Core Insights - VersaBank is positioning itself at the forefront of the digital asset revolution, particularly in the areas of tokenized deposits and payments, as it faces deposit pressures from generational wealth transfers to non-bank alternatives like crypto and stablecoins [1][6] Group 1: Digital Assets and Tokenized Banking - VersaBank distinguishes tokenized deposits as "one-to-one" representations of actual bank deposits, which are recorded on the bank's ledger and mirrored onto blockchains [1] - The bank has been working in the digital asset space for nearly a decade and has tested working deposit tokens since 2021, with plans for an integrated cross-border pilot [7][12] - The bank aims to serve as a custodian for third-party stablecoins, projecting that stablecoins in circulation could grow to $4 trillion by 2030, which would create a low-cost revenue stream [13] Group 2: U.S. Market Expansion - VersaBank's U.S. rollout of its receivable purchase program gained traction quickly, achieving a year-end target of $290 million in program value [3] - The bank has experienced asset growth at an average compounded rate of 27% over the past three years, reaching nearly CAD 6 billion [4] - The bank is piloting tokenized deposits in both Canada and the U.S., with expected announcements on regulatory discussions in the near future [9] Group 3: Strategic Partnerships and Technology - VersaBank is signing additional partners to enhance its product offerings, including an AI-driven capability for instant purchase of receivables [2] - The bank plans to license deposit-token technology to community banks, allowing them to issue their own tokens while VersaBank provides the necessary infrastructure [11] - Taylor emphasized that the bank's deposit tokens would be supported by the same liquidity and regulatory framework as traditional bank deposits, with potential eligibility for deposit insurance [8][15] Group 4: Market Opportunities - Cross-border payments are highlighted as a significant use case, with U.S.-Canada trade activity valued at $1.3 trillion, presenting opportunities for billions in low-cost deposits [10] - The bank's cloud-based, branchless model allows for significant operating leverage as it grows, particularly following its entry into the U.S. market [4][16]

Summary of VersaBank Conference Call Company Overview - **Company Name**: VersaBank - **Ticker Symbols**: VBNK (Nasdaq and TSX) - **Established**: 30 years in operation, recognized as a fully digital bank in North America [2][3] Core Business Highlights - **Growth Rate**: Achieved a compounded average growth rate of 27% over the past three years, reaching nearly CAD 6 billion in assets [4] - **Profitability**: Generated nearly CAD 36 million in ordinary income in 2025, with expectations for increased efficiency and profitability as operations expand in the U.S. [4] - **Business Model**: Operates a cloud-based, branchless business-to-business model, benefiting from significant operating leverage [3] Digital Asset Strategy - **Digital Asset Leadership**: Positioned as a leader in the digital asset space, with a focus on tokenized deposits and stablecoins [5][6] - **Market Trends**: Approximately 70% of generational wealth is expected to transfer to non-bank entities, creating challenges for traditional banks [6] - **Stablecoin Market**: The total value of the stablecoin market has surpassed $300 billion, reflecting a growth of over one-third in the last year [8] Tokenized Deposits - **Definition**: Tokenized deposits are digital representations of actual bank deposits on the blockchain, eligible for deposit insurance and capable of paying interest [7][8] - **Market Opportunity**: Anticipated to provide low-cost funding for financing and lending activities, with billions in potential deposits from cross-border trade between the U.S. and Canada [12] - **Regulatory Environment**: No new legislation is expected to be required for the launch of tokenized deposits, as they are real bank deposits reflected on a blockchain [19][20] Community Bank Engagement - **Licensing Opportunities**: Plans to license deposit token technology to community banks, allowing them to issue their own tokens [22][23] - **Community Bank Support**: Received positive feedback from community banks eager for regulatory clarity to adopt deposit tokens [22] Cybersecurity Business Update - **Divestiture**: Currently in the process of selling the cybersecurity services business, which is unrelated to the digital asset operations [33][34] - **Bids Received**: Expecting to receive bids for the cybersecurity business within the next month [35] Future Outlook - **Growth in U.S. Market**: Anticipates continued strong growth in the U.S. market, with a focus on enhancing product offerings and leveraging AI for receivable purchases [30][32] - **Deposit Insurance Expectation**: Expects that tokenized deposits will be covered by deposit insurance, crucial for maintaining depositor confidence [36][39] Conclusion - **Investment Proposition**: VersaBank presents a low-risk, high-growth digital banking opportunity with significant upside potential in the digital asset space, particularly through tokenized deposits and stablecoin custody [14][15]

