sales. The Company also successfully exited the
merchant card business by generating a $185,000 gain on the sale of its
merchant card portfolio in the fourth quarter of 2002. As part of its
earnings improvement program, the Company concluded that it lacked the
necessary scale to effectively compete in this line of business.

Non-interest income for 2001 totaled $18.1 million which represented a $1.5
million increase from the 2000 performance. Factors contributing to the net
increase between years included:

- the Company realized $1.9 million of security gains by taking advantage
of the lower interest rate environment to reposition and reduce the size
of its investment security portfolio during 2001. Many of the securities
sold in 2001 were mortgage-backed securities that were projected to
experience accelerated prepayments due to the downward movements in
interest rates. The Company also liquidated the majority of its
tax-exempt securities in order to help shorten the overall portfolio
duration. During 2000, the Company realized $952,000 in losses on
investment security sales with the proceeds used to deleverage the
balance sheet and pay down borrowings due to higher short-term interest
rates. When the 2001 gain is compared to the 2000 loss, this represents a
net favorable change of $2.9 million.

- a $1.4 million gain realized on the successful sale of the Company's
Coalport Office to CSB Bank of Curwensville in 2001. The Company captured
an 8.875% core deposit premium on the sale of approximately $15.7 million
of deposits. As the only AmeriServ Financial Office in Clearfield County,
the Coalport Office no longer strategically fit the geographic footprint
for AmeriServ Financial.

- a $1 million decrease in gains realized on loans held for sale due
primarily to the Company's exit from the wholesale mortgage production
business.

- a $299,000 decrease in trust fees due largely to a decline in the market
value of trust assets due to lower equity values and the loss of one
larger corporate trust relationship.

- a $505,000 decrease in net mortgage servicing fees due to fewer loans
serviced and increased amortization expense on mortgage servicing rights
due to accelerated prepayment speeds on mortgage loans resulting from the
lower interest rate environment.

24

NON-INTEREST EXPENSE. . .Non-interest expense for 2002 totaled $46.4
million; a $3.8 million or 9.0% increase from the 2001 performance. Factors
contributing to the net increase in non-interest expense in 2002 included:

- the Company recognized a $3.7 million non-cash impairment charge on its
mortgage servicing rights in 2002. This impairment charge is $1.2 million
greater than 2001 and reflects an increase in mortgage prepayment speeds
due to further declines in mortgage interest rates. These low rates have
contributed to unprecedented levels of mortgage refinancing activity
which has had a significant negative impact on the value of the Company's
mortgage servicing rights. On February 5, 2003, the Company announced the
sale of the servicing rights on approximately $450 million in mortgage
loan principal values or 69% of SMC's total servicing portfolio. This
downsizing of the mortgage servicing asset will reduce the level of
interest rate risk and earnings volatility at the Company and contribute
to a more conservatively positioned balance sheet. The valuation of
mortgage servicing rights is a critical accounting policy because it
requires the use of estimates related to interest rates and prepayment
speeds.

- a $1.0 million increase in salaries and employee benefits due to higher
medical insurance premiums, increased sales incentive based compensation,
higher pension expense, severance costs related to the former chairman,
and salary increases.

- the recognition of a $920,000 restructuring charge in the third quarter
of 2002 associated with the implementation of the Company's earnings
improvement program. The earnings improvement program is expected to
produce at least $4 million of pre-tax earnings improvement with $3.5
million or 88% coming from identified cost savings and $500,000 or 12%
coming from identified revenue enhancements. Within the cost savings,
approximately $2 million will be achieved through a reduction in force
that resulted in the elimination of 42 full-time equivalent employees or
9.1% of the Company's workforce. 20 of these effected employees were
non-union personnel (senior management through administrative staff) and
22 were union positions (i.e. tellers, clerical staff and facilities
personnel). As a result of this reduction in force, the Company's total
full time equivalent employees (FTE) declined from 464 at June 30, 2002
to 422 at December 31, 2002. Other expense savings will be achieved
through a significant curtailment of advertising expense, reduced
technology-related expenditures through reallocation of existing personal
computers, consolidation of one branch office, reduced charitable
contributions, and the deferment of certain planned capital expenditures.
Full earnings benefit from the above actions will be achieved in 2003. At
December 31, 2002, the Company had a remaining liability of $555,000
related to the restructuring charge that was recorded within other
liabilities on the consolidated balance sheet.

- the Company benefited from the January 1, 2002 adoption of Statement of
Financial Accounting Standards #142 which requires that goodwill no
longer be amortized but reviewed annually for impairment. The Company
recorded $1.3 million of goodwill amortization expense in 2001 while no
goodwill amortization or impairment charges were recorded in 2002. The
Company considers this a critical accounting policy because the valuation
of intangible assets requires the use of estimates and judgments.

- a $907,000 increase in professional fees due to higher legal fees,
auditing costs and other professional fees. Approximately $177,000 of the
increase reflects payments to a consultant who receives a portion of the
increased fees generated from the overdraft privilege program. This new
program has significantly increased deposit service charge fee revenue.

Non-interest expense for 2001 totaled $42.5 million which represented a
$9.2 million decrease from the 2000 performance. Factors contributing to the net
decrease in non-interest expense in 2001 included:

- a $3.7 million decrease in salaries and employee benefits in 2001. The
decline is due to 75 fewer FTE employees, reduced medical insurance
premiums, and lower incentive compensation. The lower average employee
base in 2001 resulted primarily from the Three Rivers Bank spin-off, the
Company's exit from the wholesale mortgage production business and fewer
employees at the Parent Company after the Three Rivers Bank spin-off.

25

- there were $2.6 million in costs related to the Three Rivers Bank
spin-off recognized in 2000 compared to none in 2001. These costs
included investment banking fees, legal and accounting fees, severance
and personnel costs, certain investor relations and shareholder costs,
and system and facility changes.

- a $2.2 million increase in the non-cash impairment charge for mortgage
servicing rights to $2.5 million in 2001. This impairment charge reflects
a reduced value for the mortgage servicing asset resulting from an
increase in mortgage prepayment speeds due to the unprecedented declines
in interest rates that occurred throughout 2001.

- the Company was able to reverse in 2001 $274,000 of the $1.5 million in
costs previously accrued in 2000 for the wholesale mortgage production
exit that were not realized. The exit charge in 2000 reflected costs for
employee severance, fixed asset disposal, lease termination, professional
fees, and other items associated with exiting the wholesale mortgage
production business. A total of 25 employees or 5.2% of the Company's
total workforce were released as a result of this strategic decision. The
exit charge was recorded in the fourth quarter of 2000 due to the
December 20th receipt of a favorable supplemental private letter ruling
from the IRS which ensured that the tax-free treatment of the Three
Rivers Bank spin-off would not be jeopardized by this action.

The remainder of the decline in non-interest expense is due to Three Rivers
Bank expenses being included in the first quarter of 2000 and not at all in
2001.

INCOME TAX EXPENSE. . .The Company recognized an income tax benefit of $3.4
million or an effective tax rate of (39.9%) in 2002 compared to an income tax
expense of $412,000 or a 17.3% effective tax rate in 2001. The recorded tax
benefit in 2002 resulted from the pre-tax loss the Company experienced in 2002
and is greater than the statutory rate due primarily to the tax-free income the
Company generates from bank owned life insurance and tax-free loans. The Company
also recognized a benefit for income taxes of $1.5 million in 2000. During the
first quarter of 2000, the Internal Revenue Service completed its examination of
the Company's tax returns through the 1997 tax year. As a result of the
successful conclusion of this examination, the Company was able to reduce its
income tax expense by $925,000 due to the reversal of a valuation allowance and
accrued income taxes.

SEGMENT RESULTS. . .Note #23 to the Consolidated Financial Statements
presents the results of the Company's key business segments and identifies their
net income (loss) contribution and risk-adjusted return on equity performance.
Retail banking was again the largest net income contributor earning $4.1 million
or a 14.3% ROE in 2002. The retail banking net income contribution is down
approximately $1.5 million from the prior year due primarily to the
non-recurrence of the $1.4 million gain on the Coalport branch sale that was
realized in 2001. The retail banking segment has benefited from stable net
interest income and increased non-interest income resulting from the overdraft
privilege program. These factors helped partially offset higher non-interest
expense due to the full year operation of 3 new branches opened during 2001 and
higher marketing costs. When comparing 2001 to 2000, the income contribution and
ROE within retail banking increased to $5.7 million and 20.6% respectively due
to increased non-interest income, lower non-interest expenses, and the gain
realized on the Coalport branch sale.

The trust segment's net income contribution in 2002 amounted to $486,000 or
15.2% ROE. This represents a decline from the $857,000 net income or 28.2% ROE
earned in 2001 due in part to lower market-based fee revenue resulting from the
declines in equity values over the past year and the loss of several customer
accounts as a result of investment performance. The trust segment is focused on
continuing to increase the fee revenue generated from union business activities,
particularly the ERECT and Build Funds, which are collective investment funds
for trade union pension funds. These funds currently have assets in five states-
Pennsylvania, Ohio, West Virginia, Michigan and Indiana. The value of assets in
these funds has increased by 29% during 2002 and totaled $205 million at
December 31, 2002. Trust's net income contribution of $857,000 in 2001 was down
from the $1,151,000 income contribution for 2000 due to a decline in the market
value of trust assets and the loss of one larger corporate trust relationship.

The Company experienced earnings pressure in the mortgage banking segment
which lost $3.2 million in 2002 compared to a loss of $2.3 million in 2001. This
negative performance reflects the previously discussed

26

heightened mortgage servicing impairment charges that amounted to $3.7 million
in 2002. The Company anticipates that it will experience fewer impairment
charges in 2003 due to the announced sale on February 5, 2003 of the servicing
rights on approximately $450 million in mortgage loan principal values or 69% of
SMC's total servicing portfolio. This downsizing of the mortgage servicing asset
will reduce the level of interest rate risk and earnings volatility at the
Company and contribute to a more conservatively positioned balance sheet.

The commercial lending segment also lost $3.8 million in 2002 compared to a
positive net income contribution of $1.9 million in 2001. The loss in 2002
resulted primarily from a deterioration in credit quality in the commercial loan
and lease portfolio that caused the Company to increase its provision for loan
losses by $7.2 million this year. The commercial lending segment also
experienced a net interest income decrease of $1.4 million in 2002 as a result
of accelerated asset prepayments and the downward repricing of floating rate
loans.

The net loss in the investment/parent segment was reduced by $1.5 million
in 2002 due to increased revenue earned on leverage assets in 2002 as a result
of higher investment security gains. Note that the $920,000 restructuring charge
recorded in 2002 is included in this segment along with all interest costs
associated with the Company's guaranteed junior subordinated deferrable interest
debentures.

BALANCE SHEET. . .The Company's total consolidated assets were $1.176
billion at December 31, 2002, compared with $1.198 billion at December 31, 2001,
which represents a decrease of $23 million or 1.9%. This decline in assets
occurred primarily in the loan portfolio. Total loans and loans held for sale
totaled $573 million at December 31, 2002, which represented a decrease of $27
million or 4.4% from year-end 2001. The majority of the loan decline occurred in
the fourth quarter due to accelerated payoffs of several larger commercial
loans.

The Company's deposits totaled $670 million at the end of 2002, which
represented a decrease of $6 million or 0.9% when compared to the end of 2001.
This point in time decline is not representative of the overall deposit growth
experienced during the year as total average deposits were $18 million or 2.7%
higher in 2002 as compared to 2001. The Company was able to continue to reduce
the size of its borrowed funds position as total borrowings dropped by $15
million or 3.4% between years. Within the equity section of the balance sheet,
the decline in retained earnings due to the loss for the year and the payment of
dividends was partially offset by increased accumulated comprehensive income due
to the increased value of the available for sale investment securities
portfolio.

INTEREST RATE SENSITIVITY. . .Asset/liability management involves managing
the risks associated with changing interest rates and the resulting impact on
the Company's net interest income, net income and capital. The management and
measurement of interest rate risk at AmeriServ Financial is performed by using
the following tools: 1) simulation modeling which analyzes the impact of
interest rate changes on net interest income, net income and capital levels over
specific future time periods. The simulation modeling forecasts earnings under a
variety of scenarios that incorporate changes in the absolute level of interest
rates, the shape of the yield curve, prepayments and changes in the volumes and
rates of various loan and deposit categories. The simulation modeling also
incorporates all hedging activity, if any, as well as assumptions about
reinvestment and the repricing characteristics of certain assets and liabilities
without stated contractual maturities; 2) market value of portfolio equity
sensitivity analysis, and 3) static GAP analysis which analyzes the extent to
which interest rate sensitive assets and interest rate sensitive liabilities are
matched at specific points in time. The overall interest rate risk position and
strategies are reviewed by senior management and the Company's Board of
Directors on an ongoing basis.

27

The following table presents a summary of the Company's static GAP
positions at December 31, 2002:

When December 31, 2002, is compared to December 31, 2001, the Company's one
year cumulative GAP ratio became more positive due to increased asset
sensitivity resulting from a shorter duration investment securities portfolio
and heightened prepayment speeds on loans.

Management places primary emphasis on simulation modeling to manage and
measure interest rate risk. The Company's asset liability management policy
seeks to limit net interest income variability over the first twelve months of
the forecast period to +/-7.5% and net income variability to +/-20.0% based upon
varied economic rate forecasts which include interest rate movements of at least
200 basis points. Additionally, the Company also uses market value sensitivity
measures to further evaluate the balance sheet exposure to changes in interest
rates. The Company monitors the trends in market value of portfolio equity
sensitivity analysis on a quarterly basis.

The following table presents an analysis of the sensitivity inherent in the
Company's net interest income, net income and market value of portfolio equity.
The interest rate scenarios in the table compare the Company's base forecast,
which was prepared using a flat interest rate scenario, to scenarios that
reflect immediate increases and decreases in interest rates of 200 basis points.
Each rate scenario contains unique prepayment and repricing assumptions that are
applied to the Company's balance sheet that was developed

28

under the flat interest rate scenario for the simulations and to the Company's
existing balance sheet composition for market value of portfolio equity
analysis.

As indicated in the table, the maximum positive variability of AmeriServ
Financial's net income was 32.6% under an upward rate shock forecast reflecting
a 200 basis point increase in interest rates. Market value of portfolio equity
increased by 59.4% under this same scenario due primarily to increased value of
the Company's core deposit base. The maximum negative variability of net income
and market value of portfolio equity occurred in a 200 basis point downward rate
shock and reflects further impairment of mortgage servicing rights in a falling
interest rate environment. The previously discussed sale of a sizable portion of
the mortgage servicing asset in the first quarter of 2003 will help reduce this
volatility in future periods. Net income in this forecast was also negatively
impacted by the Company's inability to further reduce certain core deposit costs
given the historic lows of current interest rates. Finally, this sensitivity
analysis is limited by the fact that it does not include all balance sheet
repositioning actions the Company may take should severe movements in interest
rates occur such as lengthening or shortening the duration of the securities
portfolio or entering into hedging transactions. These actions would likely
reduce the variability of each of the factors identified in the above table but
the cost associated with the repositioning would most likely negatively impact
net income.

Within the investment portfolio at December 31, 2002, 97% of the portfolio
is classified as available for sale and 3% as held to maturity. The available
for sale classification provides management with greater flexibility to manage
the securities portfolio to better achieve overall balance sheet rate
sensitivity goals and provide liquidity to fund loan growth if needed. The mark
to market of the available for sale securities does inject more volatility in
the book value of equity but has no impact on regulatory capital. Furthermore,
it is the Company's intent to continue to diversify its loan portfolio to manage
AmeriServ Financial's long-term interest rate risk by continuing to sell newly
originated fixed-rate 30-year mortgage loans.

LIQUIDITY. . .Financial institutions must maintain liquidity to meet
day-to-day requirements of depositor and borrower customers, take advantage of
market opportunities, and provide a cushion against unforeseen needs. Liquidity
needs can be met by either reducing assets or increasing liabilities. Sources of
asset liquidity are provided by short-term investment securities, time deposits
with banks, federal funds sold, banker's acceptances, and commercial paper.
These assets totaled $62 million at December 31, 2002, compared to $67 million
at December 31, 2001. Maturing and repaying loans, as well as the monthly cash
flow associated with mortgage-backed securities are other significant sources of
asset liquidity for the Company.

Liability liquidity can be met by attracting deposits with competitive
rates, using repurchase agreements, buying federal funds, or utilizing the
facilities of the Federal Reserve or the Federal Home Loan Bank systems. The
Company utilizes a variety of these methods of liability liquidity. At December
31, 2002, the Company's subsidiaries had approximately $16 million of unused
lines of credit available under informal arrangements with correspondent banks.
These lines of credit enable the Company's banking subsidiary to purchase funds
for short-term needs at current market rates. Additionally, the Company's
subsidiary bank is a member of the Federal Home Loan Bank which provides the
opportunity to obtain intermediate to longer term advances up to approximately
80% of its investment in assets secured by one- to four-family residential real
estate. This would suggest a remaining current total available Federal Home Loan
Bank aggregate borrowing capacity of approximately $257 million. At December 31,
2002, the Company's FHLB borrowings with maturities of 2005 and greater had
prepayment penalties of $38 million. The Company has ample liquidity available
to fund all outstanding loan commitments if they were fully drawn upon.

Liquidity can be also be analyzed by utilizing the Consolidated Statement
of Cash Flows. Cash equivalents decreased by $2 million from December 31, 2001,
to December 31, 2002, due primarily to $23 million of cash used by financing
activities. This was partially offset by $11 million of cash provided by

29

operating activities and $10 million of cash provided by investing activities.
Within investing activities, cash proceeds from investment security maturities
and sales exceeded purchases of new investment securities by $4 million. Cash
advanced for new loan fundings and purchases totaled $190 million and was $24
million less than the cash received from loan principal payments and sales.
Within financing activities, net short-term borrowings and Federal Home Loan
Bank advances decreased by $15 million. The Company used $3 million of cash to
service the dividend on the guaranteed junior subordinated deferrable interest
debentures and $4 million of cash for common dividend payments in 2002. The
Company announced on January 24, 2003 that it had suspended its common dividend
payment.

CONTRACTUAL OBLIGATIONS . . . As of December 31, 2002, the Company's
significant fixed and determinable contractual obligations are discussed in the
following footnotes to the consolidating financial statements: Note
#10 -- Federal Funds Purchased, Securities Sold Under Agreements to Repurchase,
and Other Short-Term Borrowings, Note #12 -- Advances from Federal Home Loan
Bank and Guaranteed Junior Subordinated Deferrable Interest Debentures, and Note
#16 -- Lease Commitments. The payment amounts represent those amounts
contractually due to the recipient.

CAPITAL RESOURCES. . .As presented in Note #24 to the Consolidated
Financial Statements, the Company continues to be considered well-capitalized as
the asset leverage ratio was 6.84% and the Tier 1 capital ratio was 12.12% at
December 31, 2002. Note that the impact of other comprehensive income is
excluded from the regulatory capital ratios. At December 31, 2002, accumulated
other comprehensive income amounted to $5.8 million. Additionally, the Company
generated approximately $1.4 million of tangible capital in 2002 due to the
amortization of core deposit intangible assets.

The Company exceeds all regulatory capital ratios for each of the periods
presented. Furthermore, both the Company and its subsidiary bank are considered
"well capitalized" under all applicable FDIC regulations. The Company
anticipates that it will build its capital ratios during 2003.

As a result of the loss incurred in 2002, the Company announced on January
24, 2003 that it suspended its common stock cash dividend. The Company had
declared and paid common stock cash dividends of $0.30 per share in 2002. While
the Company has not repurchased any of its own shares since the year 2000, the
Company has also suspended its treasury stock repurchase program. For so long as
the Company and the Board are parties to the Memorandum Of Understanding,
reinstatement of either the common stock dividend or the treasury stock
repurchase program will require the prior written approval of the Company's
primary regulators -the Federal Reserve Bank of Philadelphia and the
Pennsylvania Department of Banking. (See Note #24, Regulatory Matters, for
further discuss of the Memorandum of Understanding.)

FORWARD LOOKING STATEMENT. . .This Form 10-K contains various
forward-looking statements and includes assumptions concerning the Company's
beliefs, plans, objectives, goals, expectations, anticipations estimates,
intentions, operations, future results, and prospects, including statements that
include the words "may," "could," "should," "would," "believe," "expect,"
"anticipate," "estimate," "intend," "plan" or similar expressions. These
forward-looking statements are based upon current expectations and are subject
to risk and uncertainties. In connection with the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, the Company provides the
following cautionary statement identifying important factors (some of which are
beyond the Company's control) which could cause the actual results or events to
differ materially from those set forth in or implied by the forward-looking
statements and related assumptions.

Such factors include the following: (i) the effect of changing regional and
national economic conditions; (ii) the effects of trade, monetary and fiscal
policies and laws, including interest rate policies of the Board of Governors of
the Federal Reserve System; (iii) significant changes in interest rates and
prepayment speeds; (iv) inflation, stock and bond market, and monetary
fluctuations; (v) credit risks of commercial, real estate, consumer, and other
lending activities; (vi) changes in federal and state banking and financial
services laws and regulations; (vii) the presence in the Company's market area
of competitors with greater financial resources than the Company; (viii) the
timely development of competitive new products and services by the Company and
the acceptance of those products and services by customers and regulators (when
required); (ix) the willingness of customers to substitute competitors' products
and services for those of the Company and vice versa; (x) changes in consumer
spending and savings habits; (xi) unanticipated regulatory or judicial

30

proceedings; and (xii) other external developments which could materially impact
the Company's operational and financial performance.

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For information regarding the market risk of the Company's financial
instruments, see Interest Rate Sensitivity in the M. D. & A. presented on pages
27 to 29. The Company's principal market risk exposure is to interest rates.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements.

31

CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements.

32

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See accompanying notes to consolidated financial statements.

33

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

See accompanying notes to consolidated financial statements.

34

CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to consolidated financial statements.

(continued on next page)

35

CONSOLIDATED STATEMENTS OF CASH FLOWS

(continued from previous page)

See accompanying notes to consolidated financial statements.

36

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AT AND FOR THE YEARS ENDED
DECEMBER 31, 2002, 2001 AND 2000

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND NATURE OF OPERATIONS:

AmeriServ Financial, Inc. (the Company) is a bank holding company,
headquartered in Johnstown, Pennsylvania. Through its banking subsidiary the
Company operates 23 banking locations in six Pennsylvania counties. These
offices provide a full range of consumer, mortgage, commercial, and trust
financial products. The AmeriServ Trust and Financial Services Company (Trust
Company) offers a complete range of trust and financial services and has $1.1
billion in assets under management. The Trust Company also offers the ERECT and
BUILD Funds which are collective investment funds for trade union controlled
pension fund assets.

PRINCIPLES OF CONSOLIDATION:

On April 24, 2001, at the annual shareholders' meeting USBANCORP, Inc.
changed its name effective May 7, 2001, to AmeriServ Financial, Inc. The
consolidated financial statements include the accounts of AmeriServ Financial,
Inc. (the Company) and its wholly-owned subsidiaries, AmeriServ Financial Bank
(the Bank), Trust Company, AmeriServ Associates, Inc. (AmeriServ Associates),
and AmeriServ Life Insurance Company (AmeriServ Life). The Bank is a
state-chartered full service bank with 23 locations in Pennsylvania. Standard
Mortgage Corporation of Georgia (SMC), a subsidiary of the Bank, is a mortgage
banking company whose business includes the servicing of mortgage loans.
AmeriServ Associates, based in State College, is a registered investment
advisory firm that provides investment portfolio and asset/liability management
services to small and mid- sized financial institutions. AmeriServ Life is a
captive insurance company that engages in underwriting as a reinsurer of credit
life and disability insurance. On April 1, 2000, the Company successfully
completed the tax-free spin-off of its Pittsburgh based Three Rivers Bank (TRB)
subsidiary to its shareholders. (See Note #26 to the Consolidated Financial
Statements.)

As further discussed in Note #28, Prior Year Disaggregations,
disaggregations of previously reported financial statement amounts have been
made to conform with the financial statement presentation of the current period.
The disaggregations had no impact on previously reported net income or earnings
per share.

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
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 estimate
is the allowance for loan losses.

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

37

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

comprehensive income within stockholders' equity on a net of tax basis. Any
securities classified as trading assets are reported at fair value with
unrealized aggregate appreciation (depreciation) included in current income on a
net of tax basis. The Company presently does not engage in trading activity.
Realized gain or loss on securities sold was computed upon the adjusted cost of
the specific securities sold.

LOANS:

Interest income is recognized using methods which approximate a level yield
related to principal amounts outstanding. The Company's subsidiaries discontinue
the accrual of interest income when loans, except for loans that are insured for
credit loss, become 90 days past due in either principal or interest. In
addition, if circumstances warrant, the accrual of interest may be discontinued
prior to 90 days. In all cases, payments received on non-accrual loans are
credited to principal until full recovery of principal has been recognized; it
is only after full recovery of principal that any additional payments received
are recognized as interest income. The only exception to this policy is for
residential mortgage loans wherein interest income is recognized on a cash basis
as payments are received. A non-accrual commercial loan is placed on accrual
status after becoming current and remaining current for twelve consecutive
payments. Residential mortgage loans are placed on accrual status upon becoming
current.

LOAN FEES:

Loan origination and commitment fees, net of associated direct costs, are
deferred and amortized into interest and fees on loans over the loan or
commitment period. Fee amortization is determined by the effective interest
method.

LOANS HELD FOR SALE:

Newly originated fixed-rate residential mortgage loans are classified as
held for sale, if it is management's intent to sell these residential mortgage
loans. The residential mortgage loans held for sale are carried at the lower of
aggregate cost or market value.

PREMISES AND EQUIPMENT:

Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is charged to operations over the estimated useful
lives of the premises and equipment using the straight-line method with a
half-year convention. Useful lives of up to 45 years for buildings and up to 12
years for equipment are utilized. Leasehold improvements are amortized using the
straight-line method over the terms of the respective leases or useful lives of
the improvements, whichever is shorter. Maintenance, repairs, and minor
alterations are charged to current operations as expenditures are incurred.

ALLOWANCE FOR LOAN LOSSES AND CHARGE-OFF PROCEDURES:

As a financial institution which assumes lending and credit risks as a
principal element of its business, the Company anticipates that credit losses
will be experienced in the normal course of business. Accordingly, the Company
consistently applies a comprehensive methodology and procedural discipline to
perform an analysis which is updated on a quarterly basis at the Bank level to
determine both the adequacy of the allowance for loan losses and the necessary
provision for loan losses to be charged against earnings. This methodology
includes:

- A detailed review of all criticized and impaired loans to determine if
any specific reserve allocations are required on an individual loan
basis. The specific reserve established for these criticized and impaired
loans is based on careful analysis of the loan's performance, the related
collateral value, cash flow considerations and the financial capability
of any guarantor.

38

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

- The application of formula driven reserve allocations for all commercial
and commercial real-estate loans are calculated by using a three-year
migration analysis of net losses incurred within each risk grade for the
entire commercial loan portfolio. The difference between estimated and
actual losses is reconciled through the dynamic nature of the migration
analysis.

- The application of formula driven reserve allocations to installment and
mortgage loans which are based upon historical charge-off experience for
those loan types. The residential mortgage loan allocation is based upon
the Company's five-year historical average of actual loan charge-offs
experienced in that category. The same methodology is used to determine
the allocation for consumer loans except the allocation is based upon an
average of the most recent actual three-year historical charge-off
experience for consumer loans.

- The application of formula driven reserve allocations to all outstanding
loans and certain unfunded commitments is based upon review of historical
losses and qualitative factors, which include but are not limited to,
economic trends, delinquencies, concentrations of credit, trends in loan
volume, experience and depth of management, examination and audit
results, effects of any changes in lending policies and trends in policy,
financial information and documentation exceptions.

- The maintenance of a general unallocated reserve to accommodate inherent
risk in the Company's portfolio that is not identified through the
Company's specific loan and portfolio segment reviews discussed above.
Management recognizes that there may be events or economic factors that
have occurred affecting specific borrowers or segments of borrowers that
may not yet be fully reflected in the information that the Company uses
for arriving at reserves for a specific loan or portfolio segment.
Therefore, the Company and its Board of Directors believe a general
unallocated reserve is needed to recognize the estimation risk associated
with the specific and formula driven allowances. In conjunction with the
establishment of the general unallocated reserve, the Company also looks
at the total allowance for loan losses in relation to the size of the
total loan portfolio, the level of non-performing assets and its coverage
of these items as compared to peer banks.

After completion of this process, a formal meeting of the Loan Loss Reserve
Committee is held to evaluate the adequacy of the reserve. The Company believes
that the procedural discipline, systematic methodology, and comprehensive
documentation of this quarterly process is in compliance with Generally Accepted
Accounting Principles and regulatory requirements.

When it is determined that the prospects for recovery of the principal of a
loan have significantly diminished, the loan is immediately charged against the
allowance account; subsequent recoveries, if any, are credited to the allowance
account. In addition, non-accrual and large delinquent loans are reviewed
monthly to determine potential losses. Consumer loans are considered losses when
they are 90 days past due, except loans that are insured for credit loss.

The Company's policy is to individually review, as circumstances warrant,
each of its commercial and commercial mortgage loans to determine if a loan is
impaired. At a minimum, credit reviews are mandatory for all commercial and
commercial mortgage loans with balances in excess of $500,000 within a 12 month
period. The Company has also identified two pools of small dollar value
homogeneous loans which are evaluated collectively for impairment. These
separate pools are for residential mortgage loans and consumer loans. Individual
loans within these pools are reviewed and removed from the pool if factors such
as significant delinquency in payments of 90 days or more, bankruptcy, or other
negative economic concerns indicate impairment.

PURCHASED AND ORIGINATED MORTGAGE SERVICING RIGHTS:

The Company recognizes as assets the rights to service mortgage loans for
others whether the servicing rights are acquired through purchases or
originations. Purchased mortgage servicing rights are capitalized at

39

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

cost. For loans originated and sold where servicing rights have been retained,
the Company allocates the cost of originating the loan to the loan (without the
servicing rights) and the servicing rights retained based on their relative fair
market values if it is practicable to estimate those fair values. Where it is
not practicable to estimate the fair values, the entire cost of originating the
loan is allocated to the loan without the servicing rights. For purposes of
evaluating and measuring impairment, the Company stratifies the rights based on
risk characteristics. If the discounted projected net cash flows of a stratum
are less than the carrying amount of the stratum, the stratum is written down to
the amount of the discounted projected net cash flows through a valuation
account. This writedown is recorded in the line item on the Consolidated
Statements of Operations titled Impairment charge for mortgage servicing rights.
The Company has determined that the predominant risk characteristics of its
portfolio are loan type and interest rate. For the purposes of evaluating
impairment, the Company has stratified its portfolio in 200 basis point tranches
by loan type. Mortgage servicing rights are amortized in proportion to, and over
the period of, estimated net servicing income. The value of mortgage servicing
rights is subject to interest rate and prepayment risk. It is likely that the
value of these assets will decrease if prepayments occur at greater than the
expected rate.

TRUST FEES:

All trust fees are recorded on the cash basis which approximates the
accrual basis for such income.

EARNINGS PER COMMON SHARE:

Basic earnings per share includes only the weighted average common shares
outstanding. Diluted earnings per share includes the weighted average common
shares outstanding and any dilutive common stock equivalent shares in the
calculation. Treasury shares are treated as retired for earnings per share
purposes. Options to purchase 474,534, 505,429 and 508,700 shares of common
stock were outstanding during 2002, 2001 and 2000, respectively, but were not
included in the computation of diluted earnings per common share as the options'
exercise prices were greater than the average market price of the common stock
for the respective periods.

STOCK-BASED COMPENSATION

At December 31, 2002, the Company has stock based compensation plans, which
are described more fully in Note #18 Stock Compensation Plans. The Company
accounts for these plans under Accounting Principles Board (APB) Opinion #25,
"Accounting for Stock Issued to Employees," and related interpretations. No
stock-based employee compensation expense has been reflected in net income and
stock options as all rights and options to purchase ASRV stock granted under
these plans had an exercise price equal to the market value of the underlying
stock on the date of grant. The following table illustrates the income (loss)
from continuing operations and earnings per share as if the Company had applied
the fair value recognition provisions of Statement of Financial Accounting
Standards No. 123 (SFAS #123), Accounting for Stock-Based Compensation," as
amended, to stock compensation plans.

40

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRO FORMA INCOME (LOSS) FROM CONTINUING OPERATIONS
AND EARNINGS (LOSS) PER SHARE

COMPREHENSIVE INCOME:

For the Company, comprehensive income includes net income and unrealized
holding gains and losses from available for sale investment securities and
derivatives that qualify as cashflow hedges. The balances of other accumulated
comprehensive income (loss) were $5,805,000, $(771,000) and $(3,880,000) at
December 31, 2002, 2001 and 2000, respectively.

CONSOLIDATED STATEMENT OF CASH FLOWS:

On a consolidated basis, cash equivalents include cash and due from banks,
interest bearing deposits with banks, and federal funds sold and securities
purchased under agreements to resell. For the Parent Company, cash equivalents
also include short-term investments that have an overnight maturity. The Company
made $519,000 in income tax payments in 2002; $482,000 in 2001; and $787,000 in
2000. The Company made total interest expense payments of $40,382,000 in 2002;
$54,904,000 in 2001; and $75,867,000 in 2000.

INCOME TAXES:

Deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax bases of assets and liabilities
using the enacted marginal tax rate. Deferred income tax expenses or credits are
based on the changes in the asset or liability from period to period. Deferred
tax assets are reduced, if necessary, by the amounts of such benefits that are
not expected to be realized based upon available evidence.

INTEREST RATE CONTRACTS:

The Company uses various interest rate contracts, such as interest rate
swaps, caps and floors, to help manage interest rate and market valuation risk
exposure, which is incurred in normal recurrent banking activities. These
interest rate contracts function as hedges against specific assets or
liabilities on the Consolidated Balance Sheet. The fair value of these contracts
is recorded in the Company's balance sheet, with the offset to accumulated other
comprehensive income (loss), net of tax. It is the Company's policy not to
terminate hedge transactions prior to their expiration date.

For interest rate swaps, the interest differential to be paid or received
is accrued by the Company and recognized as an adjustment to interest income or
interest expense of the underlying assets or liabilities being

41

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

hedged. Because only interest payments are exchanged, the cash requirement and
exposure to credit risk are significantly less than the notional amount.

Any premium or transaction fee incurred to purchase interest rate caps or
floors is deferred and amortized to interest income or interest expense over the
term of the contract. Unamortized premiums related to the purchase of caps and
floors are included in Other assets on the Consolidated Balance Sheets.

