VersaBank (VBNK) is attracting attention from analysts following its recent expansion into the US market. Roth MKM analyst Craig Irwin initiated coverage on the company, setting a price target of $18. This optimism stems from VersaBank’s acquisition of Stearns Bank Holdings in August 2024, a move that solidified the company’s presence in both the US and Canada.
Irwin believes VersaBank’s proven point-of-sale lending model, which boasts risk mitigation features, has the potential to significantly boost the company’s leverage and deliver long-term value in the larger and more profitable US market. The analyst highlights the company’s digital infrastructure, enabling them to handle most of their lending and deposits digitally through partnerships, further increasing their leverage for incremental business.
VersaBank’s portfolio also includes commercial real estate (CRE) loans, which make up approximately 17% of their lending. Irwin notes that the company manages this sector effectively.
While anticipating modest net interest margin (NIM) expansion, Irwin expects higher U.S. retail pricing power margins and a decrease in headwinds from delayed interest rate resets on Canadian deposits to contribute to this growth. However, this may be partially offset by lower-margin real estate loans.
For fiscal year 2025, Irwin forecasts VersaBank to report earnings per share of $1.68.
As of Friday’s close, VBNK shares were down 2.03% at $13.03.
