Estimated reading time: 5 minutesFounder-led. About US$650M market cap, ~US$20 a share — roughly 1.5x book value. (Trades on both TSX and NASDAQ - VBNK)If you’re a bank investor, that last number is the one you’d anchor on — and you’d probably pass. A bank at 1.5x book isn’t cheap.But you don’t value this bank that way. Book value tells you what a sleepy lender is worth sitting still. It tells you nothing about one growing revenue 27% and earnings 45% year over year — which is what VersaBank just did last quarter. That’s not a bank multiple problem. That’s a software company hiding inside a bank charter, and the market is only starting to notice.Most investment thesis are one idea. This one is two, stacked.The first is a base business that’s inflecting right now — a boring-looking bank that earns like a software company and just pointed its engine at a market ten times its old one. That alone is the reason I own it, and I’ll value it as a complete thesis on its own two feet.The second is a free option sitting inside it. I assign it zero value. But if it works, everything I’m about to value — the entire bank — becomes a footnote! Let’s get into it.What it actually isWhen I say “bank,” you picture branches. Tellers. A line on a Tuesday afternoon. Your checking account, a mortgage, a credit card.Forget all of it.VersaBank has no branches. No tellers. No walk-in customers. It doesn’t want your checking account and it will never sell you a mortgage. It’s a branchless, B2B lending machine run for decades by its founder — more fintech than the bank down the street.Here’s the engine. Picture financing a $10,000 furnace at the store — $200 a month. The company that lent you that money is now owed ten grand but collects it in dribs and drabs, while needing cash now to fund the next fifty customers. So it sells your loan, bundled with hundreds of others, to someone with deep pockets in exchange for cash today. That someone collects your $200 a month from then on. VersaBank calls it the Structured Receivable Program — buying those loan stacks and funding them instantly.Founder David Taylor is blunt about who he’s really competing with. Not other banks — asset-backed securities. A finance company could bundle its loans into an ABS and sell them to Wall Street investors. But that means lawyers, accountants, commissions, and praying the market wants the paper that week — and every eight years or so that market just freezes, leaving the lenders relying on it stranded.VersaBank’s machine kills all of that. Reliable cash, on tap, instantly — and here’s the clever part: each lending partner has to leave a pile of cash behind as a cushion. If loans go bad, that cushion absorbs the loss before the bank feels a thing.That’s why VersaBank loses about four cents on every hundred dollars it lends — a 0.04% loss rate, among the lowest of any bank in Canada — while a normal bank loses thirty to forty. The risk is engineered out before the bank is ever on the hook. It’s not a better bank. It’s a better mousetrap. And once partners plug in, they don’t switch back."Software inside a bank" should raise an obvious question: if it's just software, what stops a fintech from copying it? The charter. A startup can write the code in a weekend — it cannot become a federally chartered bank in two countries. Taylor had to buy a trust company in Canada and a national bank in the US just to get the licenses (his was the first new US bank charter in eighteen years). That charter is what lets VersaBank take insured deposits and hold the loans itself — a fintech has to rent someone else's bank to do any of it. The code is the easy part. The license, the fifty-year loss record, and a book of partner relationships are the moat — and none of those can be coded around.Now, how does it actually make money? The same way every bank does, just better: it takes in deposits cheaply, lends them out at a higher rate, and keeps the difference. That gap is the net interest margin — the spread between what a bank pays for money and what it earns lending it. For a typical bank it’s thin, often under 2%. VersaBank runs near 2.7%— among the fattest in the country — because its costs are tiny and its losses are tinier.But wait — if nobody walks in the door, where do the deposits come from? Two places, and the second is genius. The first is brokers: investment dealers and wealth firms simply funnel their clients’ cash into VersaBank’s deposits, no branches required. The second is bankruptcy. VersaBank holds the cash tied up inside insolvency proceedings — and when the economy turns down, bankruptcies go up, so cheap deposits flow in faster exactly when every other bank’s funding dries up. The funding side gets stronger when times get worse. It’s a hedge most banks would kill for.Hold that 2.7% in your head — it’s the whole business in one figure, and it’s about to matter twice.The blueprint: Canada, then copy-paste into AmericaFor fifteen years this ran quietly in Canada and became a real machine — a multi-billion-dollar loan book compounding at better than 30% a year. Proven. Profitable. Boring.Then in 2024, Taylor did the thing that makes this interesting: he took the exact same blueprint — same software, same model, same playbook — and dropped it into the United States, a market that finances everything at the register and runs perhaps ten times larger.This is the inflection. Not a new unproven bet — a proven machine, copy-pasted into a vastly bigger room.And it’s working faster than the Canadian version ever did:Year one US fundings hit US$310M, past the US$290M targetThe US book has already crossed US$600MManagement is steering toward +US$1B in new US funding this year — and says demand is outrunning expectationsThe US is already 20%+ of revenue on just a fifth of the assets; Taylor expects it to head toward 50/50Fifteen years to build Canada. The bigger American version is being built in months.Now sit with the scale for a second. VersaBank has about C$5.7B in assets today, built almost entirely in Canada. The US market it just entered is roughly ten times larger — and Americans finance even more at the register than Canadians do. Management's near-term target is to nearly double total assets to C$10B+, and even that barely scratches a market this size. This isn't a company running out of room. It's one that spent fifteen years proving the model in the small market — and just walked into the big one with a fraction of one percent of it captured.Why it doesn’t just grow — it superchargesA bigger market explains why VersaBank grows. Three forces stacked on top of each other explain why it supercharges— and this is the part that matters most.Operating leverage. With no branches and no staff to add, almost nothing grows when the loan book grows. New