Bank Stock Analysis: Greenville Federal

Small rural bank trading at 0.65x book value

This year I wanted to spend more time looking at small bank stocks because I think its an overlooked area of the market, and increasing consolidation means undervalued banks will get gobbled up. I recently wrote a guide on some of the key things to look at when evaluating a bank, so in this post I wanted to practice my framework. For this post, I chose Greenville Federal simply because it is a small rural bank based around the small town in Ohio that I grew up in. This bank has a market cap of $13.5M and is very illiquid, so please do not run out and try to buy shares.

Asset Quality

The first step in determining the asset quality of a bank is to look at its non-performing loans. Looking at the last four quarters starting in 3Q25, Greenville Federal had $122k, $978k, $998k, and $958k of non-performing loans. Based on their asset levels, they had basically 0.0% NPL/asset ratio in the latest report, and the highest in the past year was 0.39%. These figures are much lower than the red flag value of 3%. GVFF’s latest allowance for credit loss is $1.4M, which is 0.6% of their loan balance of $217.3M. This loss ratio is lower than what I would like to see, something above 1%. On the plus side, ACL is well over their current amount of non-performing loans (and the recent high point of this figure) so they can easily cover those loans if they default.

Diving into the loan book, Greenville Federal’s loan mix is: 68% residential mortgage, 24.5% commercial real estate/C&I, 4.5% construction, 3% consumer. The construction loans are the riskiest category, but are a modest portion of the loans. Ideally the bank would be focused on a single niche, but GVFF is spread across many categories, which may imply chasing growth. Making in a niche that you are inexperienced in, or chasing growth could potentially lead to poor underwriting and losses down the road. More research would need to be done to see if the commercial and construction loans are a fairly new phenomena, or if Greenville Federal has been doing this for a while.

As for interest rate sensitivity, 78% of GVFF’s loans are fixed rate, 22% are floating rate. A breakdown of the average interest rate for their loan categories are 4.85% for residential, 7.25% for commercial & industrial, 7.75% for construction, and 8.2% for consumer. The rates for the residential loans is below current rates, which is going to have a large impact since they are the largest loan category. The other categories seem to be closer in line with current interest rates.

A breakdown of Greenville Federal’s asset mix is 82% loans, 6.6% investment securities, 7% other assets, and 4.4% in cash. This is a reasonable mix, you would expect loans to be the largest category, followed by investment securities. The make up of GVFF’s investment securities consists of 65% government bonds, 30% mortgage backed securities, and 5% municipal bonds. The ratio also seems reasonable and does not appear risky.

Deposit Mix

Greenville Federal’s total deposits are currently $233M. Their deposit mix consists of 44% savings & money market, 35% CDs, 12% non-interest demand, 9% interest demand. Preferably the bank would have a higher ratio in non-interest deposits since that is free funding. Another thing to check is whether the ratio of CDs has increased the past few years, a sign that the bank has to pay high rates to compete for deposits. Additionally GVFF has $7.5M in Federal Home Loan Bank loans, which is not ideal but this figure is quite a small amount of their funding base. Greenville Federal’s cost of deposits is about 2.4%, compared to the 5.5% they earn on loans. This produces a net interest margin of 3.1%, which is not terrible, and is an improvement from the end of 2024.

Looking at GVFF’s basic capital ratio, they have $20.07M in equity, total assets of $264.7M. This produces an equity to assets ratio of 7.6%, which is slightly below my preferred range of 8-10%. The banks recent losses are probably what has inched them below 8%.

Profitability and Valuation

Profitability wise, Greenville Federal has not has the strongest earnings. The company had a miniscule profit in Q3 2025, but shows a loss in the trailing twelve months, lost $1.7M in 2024, and bounced around $400-900k the previous few years. These earnings produced return on equity figures of -7.7% in 2024, then 1.8%, 2.7%, 4.2%, and 2.2% for the previous four years. GVFF’s latest efficiency ratio, which is non-interest expense divided by total revenue is $2.125M divided by $2.332M, which is 91%. This is a quite poor efficiency ratio, a good bank will be in the 50-60% range. Referring bank to the net interest margin, GVFF has an ok margin that has increased a bit since 2024. So it appears the bank has a lot of non-interest expense that is taking a chunk out of their profitability.

Lastly, for valuation Greenville Federal is trading around 0.65x book value. This is quite the discount, which would be nice if this were a quality bank. Greenville’s ROE has been poor the last five years, so holding the bank for an extended period of time probably would not produce market beating returns. Given the banks asset mix, high non-interest expenses, and low profitability, I think the stock is a pass in the hopes of finding a higher quality bank that is similarly trading below book value.