Roth MKM analyst Craig Irwin initiated coverage on VersaBank (NASDAQ:VBNK) with a price target of $18.

Following the August 2024 acquisition of Stearns Bank Holdings, VersaBank is now federally chartered in both the U.S. and Canada.

According to the analyst, management plans to implement VersaBank’s proven, risk-mitigated point-of-sale lending model in the U.S. to enhance leverage and deliver long-term value in this larger, more profitable market.

Irwin says VersaBank’s technology infrastructure enables it to digitally handle nearly all its lending and deposits through partners, enhancing leverage for incremental business.

Additionally, the analyst notes commercial real estate (CRE) comprises about 17% of the bank’s lending and is well-managed in their view.

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Irwin anticipates modest net interest margin (NIM) expansion for VersaBank, driven by higher U.S. retail pricing power margins and the easing of headwinds from delayed interest rate resets on Canadian deposits, though this may be partially offset by lower-margin real estate loans.

For FY25, the analyst forecasts the company to report earnings per share of $1.68.

VBNK Price Action: VBNK shares closed Friday down 2.03% to $13.03.

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This article was created with the help of artificial intelligence and has been reviewed by an editor.

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