RISK MANAGEMENT OVERVIEW:

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

Interest rate risk is the sensitivity of net interest income and the market
value of financial instruments to the magnitude, direction, and frequency of
changes in interest rates. Interest rate risk results from various repricing
frequencies and the maturity structure of assets, liabilities, and hedges. The
Company uses its asset liability management policy and hedging policy to control
and manage interest rate risk.

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

Liquidity risk represents the inability to generate cash or otherwise
obtain funds at reasonable rates to satisfy commitments to borrowers, as well
as, the obligations to depositors and debtholders. The Company uses its asset
liability management policy and contingency funding plan to control and manage
liquidity risk.

RECENT ACCOUNTING STANDARDS:

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, Business Combinations (SFAS #141) and SFAS No. 142, Goodwill and Other
Intangible Assets (SFAS #142). SFAS #141 requires all business combinations
initiated after June 30, 2001, to be accounted for using the purchase method.
The Company adopted SFAS #141 on June 30, 2001, which did not have a material
impact on its results of operation or financial position. Under SFAS #142,
goodwill and intangible assets with indefinite lives are no longer amortized but
are reviewed annually at the reporting unit level (or more frequently if
impairment indicators arise) for impairment. Separable intangible assets that
are not deemed to have indefinite lives will continue to be amortized over their
useful lives. The amortization provisions of FASB #142 apply to goodwill and
intangible assets acquired prior to July 1, 2001. The Company adopted SFAS #142
effective January 1, 2002. For further discussion see Note #21 to the
Consolidated Financial Statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets (SFAS #144). SFAS #144 replaces SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of. This statement primarily defines one accounting model for
long-lived assets to be disposed of by sale, including discontinued operations,
and addresses implementation issues regarding impairment of long-lived assets.
The Company's adoption of SFAS #144 effective January 1, 2002 did not have a
material impact on its results of operation or financial position.

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
With Exit or Disposal Activities (SFAS #146). SFAS #146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)". SFAS #146
addresses the accounting and reporting for one-time employee termination
benefits, certain contract termination costs, and other costs associated with
exit or disposal activities such as facility closings or consolidations and
employee relocations. The standard is effective for exit or disposal activities
initiated after December 31, 2002. The Company does not believe the adoption of
this standard will have a material impact on its results of operation or
financial position.

In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain
Financial Institutions (SFAS #147). This statement clarified that, only if
certain criteria are met, an acquisition of a less-than-whole financial
institution (such as a branch acquisition) should be accounted for as a business
combination. In addition, SFAS #147 amends SFAS #144 to include in its scope
long-term customer-relationship intangible assets of financial institutions such
as depositor- and borrower-relationship intangible assets. As a result, those
intangible assets are subject to the same undiscounted cash flow recoverability
test and impairment loss recognition and measurement provisions that SFAS #144
requires for other long-lived assess that are held and used by a company. The
October 1, 2002 adoption of this standard did not have a material impact on its
results of operation or financial position.

In November 2002, the FASB issued FASB Interpretation No. (FIN) 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." FIN 45 elaborates on the
existing disclosure requirements for most guarantees, including loan guarantees
such as standby letters of credit and indemnifications. It also clarifies that
at the time a company issues a guarantee, the company must recognize an initial
liability for the fair value of those obligations it assumes under that
guarantee and must disclose that information in its interim and annual financial
statements. The provisions related to recognizing a liability at inception of
the guarantee for the fair value of the guarantor's obligations would not apply
to guarantees accounted for as derivatives. The initial recognition and
measurement provisions apply on a prospective basis to guarantees issued or
modified after December 31, 2002. The Company does not believe the adoption of
FIN 45 will have a material impact on its results of operations or financial
position. See Note #17 Commitments and Contingent Liabilities for disclosures
currently required under FIN 45.

In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest
Entities. The objective of this interpretation is to provide guidance on how to
identify a variable interest entity (VIE) and determine when assets,
liabilities, noncontrolling interests, and results of operations of a VIE need
to be included in a company's consolidated financial statements. The Company
does not believe adoption of this standard will have a material impact on its
results of operations or financial position.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of SFAS #123 (SFAS
#148). This Statement amends SFAS #123 to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of SFAS #123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. See "Stock-based Compensation" herein and Note #18 Stock Compensation
Plans for additional information. Management has not made a determination
regarding adoption of SFAS #148.

2. CASH AND DUE FROM BANKS

Cash and due from banks at December 31, 2002, and 2001, included $7,155,000
and $6,656,000, respectively, of reserves required to be maintained under
Federal Reserve Bank regulations.

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. INTEREST BEARING DEPOSITS WITH BANKS

The book value of interest bearing deposits with domestic banks is as
follows:

All interest bearing deposits are with domestic banks and mature within six
months. The Company had no deposits in foreign banks nor in foreign branches of
United States banks. To be in compliance with Housing and Urban Development and
Arizona Department of Insurance rules, minimum balances of $100,000 are
maintained at appropriate institutions.

4. INVESTMENT SECURITIES

The cost basis and market values of investment securities are summarized as
follows:

Investment securities available for sale:

- ---------------

(1) Other investment securities include corporate notes and bonds, asset-backed
securities, and equity securities.

Investment securities held to maturity:

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Investment securities available for sale:

- ---------------

(1) Other investment securities include corporate notes and bonds, asset-backed
securities, and equity securities.

The Company had no investment securities held to maturity as of December
31, 2001.

All purchased investment securities are recorded on settlement date which
is not materially different from the trade date. Realized gains and losses are
calculated by the specific identification method.

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 Investors Service or
Standard & Poor's rating of A. At December 31, 2002, 97.1% of the portfolio was
rated AAA as compared to 94.4% at December 31, 2001. Approximately 1.2% of the
portfolio was rated below A or unrated on December 31, 2002.

The book value of securities, both available for sale and held to maturity,
pledged to secure public and trust deposits, and certain Federal Home Loan Bank
borrowings was $257,329,000 at December 31, 2002, and $253,453,000 at December
31, 2001. The Company realized $5,047,000, $2,827,000 and $914,000 of gross
investment security gains and $753,000, $914,000 and $1,866,000 of gross
investment security losses on available for sale securities in 2002, 2001, and
2000 respectively. The Company realized no gross investment security gains and
losses on held to maturity securities in 2002, 2001 or 2000.

The following table sets forth the contractual maturity distribution of the
investment securities, cost basis and market values, and the weighted average
yield for each type and range of maturity as of December 31, 2002. Yields are
not presented on a tax-equivalent basis, but are based upon the cost basis and
are weighted for the scheduled maturity. Average maturities are based upon the
original contractual maturity dates with the exception of mortgage-backed
securities and asset-backed securities for which the average lives were used. At
December 31, 2002, the Company's consolidated investment securities portfolio
had a modified duration of approximately 1.52 years. The weighted average
expected maturity for available for sale securities at December 31, 2002 for
U.S. Treasury, U.S. Agency, U.S. Agency Mortgage-Backed and other securities was
1.6, 3.9, 6.0 and 2.0 years, respectively. The weighted average expected
maturity for held to maturity securities at December 31, 2002 for U.S. Agency
Mortgage-Backed securities was 10.6 years.

45

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Investment securities available for sale:

Investment securities held to maturity:

- ---------------

(1) Other investment securities include corporate notes and bonds, asset-backed
securities, and equity securities.

46

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. LOANS

The loan portfolio of the Company consisted of the following:

Real estate construction loans comprised 7.2% and 5.6% of total loans net
of unearned income at December 31, 2002 and 2001, respectively. The Company has
no direct credit exposure to foreign countries. Additionally, the Company has no
significant industry lending concentrations. As of December 31, 2002, loans to
customers engaged in similar activities and having similar economic
characteristics, as defined by standard industrial classifications, did not
exceed 10% of total loans. In the ordinary course of business, the subsidiaries
have transactions, including loans, with their officers, directors, and their
affiliated companies. These transactions were on substantially the same terms as
those prevailing at the time for comparable transactions with unaffiliated
parties and do not involve more than the normal credit risk. These loans totaled
$2,427,000 and $3,912,000 at December 31, 2002 and 2001, respectively. An
analysis of these related party loans follows:

6. ALLOWANCE FOR LOAN LOSSES

An analysis of the changes in the allowance for loan losses follows:

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. NON-PERFORMING ASSETS

Non-performing assets 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 some of which are insured for credit loss, and
(iii) other real estate owned (real estate acquired through foreclosure,
in-substance foreclosures and repossessed assets).

The following table presents information concerning non-performing assets.
Note: The December 31, 1999 and 1998 information has been marked unaudited as
the Company's former auditors have ceased operations and were unable to consent
to the inclusion of such information in these consolidated financial statements.

The Company is unaware of any additional loans which are required to either
be charged-off or added to the non-performing asset totals disclosed above.
Other real estate owned is recorded at the lower of 1) fair value minus
estimated costs to sell, or 2) carrying cost.

For impaired loans, the measurement of impairment may be based upon: 1) the
present value of expected future cash flows discounted at the loan's effective
interest rate; 2) the observable market price of the impaired loan; or 3) the
fair value of the collateral of a collateral dependent loan.

The Company had loans totaling $9,116,000, $11,893,000 and $3,165,000 being
specifically identified as impaired and a corresponding allocation reserve of
$1,425,000, $1,424,000 and $600,000 at December 31, 2002, 2001 and 2000,
respectively. The average outstanding balance for loans being specifically
identified as impaired was $10,095,000 for 2002, $7,897,000 for 2001 and
$2,580,000 for 2000. All of the impaired loans are collateral dependent,
therefore the fair value of the collateral of the impaired loans is evaluated in
measuring the impairment. The interest income recognized on impaired loans
during 2002 and 2001 was $435,000 and $399,000, respectively. There was no
income recognized on impaired loans in 2000.

The following table sets forth, for the periods indicated, (i) the gross
interest income that would have been recorded if non-accrual loans had been
current in accordance with their original terms and had been outstanding
throughout the period or since origination if held for part of the period, (ii)
the amount of interest income actually recorded on such loans, and (iii) the net
reduction in interest income attributable to such loans. Note: The December 31,
1999 and 1998 information has been marked unaudited as the Company's

48

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

former auditors have ceased operations and were unable to consent to the
inclusion of such information in these consolidated financial statements.

8. PREMISES AND EQUIPMENT

An analysis of premises and equipment follows:

9. MORTGAGE SERVICING RIGHTS (MSR) PORTFOLIO

The following tables highlight key information regarding the Company's
mortgage servicing portfolio.

A rollforward of the MSRs is as follows:

On February 5, 2003, the Company announced the sale of the servicing rights
on approximately $450 million in mortgage loan principal values or 69% of SMC's
total servicing portfolio. This downsizing of

49

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the mortgage servicing asset will reduce the level of interest rate risk and
earnings volatility at the Company and contribute to a more conservatively
positioned balance sheet.

10. FEDERAL FUNDS PURCHASED, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE,
AND
OTHER SHORT-TERM BORROWINGS

The outstanding balances and related information for federal funds
purchased, securities sold under agreements to repurchase, and other short-term
borrowings are summarized as follows:

Average amounts outstanding during the year represent daily averages.
Average interest rates represent interest expense divided by the related average
balances. Collateral related to securities sold under agreements to repurchase
are maintained within the Company's investment portfolio.

These borrowing transactions can range from overnight to one year in
maturity. The average maturity was two days at the end of 2002, 16 days at the
end of 2001 and 92 days at the end of 2000.

