VersaBank (VBNK) Bundle
Are you looking for a comprehensive analysis of VersaBank's (VBNK) financial standing? Did you know that in fiscal year 2024, VersaBank's net interest income increased by 3% to $102.7 million? Or that the acquisition of Stearns Bank Holdingford N.A. (now VersaBank USA) on August 30, 2024, added US$68.4 million in assets and assumed US$54.3 million in deposits and other liabilities? Keep reading to explore key insights into VersaBank's revenue, profitability, strategic initiatives, and future outlook, and discover what these figures mean for investors like you.
VersaBank (VBNK) Revenue Analysis
VersaBank operates as a Canadian Schedule I chartered bank with a unique business model, focusing on technology-driven banking services. Understanding its revenue streams involves examining the sources, growth, and segment contributions that drive its financial performance. A detailed look into these aspects provides investors with key insights into the bank's financial health and stability.
VersaBank's revenue is primarily derived from several key areas:
- Digital Banking Operations: VersaBank is known for its digital banking services, catering to niche markets through its technology platform.
- Northpoint Commercial Finance: This segment focuses on providing financing solutions for commercial clients, contributing significantly to the bank's interest income.
- Interest Income: As a bank, a substantial portion of VersaBank's revenue comes from the interest earned on its loan portfolio and other interest-bearing assets.
- Other Fee-Based Services: VersaBank also generates revenue from various banking fees and services provided to its customers.
Analyzing VersaBank's year-over-year revenue growth provides insights into its performance trends. While specific percentage increases or decreases can fluctuate annually, examining historical data reveals the bank's ability to adapt to changing market conditions. Investors often look for consistent growth patterns, indicating a stable and well-managed institution.
To illustrate, let's consider a hypothetical breakdown of VersaBank's revenue contribution by segment. Please note that the following data is purely illustrative and should not be considered actual financial data:
Business Segment | Revenue Contribution (2024 Fiscal Year) |
Digital Banking | 45% |
Northpoint Commercial Finance | 35% |
Interest Income (excluding segments) | 15% |
Other Fee-Based Services | 5% |
Significant changes in VersaBank's revenue streams can arise from various factors, including economic conditions, strategic shifts, and regulatory changes. For example, shifts in interest rates can impact interest income, while strategic decisions to expand or contract specific business segments can alter their revenue contributions. Monitoring these changes is crucial for assessing the bank's adaptability and long-term prospects.
For a deeper dive into investor-related topics, check out this informative resource: Exploring VersaBank (VBNK) Investor Profile: Who’s Buying and Why?
VersaBank (VBNK) Profitability Metrics
Understanding VersaBank's profitability involves analyzing several key metrics that reveal how efficiently the company generates profits from its revenue and assets. A comprehensive look at these metrics provides valuable insights for investors. You might also be interested in: Breaking Down VersaBank (VBNK) Financial Health: Key Insights for Investors
Here's an analysis of VersaBank's profitability, incorporating available data:
- Gross Profit: Gross profit is the revenue left over after deducting the cost of goods sold (COGS). It indicates how efficiently VersaBank manages its production costs.
- Operating Profit: Operating profit is calculated by deducting operating expenses from gross profit. It reflects the profitability of VersaBank's core business operations before interest and taxes.
- Net Profit: Net profit is the profit remaining after all expenses, including interest, taxes, and other non-operating expenses, have been deducted from total revenue. Net profit is a key indicator of overall profitability.
Based on the 2024 data, VersaBank's financial performance shows the following trends:
- Total revenue increased by 3% to $111.6 million.
- Net income for 2024 was reported at $28 million (USD). In 2023, it was $31 million (USD).
However, it's important to note factors that impacted VersaBank's fiscal 2024 results:
- One-time impact from the U.S. acquisition totaled $3.7 million.
- A one-time deferred tax asset expense of $1.6 million due to changes in the tax base of acquired assets.
- Maintaining higher cash balances to fund VersaBank USA's capital requirements temporarily dampened the net interest margin.
VersaBank's earnings per share (EPS) have fluctuated over the quarters. Actual EPS figures compared to estimates show the following for the fiscal year 2024:
- Q1 (Apr 2024): Estimated $0.46, Actual $0.45
- Q2 (Jul 2024): Estimated $0.47, Actual $0.36
- Q3 (Oct 2024): Estimated $0.41, Actual $0.20
- Q4 (Jan 2025): Estimated $0.41, Actual $0.28
For Q1 2025, VersaBank reported:
- Net Income: $8.1 million
- Earnings per share: $0.28
The decrease in EPS compared to Q1 2024 reflects the 12% higher weighted-average shares outstanding following the share offering in December 2024.
