Fitch Downgrades AmeriServ Financial Inc.; Outlook Remains Negative.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 17, 2003

Fitch Ratings--Fitch Ratings has downgraded the ratings for AmeriServ Financial, Inc. (ASRV) as follows: Long-term debt rating to 'B' from 'BB' and Individual rating to 'D' from 'C/D'.

Fitch has also lowered the Long-term debt rating and Long-term deposit rating for ASRV's banking subsidiary, AmeriServ Financial Bank (ASRVB), to 'BB-' from 'BB+' and ASRVB's Individual rating to 'D' from 'C/D'. The Rating Outlook for all ratings for ASRV and ASRVB remains Negative. Additionally, Fitch has downgraded the rating for AmeriServ Capital Trust I (ASRVP) to 'CCC+' from 'B+'. The rating for ASRVP has been removed from Rating Outlook Negative and placed on Rating Watch Negative.

The rating action is driven by the increased uncertainty regarding the company's ability to meet future financial obligations, particularly with respect to its trust preferred debt. Liquidity at the parent company has weakened over the past few periods due to continued lack of earnings momentum and an oversized debt burden as the spin-off of Three Rivers Bank (April 1, 2000) left ASRV with one less subsidiary from which to upstream dividends to service its relatively large $34.5 mln (8.45%) trust preferred issue. The situation has been further exacerbated by a Memorandum of Understanding (MOU) entered into by ASRV and ASRVB with the Federal Reserve Bank of Philadelphia and the Pennsylvania Department of Banking in 1Q03. Under the terms of the MOU, ASRV and ASRVB cannot declare dividends, the company may not redeem any of its own stock, and ASRV cannot incur any additional debt other than in the ordinary course of business, in each case, without the prior written approval of the regulators (Federal Reserve Bank of Philadelphia and the Pennsylvania Department of Banking). The Board of Directors of ASRV had suspended the common stock dividend prior to the regulatory action.

The downgrade of the Long-term ratings of both ASRV and ASRVB is reflective of heightened constraint on financial flexibility at all levels. The parent company had approximately $694,000 in cash as of YE02. During 1Q03, the company met its quarterly obligations with respect to its outstanding trust preferred issue, thanks primarily to dividends from its non-bank subsidiaries (trust company and life insurance company). Prospectively, ASRV will likely need regulatory approval to upstream dividends from the bank to continue to service the trust preferred debt. Because the bank's financial performance has been weak, Fitch believes there is some uncertainty as to the likelihood that the bank will receive approval, despite current capital levels that are above regulatory well-capitalized thresholds. The 'CCC+' rating on ASRVP reflects the possibility that the company could be in deferral on the trust preferred dividend in the near term. If ASRV were to defer dividend payment on the trust preferred issue, then the rating of ASRVP would be lowered to 'CC'.

The downgrade of the Individual rating for ASRV and ASRVB reflects concerns regarding profitability, continued credit quality deterioration, and downward pressure associated with the soft economic environment, particularly in the company's markets. That said, we recognize that the company's strategic initiatives, including the recent reduction in staff, the one-year labor contract extension, the sale of servicing rights on approximately 70% ($450 mln) of mortgage loans serviced by Standard Mortgage Corporation, and recent management, organizational and credit procedure changes are steps in the right direction. However, the Rating Outlook Negative reflects execution risk in improving the company's financial and credit profile heightened by minimal financial flexibility.

Ratings

AmeriServ Financial, Inc.

-- Long-term to 'B' from 'BB';

-- Short-term 'B';

-- Individual to 'D' from 'C/D' ;

-- Support '5';

-- Rating Outlook Negative

AmeriServ Financial Bank.

-- Long-term to 'BB-' from 'BB+';

-- Long-term Deposits to 'BB-' from 'BB+';

-- Short-term 'B';

-- Short-term Deposits 'B';

-- Individual to 'D' from 'C/D' ;

-- Support '5';

-- Rating Outlook Negative

AmeriServ Capital Trust I

-- Trust Preferred to 'CCC+' from 'B+';

-- Rating Watch Negative