Digital-only B2B bank VersaBank Q3 revenue up 17%, profit down 32% on costs

Overview

• VersaBank Q3 revenue rises 17% yr/yr to C$31.6 mln

• Net income falls 32% yr/yr due to realignment costs

• Total assets increase 21% yr/yr to C$5.5 bln

Outlook

• Company targets US Receivable Purchase Program (RPP) portfolio of US$290 mln by fiscal year-end

• Company sees growth in Canada from resilient consumer spending

• VersaBank anticipates Digital Deposit Receipts (DDRs) as a significant future opportunity

Result Drivers

• RPP EXPANSION - Growth driven by expansion of RPP in US and Canada, including securitization

• DIGITAL BANKING GROWTH - Canadian operations benefited from resilient consumer spending and new partnerships

• REALIGNMENT COSTS - Significant non-interest expenses incurred due to planned corporate structure realignment to US bank framework

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 2 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• Wall Street's median 12-month price target for Versabank is C$19.00, about 17.5% above its September 3 closing price of C$15.68

• The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 8 three months ago

Press Release: ID:nCNWsvcwYa