UPDATE: AmeriServ Financial, Johnstown, PA (ASRV)

Remarkably, everything I said in the intro to my January 2014 Timyan Bank Alert™ review of AmeriServ Financial is still true: AmeriServ is no "five star performer." Nor is it a "mismanaged underperformer." It is still, however, a pretty good bank that is trading 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
Although AmeriServ's #1 market share position in six Pennsylvania towns is attractive, its status as a unionized bank makes it unlikely another bank will seek to buy it.
F.N.B. Corp - Pittsburgh, PA (FNB) - relocated from Hermitage
Northwest Bancshares, Inc - Warren, PA (NWBI)
Financial Snapshot
as of 12/31/2016
Total assets:
$1.2B
Tangible book value per share:
$4.41
NPAs to assets:
0.1%
Price to book:
74%
Market cap:
$70.4M
Dividend yield:
1.6%
Trailing 12-month return on assets:
0.2%
Trailing 12-month return on equity:
2.3%
TARP:
$0*
*Repaid $20M in 2011
The Crew
Craig Ford, Chairman
Jeffrey Stopko, President and CEO (promoted from CFO)
Michael Lynch, Senior VP, CFO, Chief Risk and Investment Officer
The Skinny
This is still a pretty good bank. AmeriServ has reported profits in 24 out of the last 25 quarters.

Insiders know what an opportunity they have here. Insider ownership of ASRV remains pretty high at 8.8% and growing. There have been numerous insider buys in the open market in the past year alone, and only one sell.

Thankfully, AmeriServ Management is also shareholder friendly, as evidenced by their recent decision to buy back up to 5% of ASRV stock in the open market.

Investors can still make money here. ASRV is the cheapest billion dollar bank stock in the U.S. I believe that within two years, AmeriServ will be reporting quarterly earnings of 10¢ per share, book value will have hit the high $5 range, and ASRV will trading near book value. If I am right, that portends a healthy 50% gain over today's share price. 

Sources

  • Confidential interviews with Management, shareholders and analysts

3 comments :

  1. My apologies, Yuanxi! I meant to reply to a comment of yours here, and instead somehow deleted it...

    You wrote: "I had the impression that each quarter the bank has some noisy items that reduces its earnings from what it should be. I imagined a billion-dollar bank should have a fairly stable/predictable earning history. My other concern is that the efficiency ratio doesn't really fall while its assets are growing."

    You are correct. There do always seem to be one-time charges muddling up the earnings picture. As to AmeriServ's efficiency ratio, I would argue that while it is absolutely too high and needs to come down, on balance there does seem to be slight improvement. The ratio from 2012 thru 2016 goes: 86.18%, 87.84%, 88.26%, 82.54%, 84.98%, so while 2016 was disappointingly above last year's, it was below 2012, 2013 and 2014. Let's hope they can get it into the high 70's!

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  2. In my opinion...UAW major impediment to a sale. See CNAF...a way better Bank (I am long) with the same issue. The President of CNAF actually mentioned UAW in one of their quarterlys as an impediment to a sale. At least they cough out special cash dividends every now and then.

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  3. Konnichiwa -- Hello and thanks for reading. You are correct. As stated in my review, ASRV's "status as a unionized bank makes it unlikely another bank will seek to buy it." I'm glad you like CNAF, too. I wish they would sell off some securities and buy some stock back. (Right Yuanxi?) -- Good Luck, Phil

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