Core Viewpoint - VersaBank is positioned as a leader in business-to-business digital banking and is set to present its innovative digital asset solutions at an upcoming investor conference [1][2]. Group 1: Company Overview - VersaBank operates as a federally chartered bank in both Canada and the United States, utilizing a branchless, digital model to serve underserved segments of the banking industry [4]. - The bank has developed a unique Receivable Purchase Program funding solution, which has been successful in Canada and is now being introduced to the U.S. market [4]. - VersaBank owns DRT Cyber Inc., a leader in cybersecurity services, which enhances its capabilities in addressing the growing cyber threats faced by financial institutions and corporations [4]. Group 2: Digital Asset Innovations - The bank's Real Bank Deposit Tokens (RBDTs) are digital representations of actual cash deposits, combining traditional banking safety with blockchain technology's efficiency and programmability [3]. - RBDTs are expected to be eligible for federal deposit insurance and can legally pay interest, unlike non-bank issued stablecoins [3]. - VersaBank's proprietary SOC2 (Type I) certified VersaVault® technology underpins its digital asset security solutions, including Stablecoin Custody Services [2][3].

Core Viewpoint - VersaBank is undergoing a restructuring to align with the standard framework of a US Bank, which is expected to support its growth strategy in both the US and Canada [1][2]. Group 1: Executive Appointments - Nicolas Ospina has been appointed as the Global Chief Financial Officer, overseeing the Bank's finance function at the corporate level [6]. - John Asma has been promoted to Executive Vice President, focusing on the operation and execution of strategy for Canadian Digital Banking operations [6]. - Ospina brings over a decade of experience from Raymond James, where he was involved in over 50 transactions in the US banking sector, enhancing his suitability for the role [2][6]. Group 2: Business Model and Strategy - VersaBank operates a branchless, digital, business-to-business banking model, leveraging proprietary technology to serve underserved segments of the banking industry [3]. - The Bank launched its Receivable Purchase Program in the US market, which has been successful in Canada for nearly 15 years, targeting a multi-trillion-dollar market [3]. - VersaBank also owns DRT Cyber Inc., which provides cybersecurity services, addressing the growing volume of cyber threats [3]. Group 3: Market Position and Future Outlook - The restructuring is aimed at simplifying the regulatory structure and reducing costs, which could enhance shareholder value [7][8]. - The Bank's ability to grow its US Receivable Purchase Program and expand its net interest margin is a key focus for future growth [7].

Core Viewpoint - Roth Capital has set a price target of $13 for VersaBank (NASDAQ: VBNK), reflecting confidence in the bank's growth and performance [2][5]. Financial Performance - VersaBank's fourth-quarter results for 2025 show strong growth in its Receivable Purchase Program (RPP) assets, which has driven record revenue, indicating the bank's strong operating leverage [2][5]. - The current stock price of VBNK is $13, marking an increase of 3.01% or $0.38, with fluctuations between $12.76 and $13.46 during the trading day [3][5]. - Over the past year, VBNK's stock has experienced a high of $16.47 and a low of $8.51, indicating volatility in its stock performance [3][5]. Market Position - VersaBank's market capitalization is approximately $418.18 million, with a trading volume of 136,671 shares [4]. - The bank's strategic growth in digital banking and technology solutions has contributed to its robust performance, as highlighted in its 2025 annual audited financial statements [4].

Group 1 - U.S. stocks showed mixed performance, with the Dow Jones increasing by over 600 points on Thursday [1] - Diamond Hill Investment Group Inc's shares surged 45.3% to $170.74 after First Eagle announced an acquisition for $175 per share in a $473 million all-cash deal [1] Group 2 - Planet Labs PBC's stock rose 29.7% to $16.79 following better-than-expected third-quarter sales results and an optimistic fourth-quarter sales guidance [2] - Nextdoor Holdings Inc experienced a gain of 22.9% to $3.11 [2] - Gemini Space Station Inc's shares jumped 19.2% to $13.54 after regulatory approval for its subsidiary to offer prediction markets to U.S. customers [2] - Rhythm Pharmaceuticals Inc's stock increased by 13.5% to $119.00 after announcing preliminary results from a Phase 2 trial for setmelanotide in Prader-Willi syndrome patients [2] - Candel Therapeutics Inc gained 12.4% to $6.52 [2] - VersaBank's shares rose 12.34% to $14.52 [2] - Perpetua Resources Corp's stock increased by 10.4% to $28.37 [2] - iHeartMedia Inc jumped 10.1% to $5.19 [2] - NovaBay Pharmaceuticals Inc gained 9.5% to $2.65 [2] - Idaho Strategic Resources Inc's shares rose 9.3% to $43.62 [2] - Immunovant Inc's stock increased by 8.5% to $25.57 after pricing a $550 million common stock offering [2] - Vail Resorts Inc gained 8.3% to $153.30 following first-quarter results [2] - Mosaic Co's shares surged 7.2% to $25.47 amid higher fertilizer stock prices after reports of Ukraine attacking Russian fertilizer plants [2] - Wayfair Inc's stock rose 6.9% to $99.76 [2] - Centene Corp gained 5.3% to $40.72 [2]

Core Insights - VersaBank (NASDAQ: VBNK) is a significant player in the North American business-to-business digital banking and technology solutions sector, known for its innovative approach and competitive stance against other digital banks and fintech companies [1] Financial Performance - For the quarter ending October 2025, VBNK reported an earnings per share (EPS) of $0.23, slightly below the estimated $0.24, and down from $0.28 in the same quarter last year [2] - The bank generated revenue of approximately $25 million, exceeding the estimated $24.4 million and representing a 25.1% increase from $19.98 million in the same period last year [3] Valuation Metrics - VBNK has a price-to-earnings (P/E) ratio of approximately 20.36, indicating the market's valuation of its earnings [4] - The price-to-sales ratio is about 1.94, reflecting investor willingness to pay per dollar of sales, while the enterprise value to sales ratio stands at around 0.76 [4] Financial Stability - The bank's debt-to-equity ratio is approximately 0.20, indicating a low level of debt compared to equity [5] - The current ratio is around 0.14, suggesting potential challenges in covering short-term liabilities with short-term assets [5] - VBNK's earnings yield of about 4.91% indicates a solid return on investment, reinforcing its position in the digital banking sector [5]

Financial Data and Key Metrics Changes - The fourth quarter of fiscal 2025 showed a year-over-year revenue growth of 29% to a record CAD 35.1 million, with total assets growing 20% year-over-year to over CAD 5.8 billion [11][12] - Adjusted net income increased by 91% year-over-year to CAD 10.5 million, or CAD 0.33 per share, excluding one-time costs associated with corporate realignment [12][18] - The CET1 ratio was reported at 12.92%, and the leverage ratio was 8.47%, both above internal targets [11] Business Line Data and Key Metrics Changes - Revenue from Canadian banking operations was CAD 27.6 million, up 17% year-over-year, while U.S. banking operations revenue reached CAD 5.2 million, a 67% sequential increase [13][14] - The receivable purchase program (RPP) assets grew to CAD 293 million, with total fundings for fiscal 2025 reaching CAD 310 million, surpassing targets [7][14] - The cybersecurity segment generated CAD 1.9 million in revenue, down from CAD 2.3 million in the previous year, reflecting higher operating expenses [15] Market Data and Key Metrics Changes - Credit assets grew to a record CAD 5.07 billion, driven by a 19% year-over-year increase in the RPP portfolio [15] - The multi-family residential loans portfolio grew 11% year-over-year, while the overall portfolio saw a slight decrease of 3% sequentially [15][16] Company Strategy and Development Direction - The company is focused on capitalizing on operational efficiency and leveraging its digital banking model, particularly in the U.S. market [17][18] - Plans to realign corporate structure to that of a standard U.S. bank are progressing, with a shareholder vote expected in April [21][20] - The company aims to divest its cybersecurity business to enhance regulatory capital and reduce costs by approximately CAD 10 million [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in the U.S. RPP program and expects to target CAD 1 billion in RPP funding for fiscal 2026 [18][25] - The yield curve's return to an upward slope is anticipated to benefit net interest margins, with expectations for stability and potential upside in 2026 [19][54] - The company is well-positioned to provide custodial services for stablecoin issuers, leveraging its advanced technology [27][28] Other Important Information - The company has enhanced its CMHC-insured lending program, which is expected to contribute a minimum of CAD 2 million in incremental revenue in fiscal 2026 [10] - The RealBank Deposit Tokens initiative is seen as a significant opportunity for new deposit channels and potential licensing revenue [22][56] Q&A Session Summary Question: Can you talk about your partner pipeline for the U.S. RPP program? - Management confirmed that the existing partners can help reach the CAD 1 billion target for fiscal 2026, with a strong pipeline for new partners [25] Question: Can you provide an update on the DRT Cyber sales process? - Management acknowledged delays in the sales process but indicated that they are in the final stages of a quality of earnings report, with several interested parties [29] Question: What is the expected base for non-interest expenses in 2026? - Management indicated that the budgeted figure for non-interest expenses is around CAD 72 million, excluding one-time costs [40] Question: What verticals are driving growth in the U.S. RPP? - Management noted that growth is driven by home improvement, HVAC, and recreational vehicles, similar to the Canadian market [44]

