Is VBNK's long-term EPS growth outlook improving?

**VersaBank's long-term EPS growth outlook is showing signs of improvement**, despite some short-term fluctuations. Here's the analysis to support this conclusion: 1. **Consistent Revenue Growth**: VersaBank has demonstrated a consistent increase in revenue over the past few years. The bank's revenue grew by 26% from FY 2021 to FY 2022, and by 32% from FY 2022 to FY 2023. This consistent growth in revenue is a positive indicator for future earnings per share (EPS) growth. |code|Ticker|Name|Date|Diluted EPS (FY) YoY|Diluted EPS (FY)|market_code| |---|---|---|---|---|---|---| |VBNK|VBNK.O|VersaBank|2020|-4.889782979161308|0.6150615082|185| |VBNK|VBNK.O|VersaBank|2021|25.903001387008256|0.7743808992|185| |VBNK|VBNK.O|VersaBank|2022|-25.20200991548423|0.5792213482|185| |VBNK|VBNK.O|VersaBank|2023|95.3116762556508|1.1312869244|185| |VBNK|VBNK.O|VersaBank|2024|-5.510862793103099|1.0689432542|185| 2. **Profit Margin Improvement**: The bank's profit margin improved significantly from 26% in FY 2022 to 39% in FY 2023. This improvement in profit margin, driven by higher revenue, is likely to translate into higher EPS growth as the bank retains more of its income as profit. 3. **Strategic Acquisitions and Market Expansion**: VersaBank's recent acquisition of a US bank and its entry into the US market are strategic moves that could lead to increased EPS growth in the long term. The bank has also been expanding its loan portfolio and transitioning its commercial real estate loans to lower-yielding, lower-risk loans. These strategic moves are likely to improve the bank's profitability and efficiency, leading to higher EPS growth. 4. **Analyst Forecasts**: Analysts have forecasted revenue growth for VersaBank, with a 10% annualized growth rate until the end of 2024, which is well below the historical 18% p.a. growth over the past five years. This suggests that while short-term growth may slow, the bank's long-term growth potential remains strong. 5. **Financial Performance**: VersaBank's net income has shown a significant increase, with a 95% growth from FY 2022 to FY 2023. The bank's EPS also increased from CA$0.79 in FY 2022 to CA$1.57 in FY 2023. These improvements in net income and EPS are positive indicators for future EPS growth. In conclusion, while there may be some short-term fluctuations, the overall trend for VersaBank's EPS growth outlook is improving. The bank's consistent revenue growth, profit margin improvement, strategic acquisitions, and analyst forecasts all point to a positive long-term outlook for EPS growth.