VersaBank (TSE: VNBK) (VBNK) is a Canadian digital bank that focuses on deposits and financing. The company recently reported earnings for its second quarter, which came in better than expected.
GAAP earnings per share were C$0.17 compared to the C$0.16 estimate. In addition, the company posted revenue of C$18.63 million, beating the consensus by C$3.79 million.
Revenue grew 17% on a year-over-year basis and 2% quarter-over-quarter. Growth was primarily driven by higher net interest income due to strong loan growth as well as more demand for its Cybersecurity Services.
However, net income decreased 14% year-over-year and 11% sequentially due to investments in growth initiatives such as its VCAD digital currency. Its earnings per share figure decreased 32% compared to last year as a result of its Nasdaq IPO, when it issued an additional 6.3 million shares.
Insiders Continue to Buy VersaBank Shares
When analyzing insider transactions, you can see that insiders have been buying shares of VersaBank on a fairly consistent basis. As a result, the insider confidence signal is very positive, making it much higher than the industry average.
This suggests that management is excited about the company’s future because they continue to buy regardless of the price, indicating that they think the valuation should be much higher.
Analyst Recommendations
VersaBank has a Moderate Buy rating based on just one Buy rating assigned in the past three months. VersaBank’s price target of C$16.47 implies 49.4% upside potential.
Final Thoughts
Although VersaBank saw its earnings decline, it still beat expectations while also posting solid revenue growth. Furthermore, insiders and the analyst covering the stock appear to be very optimistic about the company’s future.
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