50

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. DEPOSITS

The following table sets forth the balance of the Company's deposits:

Interest expense on deposits consisted of the following:

The following table sets forth the balance of other time deposits and
certificates of deposit of $100,000 or more maturing in the periods presented:

51

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. ADVANCES FROM FEDERAL HOME LOAN BANK AND GUARANTEED JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURES

Advances from the Federal Home Loan Bank consist of the following:

All Federal Home Loan Bank stock, along with an interest in unspecified
mortgage loans and mortgage-backed securities, with an aggregate statutory value
equal to the amount of the advances, have been pledged as collateral to the
Federal Home Loan Bank of Pittsburgh. At December 31, 2002, the Company's FHLB
borrowings with maturities of 2005 and greater had prepayment penalties of $38
million.

GUARANTEED JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES:

On April 28, 1998, the Company completed a $34.5 million public offering of
8.45% Trust Preferred Securities, which represent undivided beneficial interests
in the assets of a Delaware business trust, AmeriServ Financial Capital Trust I.
The Trust Preferred Securities will mature on June 30, 2028, and are callable at
par at the option of the Company after June 30, 2003. Proceeds of the issue were
invested by AmeriServ Financial Capital Trust I in Junior Subordinated
Debentures issued by AmeriServ Financial, Inc. Net proceeds from the $34.5
million offering were used for general corporate purposes, including the
repayment of debt, the repurchase of AmeriServ Financial common stock, and
investments in and advances to the Company's subsidiaries. Unamortized deferred
issuance costs associated with the Trust Preferred Securities amounted to $1.1
million as of December 31, 2002, and are being amortized on a straight-line
basis over the term of the issue. The Trust Preferred securities are listed on
NASDAQ under the symbol ASRVP.

52

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Upon the occurrence of certain events, specifically a tax event or a
capital treatment event, the Company may redeem in whole, but not in part, the
Guaranteed Junior Subordinated Deferrable Interest Debentures prior to September
30, 2028. A tax event means that the interest paid by the Company on the
subordinated debentures will no longer be deductible for federal income tax
purposes. A capital treatment event means that the Trust Preferred Securities no
longer qualify as Tier 1 capital for purposes of the capital adequacy guidelines
of the Federal Reserve. Proceeds from any redemption of the subordinated
debentures would cause mandatory redemption of the Trust Preferred Securities.

13. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures about Fair Value of Financial Instruments,
requires all entities to disclose the estimated fair value of its financial
instrument assets and liabilities. For the Company, as for most financial
institutions, approximately 95% of its assets and liabilities are considered
financial instruments. Many of the Company's financial instruments, however,
lack an available trading market characterized by a willing buyer and willing
seller engaging in an exchange transaction. Therefore, significant estimations
and present value calculations were used by the Company for the purpose of this
disclosure.

Estimated fair values have been determined by the Company using the best
available data and an estimation methodology suitable for each category of
financial instruments. Management believes that cash, cash equivalents, and
loans and deposits with floating interest rates have estimated fair values which
approximate the recorded book balances. The estimation methodologies used, the
estimated fair values, and recorded book balances at December 31, 2002 and 2001,
were as follows:

Financial instruments actively traded in a secondary market have been
valued using quoted available market prices.

Financial instruments with stated maturities have been valued using a
present value discounted cash flow with a discount rate approximating current
market for similar assets and liabilities.

Financial instrument liabilities with no stated maturities have an
estimated fair value equal to both the amount payable on demand and the recorded
book balance.

53

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The net loan portfolio has been valued using a present value discounted
cash flow. The discount rate used in these calculations is based upon the
treasury yield curve adjusted for non-interest operating costs, credit loss, and
assumed prepayment risk.

Purchased and originated mortgage servicing rights have been valued by an
independent third party using a methodology which incorporates a discounted
after-tax cash flow of the servicing (loan servicing fees and other related
ancillary fee income less the costs of servicing the loans). This valuation also
assumes current PSA prepayment speeds which are based upon industry data
collected on mortgage prepayment trends. For further discussion see Note #1 to
the Consolidated Financial Statements.

Changes in assumptions or estimation methodologies may have a material
effect on these estimated fair values. The Company's remaining assets and
liabilities which are not considered financial instruments have not been valued
differently than has been customary under historical cost accounting. No
disclosure of the relationship value of the Company's deposits is required by
SFAS #107, however, management believes the relationship value of these core
deposits is significant. Based upon the Company's most recent sales and
acquisitions and other limited secondary market transactions involving similar
deposits, management estimates the relationship value of these funding
liabilities to range between $33 million to $67 million less than their
estimated fair value shown at December 31, 2002. The estimated fair value of
instruments used for hedging purposes is estimated by financial modeling
performed by an independent third party. This range of values represent the
estimated amount the Company would receive or pay, to terminate the agreements,
considering current interest rates, as well as the creditworthiness of the
counterparties.

There is not a material difference between the notional amount and the
estimated fair value of the off-balance sheet items which total $98.2 million at
December 31, 2002, and are primarily comprised of unfunded loan commitments
which are generally priced at market at the time of funding.

Management believes that the disclosed fair values between financial
institutions may not be comparable due to the wide range of assumptions,
methodologies and other uncertainties in estimating fair values, given the
absence of active secondary markets for many of the financial instruments. This
lack of uniform valuation methodologies also introduces a greater degree of
subjectivity to these estimated fair values.

54

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. INCOME TAXES

The provision for federal income taxes is summarized below:

The reconciliation between the federal statutory tax rate and the Company's
effective consolidated income tax rate is as follows:

- ---------------
N/M -- not meaningful.

55

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 2002 and 2001, deferred taxes are included in the
accompanying Consolidated Balance Sheets. The following table highlights the
major components comprising the deferred tax assets and liabilities for each of
the periods presented:

The change in the net deferred liability during 2002 and 2001 was
attributed to the following:

The Company has alternative minimum tax credit carryforwards of
approximately $844,000 at December 31, 2002. These credits have an indefinite
carryforward period.

15. PENSION AND PROFIT SHARING PLANS

The Company has a trusteed, noncontributory defined benefit pension plan
covering all employees who work at least 1,000 hours per year and who have not
yet reached age 60 at their employment date. The benefits of the plan are based
upon the employee's years of service and average annual earnings for the highest
five consecutive calendar years during the final ten year period of employment.
The Company's funding policy has been to contribute annually an amount within
the statutory range of allowable minimum and maximum actuarially determined
tax-deductible contributions. Plan assets are primarily debt securities
(including U.S. Treasury and Agency securities, corporate notes and bonds),
listed common stocks (including shares of AmeriServ Financial, Inc. common stock
which is limited to 10% of the plans assets), mutual funds, and short-term cash
equivalent instruments.

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AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENSION BENEFITS:

In addition, the Bank has a trusteed, deferred profit sharing plan with
contributions made by the Bank based upon income as defined by the plan. All
employees of the Bank and the Company who work over 1,000 hours per year
participate in the plan beginning on January 1 following six months of service.
There was

57

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

no contribution to this profit sharing plan in 2002. There were contributions to
this plan of $95,000 and $111,000 for 2001 and 2000, respectively. Plan assets
are primarily debt securities (including U.S. Treasury and Agency securities,
corporate notes and bonds), listed common stocks (including shares of AmeriServ
Financial, Inc. common stock which is limited to 10% of the plans assets),
mutual funds, and short-term cash equivalent instruments.

Except for the above pension benefits, the Company has no significant
additional exposure for any other post-retirement or post-employment benefits.
For information on Supplemental Executive Retirement Plan on the former chairman
that was outstanding at the end of 2001 and cancelled in 2002, see Note #18 to
the Consolidated Financial Statements.

16. LEASE COMMITMENTS

The Company's obligation for future minimum lease payments on operating
leases at December 31, 2002, is as follows:

In addition to the amounts set forth above, certain of the leases require
payments by the Company for taxes, insurance, and maintenance.

Rent expense included in total non-interest expense amounted to $584,000,
$491,000 and $577,000, in 2002, 2001, and 2000, respectively.

17. COMMITMENTS AND CONTINGENT LIABILITIES

The Bank incurs off-balance sheet risks in the normal course of business in
order to meet the financing needs of their customers. These risks derive from
commitments to extend credit and standby letters of credit. Such commitments and
standby letters of credit involve, to varying degrees, elements of credit risk
in excess of the amount recognized in the consolidated financial statements.
Commitments to extend credit are obligations to lend to a customer as long as
there is no violation of any condition established in the loan agreement.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Because many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank evaluates each
customer's creditworthiness on a case-by-case basis. Collateral which secures
these types of commitments is the same as for other types of secured lending
such as accounts receivable, inventory, and fixed assets.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements, including
normal business activities, bond financings, and similar transactions. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loans to customers. Letters of credit are issued both
on an unsecured and secured basis. Collateral securing these types of
transactions is similar to collateral securing the Bank's commercial loans.

58

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's exposure to credit loss in the event of nonperformance by the
other party to these commitments to extend credit and standby letters of credit
is represented by their contractual amounts. The Bank uses the same credit and
collateral policies in making commitments and conditional obligations as for all
other lending. The Company had various outstanding commitments to extend credit
approximating $98,183,000 and standby letters of credit of $5,304,000 as of
December 31, 2002.

Pursuant to its bylaws, the Company provides indemnification to its
directors and officers against certain liabilities incurred as a result of their
service on behalf of the Company. In connection with this indemnification
obligation, the Company advances on behalf of covered individuals costs incurred
in defending against certain claims. The Company advanced such defense costs on
behalf of one such individual during 2002 with respect to pending litigation.
This litigation was resolved prior to December 31, 2002 and all relevant costs
were recognized in 2002.

Additionally, the Company is also subject to a number of asserted and
unasserted potential claims encountered in the normal course of business. In the
opinion of the Company, neither the resolution of these claims nor the funding
of these credit commitments will have a material adverse effect on the Company's
consolidated financial position or results of operation.

18. STOCK COMPENSATION PLANS

In 2001, the Company's Board of Directors adopted a shareholder approved
Stock Incentive Plan (the Plan) authorizing the grant of options or restricted
stock covering 800,000 shares of common stock. This Plan replaces the expired
1991 Stock Option Plan. Under the Plan, options or restricted stock can be
granted (the Grant Date) to directors, officers, and employees that provide
services to the Company and its affiliates, as selected by a committee of the
Board of Directors. The Company accounts for this Plan under APB #25. The option
price at which a stock option may be exercised shall not be less than 100% of
the fair market value per share of common stock on the Grant Date. The maximum
term of any option granted under the Plan cannot exceed 10 years. Generally,
under the Plan on or after the first anniversary of the Grant Date, one-third of
such options may be exercised. On or after the second anniversary of the Grant
Date, two-thirds of such options may be exercised minus the aggregate number of
such options previously exercised. On or after the third anniversary of the
Grant Date, the remainder of the options may be exercised.

A summary of the status of the Company's Stock Incentive Plans at December
31, 2002, 2001, and 2000, and changes during the years then ended are presented
in the table and narrative following:

A total of 344,180 of the 499,534 options outstanding at December 31, 2002,
have exercise prices between $4.08 and $15.69, with a weighted average exercise
price of $5.84 and a weighted average remaining

59

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

contractual life of 5.9 years. All of these options are exercisable. The
remaining 155,354 options have exercise prices between $2.90 and $6.21, with a
weighted average exercise price of $4.52 and a weighted average remaining
contractual life of 8.2 years. The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option pricing model with the
following assumptions used for grants in 2002, 2001, and 2000, respectively:
risk-free interest rates ranging from 3.04% to 5.07% for 2002 options, 4.07% to
4.97% for 2001 options, and 5.69% and 6.61% for 2000 options; expected dividend
yields ranging from 5.11% to 12.41% for 2002 options, 8.00% for 2001 options and
8.50% for 2000 options; expected lives of 10.0 years in 2002 and 7.0 years for
2001 and 2000 options; expected volatility ranging from 30.21% to 34.31% for
2002 options, 29.76% to 30.71% for 2001 options, and 23.09% and 29.20% for 2000
options.

The Company's Board of Directors cancelled the supplemental executive
retirement plan (SERP) as described in the 2001 proxy statement where the former
Chairman would have received 156,000 shares of ASRV common stock. Since the plan
was cancelled within the first five-year vesting period no dividends were
accrued and no expense was recognized in 2002, and the $45,000 compensation
expense for 2001 was reversed in 2002.

19. DIVIDEND REINVESTMENT PLAN

The Company's Dividend Reinvestment and Common Stock Purchase Plan provides
each record holder of Common Stock with a simple and convenient method of
purchasing additional shares without payment of any brokerage commissions,
service charges or other similar expense. A participant in the Plan may purchase
shares of Common Stock by electing either to (1) reinvest dividends on all of
his or her shares of Common Stock (note the Company suspended its common
dividend on January 24, 2003) or (2) make optional cash payments of not less
than $10 and up to a maximum of $2,000 per month and continue to receive regular
dividend payments on his or her other shares. A participant may withdraw from
the Plan at any time.

In the case of purchases from AmeriServ Financial, Inc. of treasury or
newly-issued shares of Common Stock, the average market price is determined by
averaging the high and low sale price of the Common Stock as reported on the
NASDAQ on the relevant investment date. At December 31, 2002, the Company had
244,163 unissued reserved shares available under the Plan. In the case of
purchases of shares of Common Stock on the open market, the average market price
will be the weighted average purchase price of shares purchased for the Plan in
the market for the relevant investment date.

20. SHAREHOLDER RIGHTS PLAN

Each share of the Company's Common Stock has attached to it one right (a
"Right") issued pursuant to a Rights Agreement, dated February 24, 1995 (the
"Rights Agreement"). Each Right entitles the holder to buy one-hundredth of a
share of the Company's Series C Junior Participating Preferred Stock at a price
of $21.67, subject to adjustment (the "Exercise Price"). The Rights become
exercisable if a person, group, or other entity acquires or announces a tender
offer for 19.9% or more of the Company's Common Stock. They are also exercisable
if a person or group who becomes a beneficial owner of at least 10% of the
Company's Common Stock is declared by the Board of Directors to be an "adverse
person" (as defined in the Rights Agreement). Under the Rights Agreement, any
person, group, or entity is deemed to be a beneficial owner of the Company's
Common Stock when such person or any of such person's affiliates or associates,
directly or indirectly, has the right to acquire or to vote the shares of the
Company's Common Stock (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement, or
understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options. The Rights Agreement
excludes from the definition of "beneficial owner", holders of revocable proxies
that (A) arise solely from a revocable proxy given in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and (B) is not

60

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

also then reportable by such person on Schedule 13D under the Exchange Act (or
any comparable or successor report). After the Rights become exercisable, the
Rights (other than rights held by a 19.9% beneficial owner or an "adverse
person") entitle the holders to purchase, under certain circumstances, either
the Company's Common Stock or common stock of the potential acquirer having a
value equal to twice the Exercise Price. The Company is entitled to redeem the
Rights at $0.00033 per Right at any time until the twentieth business day
following a public announcement that a 19.9% position has been acquired or the
Board of Directors has designated a holder of the Company's Common Stock an
"adverse person". The Rights attached to the shares of AmeriServ Common Stock
outstanding on March 15, 1995, will expire on February 25, 2005.

21. INTANGIBLE ASSETS

The Company's balance sheet shows both tangible assets (such as loans,
buildings, and investments) and intangible assets (such as goodwill). On January
1, 2002, the Company adopted SFAS #142, Goodwill and Other Intangible Assets
under which goodwill and other intangible assets with indefinite lives are not
amortized. Such intangibles were evaluated for impairment at the reporting unit
level as of January 1, 2002 (any such impairment at the date of adoption would
have been reflected as a change in accounting principle). In addition, each
year, the Company will evaluate the intangible assets for impairment with any
resulting impairment reflected as an operating expense. The Company's only
intangible, other than goodwill, is its core deposit intangible, which the
Company currently believes has a finite life. The Company completed its initial
goodwill impairment test in the second quarter of 2002. This evaluation
indicated that there was no impairment of the Company's goodwill. In the future,
the Company plans to perform the impairment test in the second quarter of its
fiscal year. Of the Company's total goodwill of $9.7 million, $9.5 million is
allocated to the retail banking segment and $200,000 is allocated to the
mortgage banking segment.

As of December 31, 2002, the Company's core deposit intangibles had an
original cost of $17.6 million with accumulated amortization of $11.5 million.
The weighted average amortization period of the Company's core deposit
intangibles at December 31, 2002, is 5.50 years. Estimated amortization expense
for the next five years is summarized as follows (in thousands):

A reconciliation of the Company's intangible asset balances for 2002 and
2001 is as follows (in thousands):

61

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table reports pro forma information as if SFAS #142 had been
adopted for all periods presented (in thousands, except per share data):

22. DERIVATIVE HEDGING INSTRUMENTS

The Company uses various interest rate contracts, such as interest rate
swaps, caps and floors, to help manage interest rate and market valuation risk
exposure, which is incurred in normal recurrent banking activities. On January
1, 2001, the Company adopted SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities. At December 31, 2002 the Company had no interest rate
swaps outstanding. At December 31, 2001 the Company had interest rate swap
agreements that effectively converted a notional amount of $80 million from
floating-rates to fixed-rates. At December 31, 2001, the Company had recorded
other liabilities of $1,231,000 and a decrease in other comprehensive income of
$800,000, net of tax, related to this swap. A summary of the Company's
derivative hedging transactions are as follows:

BORROWED FUNDS HEDGES:

The Company had entered into interest rate swaps to hedge short-term
borrowings used to leverage the balance sheet. Specifically, FHLB advances which
reprice between 30 days and 90 days were being used to fund fixed-rate agency
mortgage-backed securities with durations ranging from two to five years. Under
these swap agreements, the Company paid a fixed-rate of interest and received a
floating-rate which reset either monthly or quarterly. These interest rate swaps
qualified as cashflow hedges for the Company.

62

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the interest rate swap transactions that
impacted the Company's 2002 and 2001 performance:

N.A. -- not applicable

The Company monitors and controls all derivative products with a
comprehensive Board of Director approved hedging policy. This policy permits a
total maximum notional amount outstanding of $500 million for interest rate
swaps, and interest rate caps/floors. The Company had no interest rate caps or
floors outstanding at December 31, 2002, 2001, and 2000.

23. SEGMENT RESULTS

The financial performance of the Company is also monitored by an internal
funds transfer pricing profitability measurement system which produces line of
business results and key performance measures. The Company's major business
units include retail banking, commercial lending, mortgage banking, trust, other
fee based businesses and investment/parent. The reported results reflect the
underlying economics of the business segments. Expenses for centrally provided
services are allocated based upon the cost and estimated usage of those
services. Capital has been allocated among the businesses on a risk-adjusted
basis with a primary focus on credit risk. The businesses are match-funded and
interest rate risk is centrally managed and accounted for within the
investment/parent business segment. The key performance measures the Company
focuses on for each business segment are net income and risk-adjusted return on
equity.

Retail banking includes the deposit-gathering branch franchise, lending to
both individuals and small businesses, and financial services. Lending
activities include residential mortgage loans, direct consumer loans, and small
business commercial loans. Financial services include the sale of mutual funds,
annuities, and insurance products. Commercial lending to businesses includes
commercial loans, commercial real-estate loans, and commercial leasing
(excluding certain small business lending through the branch network). Mortgage
banking includes the servicing of mortgage loans (the Company completed its exit
from the wholesale mortgage production business in 2001). The trust segment has
two primary business divisions, institutional trust and personal trust.
Institutional trust products and services include 401(k) plans, defined benefit
and defined contribution employee benefit plans, individual retirement accounts,
and collective investment funds for trade union pension funds. Personal trust
products and services include personal portfolio investment management, estate
planning and administration, custodial services and pre-need trusts. Other fee
based businesses include AmeriServ Associates, AmeriServ Life, and several other
smaller fee generating business lines such as a debt collection agency. The
investment/parent includes the net results of investment securities and
borrowing activities, general corporate expenses not allocated to the business
segments, interest expense on guaranteed junior subordinated deferrable interest
debentures, and centralized interest rate risk management. Inter-segment
revenues were not material.

63

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The contribution of the major business segments to the consolidated results
for the full years of 2002, 2001 and 2000 were as follows:

64

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

65

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

66

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

24. REGULATORY MATTERS

On February 28, 2003, the Company and the Bank entered into a Memorandum of
Understanding (MOU) with the Federal Reserve Bank of Philadelphia (Federal
Reserve) and the Pennsylvania Department of Banking (Department). Under the
terms of the MOU, the Company and the Bank cannot declare dividends, the Company
may not redeem any of its own stock, and the Company cannot incur any additional
debt other than in the ordinary course of business, in each case, without the
prior written approval of the Federal Reserve and the Department. Accordingly,
the Board of Directors of the Company cannot reinstate the previously suspended
common stock dividend, or reinstitute its stock repurchase program without the
concurrence of the Federal Reserve and the Department. Other provisions of the
MOU require the Company and the Bank to: (i) improve credit quality and credit
administration practices, (ii) improve data security and disaster recovery
procedures, (iii) make periodic reports to the Federal Reserve and the
Department regarding compliance with the MOU, and (iv) appoint a committee of
independent directors to monitor compliance with the MOU. The MOU will remain in
effect until modified or terminated by the Federal Reserve and the Department.

The Company is subject to various capital requirements administered by the
federal banking agencies. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company must meet specific capital
guidelines that involve quantitative measures of the Company's assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Company's capital amounts and classification are also
subject to qualitative judgements by the regulators about components, risk
weightings, and other factors. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Company's financial statements.

Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital to risk-weighted assets, and of Tier I
capital to average assets. As of December 31, 2002 and 2001, the Federal Reserve
categorized the Company as Well Capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Company
must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the table.

67

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

25. BRANCH SALE

On September 27, 2001, the Company and CSB Bank of Curwensville, completed
the sale of the Company's Coalport office. As the only Company office in
Clearfield County, the Coalport office no longer strategically fit the
geographic footprint for the Company. The Company received an 8.875% core
deposit premium or $1.4 million on the sale of approximately $15.7 million of
deposits.

26. TAX-FREE SPIN-OFF OF THREE RIVERS BANK

On April 1, 2000, the Company executed its Board approved tax-free spin-off
of its Three Rivers Bank subsidiary. Shareholders received one share of the new
Three Rivers Bancorp common stock for every two shares of AmeriServ Financial
common stock that they owned. The distribution of the Three Rivers Bancorp
shares did not change the number of AmeriServ Financial common shares
outstanding. Standard Mortgage Corporation (SMC), a mortgage banking company,
previously a subsidiary of Three Rivers Bank, was internally spun-off from Three
Rivers Bank to the Company prior to consummation of the Three Rivers Bank
spin-off.

The accompanying AmeriServ Financial Pro Forma Condensed Consolidated
Financial Statement should be read in conjunction with the historical
consolidated financial statements and notes thereto. The AmeriServ Financial pro
forma condensed consolidated income statement assumes that the dividend to
shareholders occurred on January 1, 2000. The pro forma condensed consolidated
financial information is presented for informational purposes only and does not
purport to reflect the results of operations of AmeriServ Financial or Three
Rivers Bancorp or the results of operations that would have occurred had
AmeriServ Financial or Three Rivers Bancorp been operated as a separate,
independent company. The pro forma adjustments to the accompanying historical
consolidated statements of income are set forth below.

68

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Notes to unaudited pro forma condensed consolidated financial statements:

(A) To record the additional incremental expenses AmeriServ Financial
incurred that were previously allocated to and paid by Three Rivers Bank.

