Disclosure: Bullpen receives compensation from VersaBank for research coverage.
VersaBank (VBNK) reported Q2 results that edged past us and consensus, driven by growth in the Structured Receivable Program (SRP), sequential NIM expansion, and lower provisions.
The US growth thesis is alive and well, with VersaBank adding another US$150M of SRP funding - driving net interest income to nearly $8M (22% of NII)…
… which has plenty of runway, with management confident in its US$1B funding target for the year - implying US$650M+ of new volume in H2. With the segment running at a 37% efficiency ratio during the quarter…
… and the company targeting improvement to the low-20s by year-end, the impact on operating leverage should be tangible…
… translating into growth in book value per share and return on equity.
With shares up ~10% on the print, the market is starting to buy into that thesis, pricing VBNK at ~1.6x book value…
… which could have additional upside from the near-term commercialization of the company’s real-time SRP. For our complete breakdown of the quarter, check out the full report below:
