VersaBank - November 2020

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Our investment thesis for VersaBank (TSX:VB) is that the pricing power and risk management benefits of its technology-based business model provide multi-year double-digit EPS growth potential, with further upside from M&A and a free option on tech subsidiary DRT Cyber.

Overall, 4Q20 results and management commentary support our thesis with significant expected loan growth in 1H21 and a DRT Cyber acquisition causing us to increase our estimates (below). We continue to see potential for +20% upside to the stock in the next year, with a near term bias given the recent multiple expansion witnessed by bank and specialty lender comparables. Remain constructive on VB.

Disclosure, Disclaimer, and Wavier of Liability

VersaBank – November 2020