Financial Data and Key Metrics Changes - The fourth quarter of fiscal 2025 showed a year-over-year revenue growth of 29% to a record CAD 35.1 million, with total assets growing 20% year-over-year to over CAD 5.8 billion [11][12] - Adjusted net income increased by 91% year-over-year to CAD 10.5 million, or CAD 0.33 per share, excluding one-time costs associated with corporate realignment [12][18] - The CET1 ratio was reported at 12.92%, and the leverage ratio was 8.47%, both above internal targets [12] Business Line Data and Key Metrics Changes - Revenue from Canadian banking operations was CAD 27.6 million, up 17% year-over-year, while U.S. banking operations revenue reached CAD 5.2 million, a 67% sequential increase [13] - The receivable purchase program (RPP) assets grew to CAD 293 million, with total fundings for fiscal 2025 reaching CAD 310 million, surpassing targets [6][13] - The cybersecurity segment generated revenue of CAD 1.9 million, down from CAD 2.3 million in the previous year, reflecting higher operating expenses [14] Market Data and Key Metrics Changes - Credit assets grew 20% year-over-year to CAD 5.07 billion, with the RPP portfolio representing 78% of total assets [15] - The net interest margin on credit assets was 265 basis points, a 13% increase year-over-year, while overall net interest margin was 229 basis points [16][43] Company Strategy and Development Direction - The company is focusing on expanding its U.S. operations, targeting CAD 1 billion in RPP funding for fiscal 2026, with a mix of conventional and securitized RPP [18][19] - Plans to divest the cybersecurity business are underway, which is expected to eliminate CAD 10 million from the consolidated cost structure [20] - The company is also advancing its proprietary deposit tokens, aiming to establish a new deposit channel and license technology to other banks [22][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum of the digital banking business and the potential for continued growth in both Canadian and U.S. markets [4][17] - The anticipated one-time costs associated with corporate realignment are expected to be around CAD 1.5 million, with overall costs projected to remain flat in 2026 [18][33] - The company expects to benefit from a stable net interest margin in 2026, with potential upside from the RPP and CMHC lending [19][43] Other Important Information - The company achieved a record book value per share of CAD 16.67 [11] - The liquidity levels were higher than typical due to the U.S. market entry, with cash and securities at CAD 663 million, or 11% of total assets [11][12] Q&A Session Summary Question: Can you talk about your partner pipeline for the U.S. RPP program? - Management confirmed that the existing partners can help reach the CAD 1 billion target for fiscal 2026, with a strong pipeline for new partners [25] Question: Can you elaborate on the custody solution consistent with planned regulation in Canada? - The company is prepared to provide custodial services to stablecoin issuers, leveraging its state-of-the-art technology [26][27] Question: What is the status of the DRT Cyber sales process? - The sales process is taking longer than expected, with a quality of earnings report in the final stages [28][29] Question: What is the expected base for non-interest expenses in 2026? - Management indicated that the budgeted figure is around CAD 72 million, excluding one-time expenses [33] Question: Can you provide insights on the growth drivers in the U.S. RPP? - The growth is driven by home improvement, HVAC, and energy-saving projects, similar to the Canadian market [37]

Core Insights - VersaBank reported quarterly earnings of $0.24 per share, matching the Zacks Consensus Estimate, but down from $0.28 per share a year ago [1] - The bank's revenues for the quarter ended October 2025 were $25.29 million, exceeding the Zacks Consensus Estimate by 4.22% and up from $19.98 million year-over-year [2] - The stock has underperformed, losing about 8.9% since the beginning of the year compared to the S&P 500's gain of 16.3% [3] Earnings Performance - The company has surpassed consensus EPS estimates only once in the last four quarters [1] - The current consensus EPS estimate for the upcoming quarter is $0.29, with expected revenues of $25.67 million, and for the current fiscal year, the estimate is $1.50 on revenues of $116.76 million [7] Market Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call [3] - The Zacks Rank for VersaBank is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] - The outlook for the industry, particularly the Banks - Foreign sector, is favorable, ranking in the top 26% of over 250 Zacks industries [8]