lending just runs through the same software, so the profit falls nearly straight to the bottom line. You can already see it: last quarter revenue grew 27% and profit grew 45% — earnings expanding nearly twice as fast as the business. And the US engine is more efficient than Canada, not less; as it scales, the whole company’s cost ratio falls.A fat, widening margin. Because the model strips out both risk and cost, VersaBank earns one of the highest net interest margins of any bank in Canada — and it’s widening as cheaper funding rolls in. Fat margin, times exploding volume, times almost no cost growth. That’s the equation.The AI accelerant. Today a lending partner has to warehouse its loans for up to a month before bundling them off to VersaBank. The new Real-Time SRP — already in pilot — uses AI to buy each loan the instant it’s made. No warehousing, no waiting. For a partner, that’s the difference between a useful funding source and an indispensable one. Taylor thinks it could pull in volume faster than the bank can even hold it — enough that they’d syndicate the overflow to other banks for a fee. That doesn’t just grow the book; it bends the curve.Leverage, margin, accelerant. Put them together and you don’t get steady growth — you get a line that bends upward.So what’s the base business worth?Here’s the ramp — all in US dollars, core earnings per share.One word on "revenue," because for a bank it's not what you'd think. It doesn't mean all the interest VersaBank collects (that's well over US$200M). It means what the bank keeps — interest earned minus interest paid to depositors, plus a little fee income. It's the 2.7% margin, in dollars. So when you see ~$90M, that's already the spread, not the gross.(2025 is reported; 2026–27 are my estimates, not company guidance.)Core EPS has already climbed six quarters in a row, and the US engine is barely lit. At a $20 share price today (US), you’re paying 10x for 2027 earnings growing 40%+ a year. Banks that grow like that don’t stay cheap — put even a sane multiple on a $2 number and the stock easily doubles in a year.And I don’t think it stops there. Run those three forces forward — the US book scaling toward management’s own targets, the efficiency ratio collapsing, the AI accelerant pulling demand in — and 2030 core EPS could easily look like $5 to $6.That’s not a heroic multiple on today’s earnings; it’s just what this machine does if the inflection plays out. It’s the same path management has drawn in plain sight:Those aren’t three separate miracles. They’re one mechanism — a fixed, tiny cost base — described three ways. As the book grows, costs barely move, so the efficiency ratio collapses and returns climb on their own. It’s already happening: US efficiency improved from 41% to 37% in a single quarter.That’s the base business. On its own, zero credit for anything else: a stock that doubles in two years and could quadruple-plus by decade’s end.Now the part I’m not paying forSitting inside this bank is a second business I value at zero.VersaBank just told regulators it became the first bank to complete a tokenized-deposit pilot — real, bank-issued digital dollars running live across the Algorand, Ethereum, and Stellar blockchains. Think of them as a stablecoin’s smarter sibling: same blockchain speed, but because a real bank issues them, they can pay interest (stablecoins can’t), they’re expected to be federally insured (stablecoins aren’t), and — here’s the part that matters — they sit on VersaBank’s own balance sheet as deposits. The company is already custodying Canada’s first regulated digital dollar.Why deposits matter: they’re funding — the cheap raw material the whole machine runs on. Every dollar that lands as a deposit is another dollar VersaBank can lend out at that ~2.7% margin. Remember I told you to hold that number? Here’s the second time it matters. This isn’t a side gig; it pours fuel straight into the engine. The math:The whole bank earns about US$36M a year today.Just US$2B of these deposits, lent at the spread, throws off ~US$40M after tax — more than the entire bank makes now.US$10B would be ~US$200M — roughly 5x today’s whole company.And the pond is an ocean: VersaBank points to US$1.3 trillion in annual US–Canada cross-border trade alone, with the broader stablecoin market headed toward several trillion. Capturing even a low-single-digit slice of that as deposits doesn’t add to the bank — it eclipses it.It might amount to nothing; it’s early, and I’m assuming none of it. But that’s exactly the point.And that’s the whole thesis in one line: value the base business, and it’s already a stock that doubles in 1 year. If the option works, everything above it is a footnote.The one real risk — and why it might not be oneLet me steelman the bear case, because there’s one risk that actually matters here, and it’s capital.Growth this fast is hungry. Every new loan VersaBank funds consumes regulatory capital, and you can see the tank draining: its CET1 ratio — the core cushion regulators watch — fell to 12.3% from 14.3% a year ago, and its leverage ratio dropped to 7.9% from 9.6%. Still comfortably above the minimums, but the direction is clear. If the US “avalanche” arrives the way management hopes, the supercharged growth I just described will need more capital than the bank generates on its own. A planned sale of its cybersecurity arm should free some up — but if that slips, the most likely answer is an equity raise.Here’s why that doesn’t scare me. VersaBank trades at roughly 1.5x book value. When a bank raises money above book and then earns a high return on it, the raise is accretive, not dilutive — every new share is sold for more than the equity behind it, and the fresh capital immediately goes to work at VersaBank’s fat margin. The thing investors usually fear from a growth company — the dilutive raise — is, for a high-return bank trading above book, closer to a feature than a bug.The other risks are real but smaller. The flawless loss record was built in Canada; the US is still being proven. And the stock has run hard, so the tape can give some back.But the engine is real, and I’ve checked it from every angle I have. A bank that prints like software, copy-pasting a proven blueprint into a market ten times its size — with a free, trillion-dollar option stapled on top.That’s the kind of thing I started this letter to find.— AdityaI own VBNK. Not advice — I just write up what I'm buying with my own money. Figures are core (excluding one-time items), converted at roughly US$0.72 per Canadian dollar; the company reports in CAD. The multi-year numbers are my estimates, not company guidance. Do your own work; you can lose it all.Thanks for reading The 10x Radar! Subscribe for free to receive new posts and support my work.