AmeriServ Financial, Johnstown, PA (ASRV)

An Extreme Case of Under the Radar


I'll admit, AmeriServ doesn't fall into either of the categories I usually write about: This bank is no "five star performer." Nor is it a "mismanaged underperformer." It is, however, a pretty good bank that is trading for way below book value with not a single Wall Street analyst following it. Which makes it a great "seize the moment," no-brainer kind of buy for the enterprising investor.

Disclosure: As of this posting, I own shares of ASRV and may subsequently either dispose of them or purchase more.

Prospective Buyers
I'd say these acquisition-minded banks in particular should be looking at this bargain billion dollar bank buy in their backyard.
F.N.B. Corp - Hermitage, PA (FNB)
First Niagara Financial Group - Buffalo, NY (FNFG)
Northwest Bancshares, Inc - Warren, PA (NWBI)
Financial Snapshot
(as of 09/30/2013)

Total assets:
$1.04B
Tangible book value per share:
$4.09
NPAs to assets:
0.42%
Price to book:
64.1%
Market cap:
$57.3M
Dividend yield:
1.3%
Trailing 12-month return on assets:
0.4%
Trailing 12-month return on equity:
5.0%
TARP:
$0*
*Repaid $20M in 2011
The Crew
Craig Ford, Chairman
Glenn Wilson, President and CEO
Jeffrey Stopko, Executive VP and CFO
The Skinny
This is a pretty good bank. AmeriServ has enjoyed 14 profitable quarters in a row, is getting fee income from its trust and advisory business, and has a strong credit culture wherein NPAs haven't exceeded 2% of assets for as long as I can tell.

Insiders know what an opportunity they have here. Insider ownership of ASRV is pretty high at 8.3% and growing. There have been 26 insider buys in the open market in the past year alone, and zero sells.

An acquiring bank could make money here.  The buyer could afford to pay a 25% premium to book value, because — assuming the requisite efficiencies obtained in a merger — the acquisition would be immediately accretive to both book value and earnings.  

Any investor can make money here! AmeriServ pays a decent dividend, and even without an acquirer in the story, there's a more than fair chance your investment would double in value, because it's only a matter of time before the market recognizes this bank for what it is. 
Sources
  • Confidential interviews with shareholders