Investment Q&A

VBNK reported EPS of $0.28 missing estimates of $0.41 and sales of $28M missed estimates of $30.4M. Net profits fell sharply against last year, and sales declined mostly due to lower net interest margins and lower non-interest income. Total assets increased 15% year-over-year, mostly due to growth in Digital Banking Operations' Receivable Purchase Program (RPP), and while its Digital Banking operations in Canada grew year-over-year, its US operations faced difficulties in the quarter. Some of this is due to expenses which are being incurred ahead of asset growth and revenue generated by the launch of its RPP operations in the US. While it was a weak year-over-year comparison, VBNK did improve several of its metrics on a quarter-over-quarter basis. 

The stock is down sharply, and while we are not huge fans of the earnings miss, some of it is explainable by one-time costs with its US operations integration. Following today's 10% decline it now trades below book value, and while some of its profit metrics shrank, it continues to be profitable, and expanding its market share. It trades at a 7.4X forward P/E, and largely, we would prefer not to sell at these levels. Although, we would like to see where shares find support before adding to or initiating a new position, but largely we will need to see the company's next earnings to further assess its growth prospects.