(B) To record the income tax impact of the above expenses at the
statutory tax rate.

27. PARENT COMPANY FINANCIAL INFORMATION

The Parent Company functions primarily as a coordinating and servicing unit
for all subsidiary entities. Provided services include general management,
accounting and taxes, loan review, auditing, investment advisory, marketing,
insurance risk management, general corporate services, and financial and
strategic planning. The following financial information relates only to the
Parent Company operations:

BALANCE SHEETS

69

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

70

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The ability of the subsidiary bank to upstream cash to the Parent Company
is restricted by regulations and the MOU that the Company entered into with its
primary regulators on February 28, 2003. (See Note #24, Regulatory Matters.)
Federal law prevents the Parent Company from borrowing from its subsidiary bank
unless the loans are secured by specified assets. Further, such secured loans
are limited in amount to ten percent of the subsidiary banks' capital and
surplus. In addition, the Bank is subject to legal limitations on the amount of
dividends that can be paid to their shareholder. The dividend limitation
generally restricts dividend payments to a bank's retained net income for the
current and preceding two calendar years. Cash may also be upstreamed to the
Parent Company by the subsidiaries as an inter-entity management fee. At
December 31, 2002, the subsidiary bank was not permitted to upstream any cash
dividends to the Parent Company. The subsidiary bank had a combined $93,725,000
of restricted surplus and retained earnings at December 31, 2002.

To facilitate an orderly spin-off transition, the Company and TRB entered
into a Services Agreement whereby AmeriServ Financial has provided certain
services such as audit, loan review and asset/liability management on an
outsourced basis to TRB. The Company received $146,000, $557,000, and $985,000
in 2002, 2001 and 2000, respectively, for these services. This agreement expired
in 2002.

28. PRIOR YEAR DISAGGREGATIONS

Certain revisions have been made to the accompanying Consolidated Financial
Statements and related notes as of December 31, 2001 and for the two-year period
ended December 31, 2001. In order to maintain consistency and comparability
between periods presented, disaggregations of certain amounts within previ-

71

AMERISERV FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ously reported financial statements and disclosures have been made to conform to
the financial statement presentation of the current period as follows:

CONSOLIDATED BALANCE SHEETS

- Goodwill and Core Deposit Intangibles have been separately disclosed.

CONSOLIDATED STATEMENTS OF CASH FLOWS

- Purchases and Sales of mortgage servicing rights have been separately
disclosed.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

- Note #9, Mortgage Servicing Rights (MSR) Portfolio: A summary of activity
within the MSR portfolio has been disclosed for 2001.

- Note #18, Stock Compensation Plans: The weighted average fair value of
options granted in the current year was disclosed for 2001 and 2000.

- Note #23, Segment Results: The provision for loan losses has been
disclosed separately from net interest income for 2001 and 2000.

72

STATEMENT OF MANAGEMENT RESPONSIBILITY

January 31, 2003

To the Stockholders and
Board of Directors of
AmeriServ Financial, Inc.

Management of AmeriServ Financial, Inc. and its subsidiaries have prepared
the consolidated financial statements and other information in the Annual Report
and Form 10-K in accordance with generally accepted accounting principles and
are responsible for its accuracy.

In meeting its responsibility, management relies on internal accounting and
related control systems, which include selection and training of qualified
personnel, establishment and communication of accounting and administrative
policies and procedures, appropriate segregation of responsibilities, and
programs of internal audit. These systems are designed to provide reasonable
assurance that financial records are reliable for preparing financial statements
and maintaining accountability for assets and that assets are safeguarded
against unauthorized use or disposition. Such assurance cannot be absolute
because of inherent limitations in any internal control system.

Management also recognizes its responsibility to foster a climate in which
Company affairs are conducted with the highest ethical standards. The Company's
Code of Conduct, furnished to each employee and director, addresses the
importance of open internal communications, potential conflicts of interest,
compliance with applicable laws, including those related to financial
disclosure, the confidentiality of proprietary information, and other items.
There is an ongoing program to assess compliance with these policies.

The Audit Committee of the Company's Board of Directors consists solely of
outside directors. The Audit Committee meets periodically with management and
the independent public accountants to discuss audit, financial reporting, and
related matters. Deloitte & Touche LLP and the Company's internal auditors have
direct access to the Audit Committee.

/S/ CRAIG G. FORD /S/ JEFFERY A. STOPKO

Craig G. Ford Jeffrey A. Stopko
Interim Chairman, Senior Vice President &
President & CEO Chief Financial Officer

73

INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders of
AmeriServ Financial, Inc.:
Johnstown, PA

We have audited the accompanying consolidated balance sheet of AmeriServ
Financial, Inc. and subsidiaries ("the Corporation") as of December 31, 2002,
and the related consolidated statements of operations, comprehensive income,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The consolidated financial statements of the Corporation for the
years ended December 31, 2001 and 2000 were audited by other auditors who have
ceased operations. Those auditors expressed an unqualified opinion on those
financial statements in their report dated January 22, 2002.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as of December
31, 2002, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note #21 to the financial statements, in 2002 the
Corporation changed its method of accounting for goodwill and other intangible
assets to adopt Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets."

As discussed above, the consolidated financial statements of the
Corporation as of December 31, 2001 and for each of the years in the two-year
period then ended were audited by other auditors who have ceased operations.
These consolidated financial statements have been revised as follows: (a) as
described in Note 21, Intangible Assets, these consolidated financial statements
have been revised to include the transitional disclosures required by Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets,
which was adopted by the Corporation as of January 1, 2002. Our audit procedures
with respect to the disclosures in Note 21 with respect to 2001 and 2000 include
(i) agreeing the previously reported net income to the previously issued
consolidated financial statements and the adjustments to reported net income
representing amortization expense (including any related tax effects) recognized
in those periods to the Corporation's underlying records obtained from
management, and (ii) testing the mathematical accuracy of the reconciliation of
adjusted net income to reported net income and the related earnings per-share
amounts; (b) as described in Note 28, Prior Year Disaggregations, these
consolidated financial statements and related notes as of December 31, 2001 and
for each of the years in the two-year period ended December 31, 2001 have been
revised to provide disaggregations of certain financial statement amounts and
note disclosures. Our audit procedures with respect to the financial statement
amounts and note disclosures described in Note 28 included (i) agreeing the
previously reported amounts to the Corporation's underlying records obtained
from management, and (ii) testing the mathematical accuracy of the
disaggregation. In our opinion, such disaggregations and disclosures are
appropriate and have been properly applied. However, we were not engaged to
audit, review, or apply any procedures to the 2001 and 2000 consolidated
financial statements of the Corporation other than with respect to such
disaggregations and disclosures, and accordingly, we do not express an opinion
or any other form of assurance on the 2001 and 2000 consolidated financial
statements taken as a whole.
/s/ Deloitte & Touche, LLP
Pittsburgh, PA
January 31, 2003
(February 28, 2003 as to Notes 9 and 24)

74

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP

To the Stockholders and Board of Directors of AmeriServ Financial, Inc.:

We have audited the accompanying consolidated balance sheets of AmeriServ
Financial, Inc. (a Pennsylvania corporation) and subsidiaries as of December 31,
2001 and 2000, and the related consolidated statements of income, comprehensive
income, stockholders' equity and cash flows for each of the three years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AmeriServ Financial, Inc.
and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

As explained in Note #21 to the financial statements, effective January 1,
2001, the Company changed its method of accounting for derivative instruments
and hedging activities.

/S/ ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania
January 22, 2002

NOTE: The report of Arthur Andersen LLP presented above is a copy of a
previously issued report by Arthur Andersen LLP. The report has not been
reissued by Arthur Andersen LLP nor has Arthur Andersen LLP consented to
the inclusion of its report in this Form 10-K.

NOTE: The consolidated financial statements as of December 31, 2001 and for each
of the years in the two-year period then ended have been revised to
include: (i) the transitional disclosures required by Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets (see Note 21, Intangible Assets) and (ii) disaggregations of
certain financial statement amounts and note disclosures (see Note 28,
Prior Year Disaggregations). The report of Arthur Andersen LLP presented
above does not extend to these changes.

75

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On July 5, 2002 the Company's Board of Directors announced the appointment
of Deloitte & Touche, LLP as its independent auditor replacing Arthur Andersen,
LLP.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this section relative to Directors of the
Registrant is presented in the Proxy Statement for the Annual Meeting of
Shareholders.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this section is presented in the Proxy Statement
for the Annual Meeting of Shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this section is presented in the Proxy Statement
for the Annual Meeting of Shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this section is presented in the Proxy Statement
for the Annual Meeting of Shareholders.

ITEM 14. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Based on their
evaluation as of a date within 90 days of the filing date of this Form 10-K, the
Company's principal executive officer and principal financial officer have
concluded that the Company's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the
Exchange Act)) are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported with the time periods specified in
Securities and Exchange Commission rules and forms.

(b) Changes in internal control. Except as discussed herein, there were
no significant changes in the Company's internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation, nor, except as noted herein, were any corrective actions taken to
address significant deficiencies or material weaknesses in internal controls.
The Company has identified material weaknesses in its credit administration
processes. In particular, the Company has concluded that, although its credit
and credit administration policies are sound, adherence to these policies has
not been consistent. This resulted in incomplete or dated information in credit
files. The Company did, however, make a concerted effort in the fourth quarter
of 2002 to obtain the most current information for the credit files. The
resulting analysis of this updated information led to rating downgrades for
numerous credits which contributed to an increased level of criticized and
classified loans. This deterioration of credit quality combined with continued
economic weakness were factors that contributed to a significant addition to the
allowance for loan losses in the fourth quarter of 2002.

In addition, the Company has implemented changes to more closely monitor
adherence to credit and credit administration policies. The Company has
reviewed, redesigned and implemented procedures and processes to support these
policies and strengthen credit controls. Procedures that were initiated in the
fourth quarter 2002 to obtain timely credit file information are being
consistently applied on an ongoing basis. These procedures and controls will
support consistent adherence to sound credit and credit administration policies.

76

PART IV

ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K

CONSOLIDATED FINANCIAL STATEMENTS FILED:

The consolidated financial statements listed below are from the 2002 Form
10-K and Part II -- Item 8. Page references are to said Form 10-K.

CONSOLIDATED FINANCIAL STATEMENTS:

AmeriServ Financial, Inc. and Subsidiaries
Consolidated Balance Sheets, 31
Consolidated Statements of Operations, 32
Consolidated Statements of Comprehensive Income, 33
Consolidated Statements of Changes in Stockholders' Equity, 34
Consolidated Statements of Cash Flows, 35-36
Notes to Consolidated Financial Statements, 37
Statement of Management Responsibility, 73
Independent Auditors Report, 74

CONSOLIDATED FINANCIAL STATEMENT SCHEDULES:

These schedules are not required or are not applicable under Securities and
Exchange Commission accounting regulations and therefore have been omitted.

REPORTS ON FORM 8-K:

On December 2, 2002 the Company announced the appointment of Craig G. Ford
as interim Chairman, President and Chief Executive Officer.

77

EXHIBITS:

The exhibits listed below are filed herewith or to other filings.

78

EXHIBIT A

(21) SUBSIDIARIES OF THE REGISTRANT

79

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

AmeriServ Financial, Inc.
(Registrant)

By: /s/ CRAIG G. FORD
-------------------------------------
Craig G. Ford
Interim Chairman, President
and Chief Executive Officer

Date: February 28, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on February 28, 2003:

/s/ CRAIG G. FORD Interim Chairman, President and Chief Executive Officer
- ------------------------------------------------
Craig G. Ford

/s/ JEFFREY A. STOPKO Senior Vice President and Chief Financial Officer
- ------------------------------------------------
Jeffrey A. Stopko

/s/ J. MICHAEL ADAMS, JR. Director
- ------------------------------------------------
J. Michael Adams, Jr.

/s/ EDWARD J. CERNIC, SR. Director
- ------------------------------------------------
Edward J. Cernic, Sr.

/s/ DANIEL R. DEVOS Director
- ------------------------------------------------
Daniel R. DeVos

/s/ JAMES C. DEWAR Director
- ------------------------------------------------
James C. Dewar

/s/ BRUCE E. DUKE, III Director
- ------------------------------------------------
Bruce E. Duke, III, M.D.

/s/ JAMES M. EDWARDS, SR. Director
- ------------------------------------------------
James M. Edwards, Sr.

/s/ KIM W. KUNKLE Director
- ------------------------------------------------
Kim W. Kunkle

/s/ MARGARET A. O'MALLEY Director
- ------------------------------------------------
Margaret A. O'Malley

/s/ REV. CHRISTIAN R. ORAVEC Director
- ------------------------------------------------
Rev. Christian R. Oravec

/s/ MARK E. PASQUERILLA Director
- ------------------------------------------------
Mark E. Pasquerilla

/s/ HOWARD M. PICKING, III Director
- ------------------------------------------------
Howard M. Picking, III

/s/ SARA A. SARGENT Director
- ------------------------------------------------
Sara A. Sargent

/s/ THOMAS C. SLATER Director
- ------------------------------------------------
Thomas C. Slater

/s/ ROBERT L. WISE Director
- ------------------------------------------------
Robert L. Wise

80

I, Craig G. Ford, certify that:

1. I have reviewed this annual report on Form 10-K of AmeriServ Financial Inc.
("ASF");

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operation and cash flows of ASF
as of, and for, the periods presented in this annual report;

4. ASF's other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for ASF and we have:

a. designed such disclosure controls and procedures to ensure that material
information relating to ASF, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during
the period in which this annual report is being prepared;

b. evaluated the effectiveness of ASF's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this annual
report( the "Evaluation Date"); and

c. presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;

5. ASF's other certifying officer and I have disclosed, based on our most recent
evaluation, to ASF's auditors and the audit committee of ASF's Board of
Directors:

a. all significant deficiencies in the design or operation of internal
controls which could adversely affect ASF's ability to record, process,
summarize and report financial data and have identified for ASF's
auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other
employees who have a significant role in ASF's internal controls; and

6. ASF's other certifying officer and I have indicated in this annual report
whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 17, 2003

/s/ Craig G. Ford

Craig G. Ford,
Interim Chairman, President & CEO

81

I, Jeffrey A. Stopko, certify that:

1. I have reviewed this annual report on Form 10-K of AmeriServ Financial Inc.
("ASF");

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operation and cash flows of ASF
as of, and for, the periods presented in this annual report;

4. ASF's other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for ASF and we have:

a. designed such disclosure controls and procedures to ensure that material
information relating to ASF, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during
the period in which this annual report is being prepared;

b. evaluated the effectiveness of ASF's disclosure controls and procedures
as of a date within 90 days prior to the filing date of this annual
report( the "Evaluation Date"); and

c. presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;

5. ASF's other certifying officer and I have disclosed, based on our most recent
evaluation, to ASF's auditors and the audit committee of ASF's Board of
Directors:

a. all significant deficiencies in the design or operation of internal
controls which could adversely affect ASF's ability to record, process,
summarize and report financial data and have identified for ASF's
auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other
employees who have a significant role in ASF's internal controls; and

6. ASF's other certifying officer and I have indicated in this annual report
whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 17, 2003

/s/ Jeffery A. Stopko
Jeffrey A. Stopko
Sr. Vice President & CFO

82

EXHIBIT 15.1

We have attempted and have been unable to obtain from Arthur Andersen LLP
("Andersen") a consent for the reissuance of their report on our consolidated
balance sheet as of December 31, 2001 and the related consolidated statements of
income, comprehensive income and stockholders' equity for the twelve month
periods ended December 31, 2001 and December 31, 2000 and the related
consolidated statement of cash flows for the twelve month period ended December
31, 2001. As such, we have included a copy of Andersen's prior audit report in
the filing and will prominently disclose the fact that the report is a copy and
that it has not been reissued by Andersen.

83

EXHIBIT 24.1

March 17, 2003

AmeriServ Financial, Inc.
216 Franklin St., P.O. Box 430
Johnstown, PA 15907

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in the following registration
statements of AmeriServ Financial, Inc:

Registration Statement No. 33-56604 on Form S-3
Registration Statement No. 33-53935 on Form S-8
Registration Statement No. 33-55845 on Form S-8
Registration Statement No. 33-55207 on Form S-8
Registration Statement No. 33-55211 on Form S-8

of our report dated January 31, 2003, relating to the consolidated financial
statements of AmeriServ Financial, Inc. and subsidiaries as of and for the year
ended December 31, 2002 (which report expresses an unqualified opinion and
includes explanatory paragraphs relating to (i) the adoption of Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets,
and (ii) the application of procedures relating to certain other disaggregations
and disclosures of financial statement amounts related to the 2001 and 2000
consolidated financial statements that were audited by other auditors who have
ceased operations and for which we have expressed no opinion or other form of
assurance other than with respect to such disaggregations and disclosures)
appearing in this Annual Report on Form 10-K of AmeriServ Financial, Inc. for
the year ended December 31, 2002.

/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania

84

EXHIBIT 99.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of AmeriServ Financial, Inc. (the
"Company") on Form 10-K for the period ending December 31, 2002, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Craig G. Ford, Interim Chairman, President and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:

1). The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

2). The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company.

/s/ Craig G. Ford
Craig G. Ford
Interim Chairman, President
and Chief Executive Officer
March 17, 2003

85

EXHIBIT 99.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of AmeriServ Financial, Inc. (the
"Company") on Form 10-K for the period ending December 31, 2002, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Jeffrey A. Stopko, Senior Vice President and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:

1). The Report fully complies with the requirements of section 13(a) or 15
(d) of the Securities Exchange Act of 1934; and

2). The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company.

/s/ Jeffery A. Stopko
Jeffrey A. Stopko
Senior Vice President and
Chief Financial Officer
March 17, 2003

86

AMERISERV FINANCIAL BANK

OFFICE LOCATIONS

* Main Office Downtown
216 Franklin Street
P.O. Box 520
Johnstown, PA 15907-0520
1-800-837-BANK(2265)

+* Westmont Office
110 Plaza Drive
Johnstown, PA 15905-1286

+* University Heights Office
1404 Eisenhower Boulevard
Johnstown, PA 15904-3280

* East Hills Express Office
1213 Scalp Avenue
Johnstown, PA 15904-3182

* Eighth Ward Office
1059 Franklin Street
Johnstown, PA 15905-4303

* West End Office
163 Fairfield Avenue
Johnstown, PA 15906-2392

* Carrolltown Office
101 Main Street
Carrolltown, PA 15722-0507

* Northern Cambria Office
4206 Crawford Avenue Suite 1
Northern Cambria, PA
15714-1342

* Ebensburg Office
104 S. Center Street
Ebensburg, PA 15931-0209

+* Lovell Park Office
179 Lovell Avenue
Ebensburg, PA 15931-0418

Nanty Glo Office
928 Roberts Street
Nanty Glo, PA 15943-1303

Nanty Glo Drive-In
1383 Shoemaker Street
Nanty Glo, PA 15943-1255

+* Galleria Mall Office
500 Galleria Drive Suite 100
Johnstown, PA 15904-8911

* St. Michael Office
900 Locust Street
St. Michael, PA 15951-9998

* Seward Office
#1, Roadway Plaza
Seward, PA 15954-9501

* Windber Office
1501 Somerset Avenue
Windber, PA 15963-1745

Central City Office
104 Sunshine Avenue
Central City, PA 15926-1129

+* Somerset Office
108 W. Main Street
Somerset, PA 15501-2035

* Derry Office
112 South Chestnut Street
Derry, PA 15627-1938

+* South Atherton Office
734 South Atherton Street
State College, PA 16801-4628

* Harrisburg Office
231 State Street
Harrisburg, PA 17101-1110

* Pittsburgh Office
60 Boulevard of the Allies
Suite 100
Pittsburgh, PA 15222-1241

Greensburg Branch Office
Oakley Park II, Route 30 East
Greensburg, PA 15601-9560

Opening 2003

* Benner Pike Office
763 Benner Pike
State College, PA 16801-7313

* = 24-Hour ATM Banking Available
+ = Seven Day a Week Banking Available

REMOTE ATM

BANKING LOCATIONS

Main Office, Main & Franklin
Streets, Johnstown
Lee Hospital, Main Street,
Johnstown
The Galleria, Johnstown
6-2-Go Shop, Nanty Glo
Gogas Service Station, Cairnbrook
Kwik Fill, Derry

AMERISERV MORTGAGE

COMPANY LOCATIONS

Greensburg Office
Oakley Park II, Route 30 East
Greensburg, PA 15601-9560

Altoona Office
87 Logan Boulevard
Altoona, PA 16602-3123

Mt. Nittany Mortgage Company
2300 South Atherton Street
State College, PA 16801-7613

87

SHAREHOLDER INFORMATION

SECURITIES MARKETS

AmeriServ Financial, Inc. Common Stock is publicly traded and quoted on the
NASDAQ National Market System. The common stock is traded under the symbol of
"ASRV." The listed market makers for the stock are:

Legg Mason Wood Walker, Inc.
969 Eisenhower Boulevard
Oak Ridge East
Johnstown, PA 15904
Telephone: (814) 266-7900

Boenning & Scattergood
F. J. Morrissey & Co., Inc.
4 Tower Bridge
Suite 300
200West Barr Harbor Drive
West Conshohocken, PA 19428-2979
Telephone: (610) 862-5360
Keefe Bruyette & Woods, Inc.
787 Seventh Avenue
Equitable Bldg -- 4th Floor
New York, NY 10019
Telephone: (800) 966-1559

Goldman Sachs & Co.
10 Exchange Place
Jersey City, NJ 07302
Telephone: (212) 344-8087
Parker/Hunter, Inc.
416 Main Street
Johnstown, PA 15901
Telephone: (814) 535-8403

Sandler O'Neill & Partners, L.P.
919 Third Avenue
6th Floor
New York, NY 10022
Telephone: (800) 635-6860

CORPORATE OFFICES

The corporate offices of AmeriServ Financial, Inc. are located at 216
Franklin Street, Johnstown, PA 15901. Mailing address:

P.O. Box 430
Johnstown, PA 15907-0430
(814) 533-5300

AGENTS

The transfer agent and registrar for AmeriServ Financial, Inc.'s common
stock is:

Equiserve Trust Company
P O Box 43010
Providence, RI 02940-3023
Shareholder Inquiries: 1-800-730-4001
Internet Address: http://www.EquiServe.com

SHAREHOLDER DATA

As of January 31, 2002, there were 4,877 shareholders of common stock and
13,920,656 shares outstanding. Of the total shares outstanding, approximately
936,861 or 7% are held by insiders (directors and executive officers) while
approximately 2,854,392 or 21% are held by institutional investors (mutual
funds, employee benefit plans, etc.).

DIVIDEND REINVESTMENT

Shareholders seeking information about AmeriServ Financial, Inc.'s dividend
reinvestment plan should contact Betty L. Jakell, Executive Office, at (814)
533-5158

INFORMATION

Analysts, investors, shareholders, and others seeking financial data about
AmeriServ Financial, Inc. or any of its subsidiaries' annual and quarterly
reports, proxy statements, 10-K, 10-Q, 8-K, and call reports -- are asked to
contact Jeffrey A. Stopko, Senior Vice President & Chief Financial Officer at
(814) 533-5310 or by e-mail at [email protected].

88