Download PDF

1. Company Snapshot

1.a. Company Description

VersaBank, a schedule I chartered bank, provides various banking products and services in Canada.The company offers deposit products, such as guaranteed investment certificates, registered retirement savings plans, daily interest savings accounts, and tax-free savings accounts, as well as deposit insurance products.It also provides lending services, including point of sale financing that involves purchasing loan and lease receivables from finance companies operating in various industries; and commercial banking services comprising commercial real estate, public sector/infrastructure financing, condominium financing, and residential mortgages.


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.

Show Full description

1.b. Last Insights on VBNK

VersaBank's recent performance was driven by a 29% revenue surge and a 91% increase in adjusted net income. The company's Q1 2026 earnings revealed record growth in credit assets and revenue, with significant milestones in US operations and structured receivable programs. Despite reorganization costs and liquidity challenges, the bank's US Structured Receivable Program (SRP) showed accelerating growth. Additionally, VersaBank declared a quarterly dividend of CAD $0.025 per Common Share. The company also announced a corporate reorganization and appointed a new Global CFO.

1.c. Company Highlights

2. VersaBank's Q1 Fiscal 2026: A Strong Start to the Year

VersaBank reported a robust first quarter, with revenue reaching $36.5 million, up 31% year-over-year and 4% sequentially. The bank's net income was $11.1 million, with consolidated earnings per share of $0.35, while adjusted earnings per share were $0.3462, slightly below the expected $0.3833. The bank's credit assets reached $5.33 billion, driven by the structured receivable program, which grew 29% year-over-year.

Publication Date: Mar -09

📋 Highlights
  • Credit Assets Growth:: Surpassed $5.33 billion, 23% YoY, driven by SRP's 29% YoY increase to $4.4 billion.
  • Revenue Surge:: Rose 31% YoY to $36.5 million, with adjusted net income up 49% to $12.2 million ($0.38/share).
  • US Market Expansion:: Revenue and net income jumped 30% and 40%, respectively, with $200M SRP originations in Q1 and $1B target by year-end.
  • Digital Innovation:: Launched tokenized deposits pilot and partnered with Stablecorp for stablecoin custody, targeting royalty revenue shares.

Financial Performance

The bank's net interest margin on credit assets was 2.64%, up 28 basis points year-over-year. The CET1 ratio was 12.8%, and the leverage ratio was 8.2%, both above internal targets. The bank's return on equity (ROE) was 5.89%, indicating a stable return on shareholders' equity.

Business Highlights

The bank's U.S. operations saw a 30% increase in revenue and a 40% increase in net income, driven by the growth of the structured receivable program. The bank is on track to add at least $1 billion in fundings in fiscal 2026, more than threefold the 2025 amount. The reorganization to a standard U.S. bank framework is progressing, with expected costs of $4 million to $4.5 million in Q2.

Digital Asset Opportunities

The bank is pursuing digital asset opportunities, including tokenized deposits and stablecoin custody services. A pilot program for tokenized deposits is underway, and the bank recently announced a partnership with Stablecorp for stablecoin custody services. The bank expects to generate revenue from traditional net interest margin on deposits and potentially more as the business grows.

Valuation

With a Price-to-Tangible Book Value (P/TBV) ratio of 1.15, the bank's valuation appears reasonable. The Net Interest Margin (NIM) of 2.64% is also a positive indicator. Considering the bank's growth prospects, with analysts estimating a 27.5% revenue growth next year, the current valuation multiples may be justified.

Outlook

The bank's efficiency ratio is expected to improve significantly once it completes its reorganization, with a target of 20-25% in the long term. The US market is expected to become a much larger contributor to the company's results, with a population 10 times that of Canada and a greater propensity for financing at point of sale. The company's deposit-gathering network in the US is more efficient and sophisticated, with lower costs.

3. NewsRoom

Card image cap

Why The VersaBank (TSX:VBNK) Narrative Is Shifting With Loan Growth And Stablecoin Custody Hopes

Mar -06

Source:

Card image cap

VersaBank (VBNK) Q1 2026 Earnings Call Highlights: Record Growth in Credit Assets and Revenue

Mar -04

Source:

Card image cap

VersaBank Q1 Earnings Call Highlights

Mar -04

Source:

Card image cap

VersaBank Q1 Net Income and Revenue Rise; Declares Quarterly Dividend

Mar -04

Source:

Card image cap

VERSABANK DECLARES DIVIDENDS

Mar -04

Source:

Card image cap

VersaBank (VBNK) Q1 Earnings Match Estimates

Mar -04

Source:

Card image cap

VERSABANK TO HOST FIRST QUARTER FISCAL 2026 FINANCIAL RESULTS CONFERENCE CALL/WEBCAST WEDNESDAY, MARCH 4, 2026 at 9:00 A.M. ET

Feb -24

Source:

Card image cap

QCAD Digital Trust Enters into Custodial Services Agreement with VersaBank

Feb -03

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.38%)

6. Segments

Digital Banking

Expected Growth: 15%

VersaBank's 15% growth in digital banking is driven by increasing adoption of online and mobile banking channels, rising demand for digital payment solutions, and strategic partnerships with fintech companies. Additionally, investments in AI-powered customer service, enhanced cybersecurity measures, and user-friendly interface have improved customer experience, contributing to the growth.

Cybersecurity Services and Banking and Financial Technology Development

Expected Growth: 10%

VersaBank's 10% growth in Cybersecurity Services and Banking and Financial Technology Development is driven by increasing demand for secure digital banking, rising cyber threats, and growing adoption of cloud-based services. Additionally, the need for regulatory compliance, digital transformation, and innovation in the financial sector are key growth drivers.

Eliminations / Adjustments

Expected Growth: 5%

VersaBank's 5% growth driven by strategic expansion into digital banking, increased adoption of cloud-based services, and growing demand for online lending platforms. Additionally, the bank's focus on cost reduction initiatives, improved operational efficiency, and enhanced customer experience have contributed to its growth momentum.

7. Detailed Products

VersaBank eDeposit

A digital deposit platform that allows businesses to deposit cheques remotely using a mobile app or desktop scanner

VersaBank ASC (Automated Settlement Centre)

A digital platform that automates the settlement process for businesses, allowing for faster and more efficient payment processing

VersaBank DDA (Demand Deposit Account)

A digital demand deposit account that provides businesses with a secure and flexible way to manage their cash flow

VersaBank API Banking

A suite of APIs that enable businesses to integrate banking services into their own applications and systems

VersaBank Commercial Loans

A range of commercial loan products that provide businesses with access to capital for growth and expansion

8. VersaBank's Porter Forces

Forces Ranking

Threat Of Substitutes

VersaBank's digital banking platform and online services reduce the threat of substitutes, as customers are less likely to switch to traditional banks.

Bargaining Power Of Customers

VersaBank's customers have some bargaining power due to the availability of alternative digital banking options, but the bank's unique services and features mitigate this power.

Bargaining Power Of Suppliers

VersaBank's suppliers, such as technology providers, have limited bargaining power due to the bank's strong market position and ability to negotiate favorable terms.

Threat Of New Entrants

The threat of new entrants is high in the digital banking space, as new fintech companies and traditional banks are expanding their online services, posing a threat to VersaBank's market share.

Intensity Of Rivalry

The intensity of rivalry in the digital banking space is high, with many players competing for market share, and VersaBank must continuously innovate and improve its services to remain competitive.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 22.79%
Debt Cost 9.32%
Equity Weight 77.21%
Equity Cost 9.32%
WACC 9.32%
Leverage 29.53%

11. Quality Control: VersaBank passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Home Bancorp

A-Score: 6.3/10

Value: 7.0

Growth: 5.9

Quality: 6.3

Yield: 4.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

View Full Report
Stock-Card
ChoiceOne Financial Services

A-Score: 6.0/10

Value: 5.6

Growth: 7.6

Quality: 5.8

Yield: 8.0

Momentum: 2.5

Volatility: 6.7

1-Year Total Return ->

View Full Report
Stock-Card
Byline Bancorp

A-Score: 6.0/10

Value: 6.2

Growth: 7.9

Quality: 7.7

Yield: 2.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

View Full Report
Stock-Card
Colony Bankcorp

A-Score: 5.7/10

Value: 7.4

Growth: 4.1

Quality: 4.9

Yield: 5.0

Momentum: 4.5

Volatility: 8.0

1-Year Total Return ->

View Full Report
Stock-Card
CrossFirst Bankshares

A-Score: 5.4/10

Value: 5.2

Growth: 8.2

Quality: 7.8

Yield: 0.0

Momentum: 5.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Versa

A-Score: 4.7/10

Value: 6.9

Growth: 6.8

Quality: 6.5

Yield: 0.0

Momentum: 2.0

Volatility: 6.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

19.96$

Current Price

19.96$

Potential

-0.00%

Expected Cash-Flows