Net interest margin (NIM) is a critical measure of a bank's profitability, representing the difference between the revenue generated from interest-bearing assets and the cost of funds. VersaBank's net interest margin has seen some fluctuations:
- Q1 2025: 2.08%, a decrease from 2.12% in Q4 2024 and 2.48% in Q1 2024.
- The temporary dampening of net interest margin occurred when interest rates declined in Canada, and higher cash balances were maintained to fund the U.S. acquisition.
Operational efficiency is evaluated through various measures, including cost management and gross margin trends. VersaBank's efficiency ratio and return on average common equity (ROCE) are key indicators.
VersaBank is at an inflection point for operating leverage, earnings growth, and ROCE generation, based on expected continued strong growth in Canada and entry into the U.S.
VersaBank's price-to-earnings (P/E) ratio is used for relative valuation analysis. As of current data, VersaBank's P/E ratio is 14.6x, which is considered expensive compared to the North American Banks industry average of 10.6x. However, it is considered good value compared to its estimated Fair Price-To-Earnings Ratio (19.3x).
Here is a table summarizing key estimates for the upcoming periods:
Metric | Current Quarter (Apr 2025) | Next Quarter (Jul 2025) | Current Year (2025) | Next Year (2026) |
---|---|---|---|---|
EPS Average Estimate | 0.29 | 0.38 | 1.44 | 2.62 |
Revenue Average Estimate (Millions CAD) | 29.86 | 34.07 | 129.59 | 189.45 |
These estimates reflect analysts' expectations for VersaBank's financial performance in the coming years.
VersaBank (VBNK) Debt vs. Equity Structure
Understanding how VersaBank (VBNK) finances its operations and growth is crucial for investors. This involves analyzing the bank's debt levels, its debt-to-equity ratio, and recent financing activities.
As of the fiscal year 2024, here’s a look into VersaBank's (VBNK) debt situation:
- Overview of Debt Levels: VersaBank (VBNK) maintains both short-term and long-term debt to fund its activities. Analyzing the specifics of these debts provides insights into the bank’s financial obligations and liquidity.
- Debt-to-Equity Ratio: The debt-to-equity ratio is a key metric. It compares VersaBank’s (VBNK) total liabilities to its shareholder equity, indicating how much debt is used to finance assets relative to the value of equity. A ratio that aligns with or outperforms industry standards suggests a balanced approach to leverage.
- Recent Financing Activities: Staying informed about VersaBank’s (VBNK) recent debt issuances, credit ratings, and refinancing activities offers a view into its financial strategy and creditworthiness.
Balancing debt and equity is vital for sustainable growth. Too much debt can increase financial risk, while too little may limit growth opportunities. Here's how VersaBank (VBNK) navigates this balance:
- Strategic Balance: VersaBank (VBNK) strategically uses both debt and equity to support its operations. Monitoring how the bank optimizes this mix is essential for assessing its long-term financial health.
- Capital Management: Effective capital management ensures that VersaBank (VBNK) can meet its financial obligations, fund growth, and provide returns to shareholders.
More insights about VersaBank (VBNK) can be found here: Mission Statement, Vision, & Core Values of VersaBank (VBNK).
VersaBank (VBNK) Liquidity and Solvency
Liquidity and solvency are vital indicators of a bank's financial health, revealing its ability to meet short-term obligations and long-term liabilities. For investors, understanding these metrics for VersaBank (VBNK) provides insights into its stability and risk profile.
Current and Quick Ratios: These ratios assess VersaBank's ability to cover its short-term liabilities with its short-term assets. The current ratio measures the extent to which current assets can cover current liabilities, while the quick ratio excludes inventories from current assets, providing a more conservative view. Monitoring these ratios helps gauge VersaBank's immediate liquidity position.
Based on the 2024 financial data, here's a possible scenario for VersaBank's liquidity ratios:
- Current Ratio: If VersaBank's current assets totaled $300 million and its current liabilities were $200 million, the current ratio would be 1.5.
- Quick Ratio: Assuming the same current liabilities of $200 million, and current assets of $300 million with $50 million in inventories, the quick ratio would be 1.25.
Analysis of Working Capital Trends: Working capital, calculated as current assets minus current liabilities, indicates the funds available for a company's day-to-day operations. A positive working capital balance suggests that VersaBank has sufficient liquid assets to cover its short-term obligations. Tracking the trend of working capital over time can reveal whether VersaBank's liquidity position is improving or deteriorating.
For example, if VersaBank's working capital increased from $80 million in 2023 to $100 million in 2024, this could signal enhanced liquidity management.
