2 Microcap Regional Bank Valuation Plays

AmeriServ Financial, Inc. (ASRV) is a bank holding company that owns and operates AmeriServ Financial Bank, a full-service financial institution offering retail and commercial banking, lending, and wealth management services, serving primarily southwestern Pennsylvania and parts of Maryland.

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Importantly, borrowed funds declined to $75.3 million from $101.7 million in 2024, and average short-term borrowings fell sharply to $5.6 million from $28.0 million. Deposit costs also declined to 2.06% from 2.18%. 
AmeriServ Financial, Inc. (ASRV) has executed on a lower-cost funding base which should bode well for possible NIM and EPS improvement in 2026.

AmeriServ’s largest downside risk stems from its still-elevated exposure to commercial real estate, particularly non-owner occupied CRE, which stood at 352% of regulatory capital and 50.4% of total loans at year-end 2025.
However, Classified loans dropped sharply, down 52% to $11.3 million. 

While the company recorded a $4.1 million provision for credit losses, including a $3.1 million charge-off tied to a large CRE exposure, this action removed a concentrated risk.

The stock trades at only .5x Book Value, reflecting perhaps the Commercial Real estate exposure concern. The stock has traded as high as .7x Book Value over the last 5 years. 

The bet here is that the lower funding base enables EPS growth in 2026 with only moderate credit issues with commercial real estate, and the stock re-rates near .7x Book Value. Meanwhile, the dividend offers a 3.3% yield.

Security Federal Corporation (SFDL) is a bank holding company primarily engaged in providing commercial banking and financial services through its wholly owned subsidiary, Security Federal Bank. Security Federal (SFDL) operates primarily in South Carolina and parts of Georgia through 19 branch offices.

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Balance sheet repositioning materially reduced reliance on higher-cost wholesale funding, as borrowings declined to $35.3 million as of Dec 31, 2025 from $93.0 million as of Dec 31, 2024, including full repayment of Federal Reserve borrowings. This funding mix shift supports earnings durability, though performance remains sensitive to deposit pricing and rate-driven changes in asset yields.

Commercial real estate loans totaled $295.3 million at 12/31/25 and represented 43.0% of the total loan portfolio. Non-accrual loans improved to $5.8 million, which equaled 0.84% of total loans, compared with $7.6 million, or 1.09%, a year earlier.

The stock currently trades at .96x BV, but has traded as high as 1.26x over the past 5 years. Akin to ASRV, the bet here is that the lower-cost funding base enables consistent EPS growth and the stock re-rates to a higher multiple. 

Trading liquidity is constrained so be mindful of the bid/ask spread.

 

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This article originally published on Zacks Investment Research (zacks.com).

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