CoastalSouth Bancshares (NYSE:COSO) vs. VersaBank (NASDAQ:VBNK) Critical Analysis

VersaBank (NASDAQ:VBNK) and CoastalSouth Bancshares (NYSE:COSO) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Analyst Recommendations

This is a summary of recent ratings and target prices for VersaBank and CoastalSouth Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VersaBank	0	1	3	0	2.75
CoastalSouth Bancshares	1	0	2	1	2.75

VersaBank presently has a consensus price target of $24.00, indicating a potential upside of 3.23%. CoastalSouth Bancshares has a consensus price target of $31.50, indicating a potential upside of 12.94%. Given CoastalSouth Bancshares’ higher possible upside, analysts clearly believe CoastalSouth Bancshares is more favorable than VersaBank.

Insider and Institutional Ownership

56.9% of VersaBank shares are owned by institutional investors. 5.3% of VersaBank shares are owned by company insiders. Comparatively, 15.1% of CoastalSouth Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

VersaBank has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500. Comparatively, CoastalSouth Bancshares has a beta of 0.07, meaning that its stock price is 93% less volatile than the S&P 500.

Valuation & Earnings

This table compares VersaBank and CoastalSouth Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VersaBank	$217.14 million	3.48	$20.32 million	$0.76	30.59
CoastalSouth Bancshares	$90.60 million	3.68	$24.89 million	$2.39	11.67

CoastalSouth Bancshares has lower revenue, but higher earnings than VersaBank. CoastalSouth Bancshares is trading at a lower price-to-earnings ratio than VersaBank, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares VersaBank and CoastalSouth Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VersaBank	9.92%	8.66%	0.75%
CoastalSouth Bancshares	20.56%	11.20%	1.25%

Dividends

VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.3%. CoastalSouth Bancshares pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. VersaBank pays out 9.2% of its earnings in the form of a dividend. CoastalSouth Bancshares pays out 10.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

CoastalSouth Bancshares beats VersaBank on 10 of the 16 factors compared between the two stocks.

About VersaBank

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

About CoastalSouth Bancshares

CoastalSouth Bancshares, Inc. is a bank holding company headquartered in Atlanta, Georgia. Through our wholly owned subsidiary, Coastal States Bank, a South Carolina state-chartered commercial bank, we offer a full range of banking products and services designed for businesses, real estate professionals, and consumers looking for a deep and meaningful relationship with their bank. Today, we have a community banking presence in some of the fastest growing and most business-friendly markets in the U.S., namely the Lowcountry of South Carolina (Hilton Head Island, Bluffton, and Beaufort), nearby Savannah, Georgia, and the Atlanta, Georgia market. — In addition to our traditional community banking operations, we operate four specialty lines of business that provide scalability and diversification: • Senior Housing Lending – focuses on lending to operators across the spectrum of senior care, with an emphasis on assisted living; • Marine Lending – focuses on consumer loans primarily to high-net-worth borrowers secured by yachts and high-end sport fishing vessels; • Government Guaranteed Lending – focuses on origination of small business and other loans guaranteed by the SBA and USDA; and • Mortgage Banker Finance – focuses on mortgage warehouse lending to mortgage originators. By combining the relationship-based focus of a community bank with our specialty lines of business, we believe we can capitalize on the substantial growth opportunities available in our markets, particularly given the scarcity of community banks between $1.5 billion and $5.0 billion in total assets. Our principal executive offices are located in Atlanta, Georgia.