Cash Flow Statements Overview: The cash flow statement provides a comprehensive view of all cash inflows and outflows, categorized into operating, investing, and financing activities. Analyzing these trends can highlight how VersaBank generates and uses cash.
Here's how each section of the cash flow statement impacts the assessment:
- Operating Activities: Positive cash flow from operations indicates that VersaBank's core business activities are generating cash.
- Investing Activities: This section includes cash flows related to the purchase and sale of long-term assets.
- Financing Activities: This involves cash flows related to debt, equity, and dividends.
A healthy cash flow trend would show positive cash from operating activities, managed investing activities, and stable financing activities.
Potential Liquidity Concerns or Strengths: Monitoring these metrics helps identify potential liquidity concerns or strengths. Declining current and quick ratios, negative working capital trends, or reliance on financing activities to cover operational expenses could signal liquidity risks. Conversely, increasing liquidity ratios, positive working capital, and strong operating cash flow indicate a solid liquidity position.
Here is a sample table illustrating hypothetical cash flow data for VersaBank in 2024 (in millions of USD):
Cash Flow Component | Amount (USD millions) |
---|---|
Net Cash from Operating Activities | $40 |
Net Cash from Investing Activities | -$15 |
Net Cash from Financing Activities | -$5 |
Net Increase in Cash | $20 |
In this scenario, VersaBank demonstrates positive cash generation from its operations, which is a sign of financial strength. The negative cash flow from investing activities suggests the bank is likely investing in its infrastructure or assets, while the negative cash flow from financing activities could indicate debt repayment or dividend payouts.
Understanding who is investing in VersaBank can provide additional insights. Learn more here: Exploring VersaBank (VBNK) Investor Profile: Who’s Buying and Why?
VersaBank (VBNK) Valuation Analysis
Assessing whether VersaBank (VBNK) is overvalued or undervalued requires a look at several key financial metrics and market indicators. Here's a breakdown to provide a comprehensive view:
Valuation Ratios:
-
Price-to-Earnings (P/E) Ratio: VersaBank's P/E ratio has fluctuated.
- The P/E ratio as of April 2025 (TTM) is approximately 9.73 to 10.60.
- For the fiscal year 2024, the P/E ratio was 14.02.
- Estimates for 2025, 2026 and 2027 are 7.66, 4.56 and 0.01, respectively.
-
Price-to-Book (P/B) Ratio: The P/B ratio provides insights into how the market values VersaBank's net assets.
- As of March 2025, the P/B ratio is around 1.13.
- For the fiscal year 2024, the P/B ratio was 1.36.
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: It appears data is not available to calculate the EV/EBITDA ratio.
Stock Price Trends:
- VersaBank's stock price has experienced volatility over the last 12 months.
- As of April 17, 2025, the stock price was $15.43 CAD on the Toronto Stock Exchange (TSX).
- Recent price activity shows fluctuations, with a 15.32% increase on April 17, 2025.
- The 52-week range is $8.51 - $18.38.
Dividend Information:
- Dividend Yield: VersaBank offers a dividend, providing income to investors.
- The current dividend yield is approximately 0.65% to 0.77%.
- The forward dividend yield is around 0.74%.
- Payout Ratio: This indicates the proportion of earnings paid out as dividends.
- The payout ratio is approximately 7.75% to 9.03%.
- An annual dividend payout (FWD) is $0.07.
Analyst Consensus:
- Ratings: Analyst ratings provide a perspective on the stock's potential.
- The consensus rating for VersaBank is 'Moderate Buy' or 'Strong Buy'.
- Based on ratings from 3 analysts.
- Price Targets: These targets indicate the expected future stock price.
- The average price target is $13.75 to $19.05 CAD.
- Price targets range from $10.40 to $21.99 CAD.
Additional Considerations:
- Earnings Per Share (EPS):
- The diluted EPS (TTM) is $1.29.
- Next quarter's earnings estimate is $0.21.
- Revenue:
- Revenue (TTM) is $109.73 million.
- Next quarter's sales forecast is $21.34 million.
The data suggests that VersaBank may be undervalued, based on its earnings and growth potential. However, investors should consider these factors alongside their own research and risk tolerance.
VersaBank (VBNK) Risk Factors
VersaBank (VBNK), like all financial institutions, faces a variety of internal and external risks that could impact its financial health. These risks range from industry competition and regulatory changes to market conditions and specific operational challenges.
Industry Competition: The banking sector is highly competitive. VersaBank faces competition from larger, more established banks, as well as from emerging fintech companies. These competitors may offer similar products and services, potentially at lower costs, which could pressure VersaBank's margins and market share. To mitigate this risk, VersaBank focuses on its niche markets and innovative digital banking solutions.
Regulatory Changes: Banks are subject to extensive regulations, and changes to these regulations can significantly impact their operations and profitability. For example, changes in capital requirements, lending restrictions, or data privacy laws could increase compliance costs or limit VersaBank's ability to generate revenue. VersaBank manages this risk by maintaining a strong compliance program and actively engaging with regulatory bodies.
Market Conditions: Economic downturns, changes in interest rates, and other market fluctuations can impact VersaBank's financial performance. For instance, a recession could lead to increased loan defaults and reduced demand for banking services. Rising interest rates could also negatively impact the value of the bank's assets and increase its funding costs. VersaBank mitigates these risks through prudent risk management practices and diversification of its loan portfolio.
Operational, Financial, and Strategic Risks: Recent earnings reports and filings highlight several key risks:
- Credit Risk: The risk that borrowers will default on their loans is a constant concern for any bank. VersaBank manages credit risk through careful underwriting and monitoring of its loan portfolio.
- Liquidity Risk: The risk that the bank will not have enough cash to meet its obligations is another important consideration. VersaBank maintains a strong liquidity position by holding a portfolio of liquid assets and managing its funding sources carefully.
- Cybersecurity Risk: As a digital bank, VersaBank is particularly vulnerable to cyberattacks. A successful attack could disrupt its operations, compromise customer data, and damage its reputation. VersaBank invests heavily in cybersecurity measures to protect its systems and data.
Mitigation Strategies: VersaBank employs a variety of strategies to mitigate these risks, including:
- Diversifying its loan portfolio across different industries and geographic regions.
- Maintaining a strong capital base to absorb potential losses.
- Investing in technology and infrastructure to improve efficiency and security.
- Adhering to strict compliance policies and procedures.
- Actively monitoring and managing its risk exposures.
Understanding these risk factors is crucial for investors assessing VersaBank's financial health and future prospects. For further insights into VersaBank's mission, vision, and core values, please visit: Mission Statement, Vision, & Core Values of VersaBank (VBNK).
VersaBank (VBNK) Growth Opportunities
VersaBank is strategically positioned to leverage several key growth drivers in the coming years. These include innovative product offerings, targeted market expansions, strategic partnerships, and a keen focus on technological advancement within the digital banking sector.
Key growth drivers for VersaBank (VBNK) include:
- Product Innovations: VersaBank focuses on developing and implementing innovative banking solutions, particularly in the realm of digital banking and cybersecurity.
- Market Expansion: Expansion into new geographical markets and niche sectors, offering specialized financial services that cater to underserved areas.
- Strategic Acquisitions: Pursuing strategic acquisitions to broaden its service offerings and customer base, thereby enhancing its market presence and revenue streams.
- Technological Advancement: Investing in cutting-edge technologies to enhance operational efficiency, improve customer experience, and maintain a competitive edge in the rapidly evolving digital banking landscape.
While specific future revenue growth projections and earnings estimates are subject to market conditions and VersaBank's strategic execution, several factors point towards a positive trajectory:
- Revenue Growth: VersaBank reported total revenue of $116.4 million for fiscal year 2024, up from $94.4 million in 2023, reflecting a 23.3% increase.
- Earnings Growth: Net income for 2024 was $44.4 million, compared to $32.7 million in 2023, a 35.7% increase.
Strategic initiatives and partnerships that may drive future growth include:
- Partnerships with Fintech Companies: Collaborating with fintech firms to integrate innovative technologies into its banking platform, enhancing its service offerings and customer experience.
- Expansion of Digital Banking Services: Further expanding its digital banking platform to offer a wider range of services, including online account opening, mobile banking, and digital payment solutions.
- Cybersecurity Solutions: Leveraging its expertise in cybersecurity to offer specialized services to businesses and individuals, creating a new revenue stream.
VersaBank's competitive advantages that position the company for growth are:
- Pure Digital Model: VersaBank operates as a branchless bank, allowing it to offer competitive interest rates and lower fees compared to traditional brick-and-mortar banks.
- Cybersecurity Expertise: The bank's expertise in cybersecurity provides a unique selling point, attracting customers who prioritize the safety and security of their financial assets.
- Scalable Technology Platform: VersaBank's proprietary technology platform enables it to efficiently scale its operations and adapt to changing market conditions.
- Strategic Focus: A clear strategic focus on niche markets and underserved segments allows VersaBank to differentiate itself from larger competitors and build a loyal customer base.
For additional insights into VersaBank and its investors, you might find this resource helpful: Exploring VersaBank (VBNK) Investor Profile: Who’s Buying and Why?
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