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].

VersaBank (NasdaqGS:VBNK) Q4 2025 Earnings Call December 10, 2025 09:00 AM ET Company ParticipantsJohn Asma - CFOWade MacBain - Head of Investor RelationsDavid Taylor - PresidentConference Call ParticipantsTim Switzer - AnalystJoseph Yanchunis - AnalystAndrew Scott - AnalystWade MacBainGood morning, ladies and gentlemen, and welcome to the VersaBank Fourth Quarter Fiscal 2025 Financial Results Conference Call. This morning, VersaBank issued a news release reporting its financial results for the fourth quart ...

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 has entered into an agreement with its largest US Receivable Purchase Program (RPP) partner to utilize its core RPP in the United States [1][3] - The initial funding of US$61 million has been completed, bringing total US RPP fundings in fiscal 2025 to US$310 million, exceeding the year-end target of US$290 million [2][3] Financial Performance - Total US RPP fundings in fiscal 2025 comprised US$242 million from the core RPP offering and US$68 million from the Securitized RPP offering [2] - Year-end RPP assets reached US$293 million, with US$227 million from the core RPP and US$66 million from the Securitized RPP [2] Strategic Outlook - The company anticipates expanding its US assets significantly in fiscal 2026, driven by the momentum of both core and Securitized RPP offerings [3] - The partnership is expected to enhance the attractiveness of VersaBank's RPP and foster further relationships with new partners [3] Company Overview - VersaBank operates as a branchless, digital, business-to-business bank, leveraging proprietary technology to serve underserved segments of the banking industry [4] - The bank has launched its Receivable Purchase Program funding solution in the US market, which has been successful in Canada for nearly 15 years [4] - VersaBank also owns DRT Cyber Inc., a leader in cybersecurity services, and Digital Meteor Inc., which focuses on next-generation digital assets [4]

Core Insights - VersaBank has entered into an agreement with Thrive Financial Inc. to utilize its Receivable Purchase Program (RPP) for point-of-sale financing in home improvement projects, marking a significant step in expanding its digital banking solutions in the U.S. market [1][2] - The partnership is expected to enhance the growth of VersaBank's RPP business, which is already a major growth driver due to its economic resiliency, with a target portfolio of US$290 million [2] Company Overview - VersaBank operates as a branchless, digital, business-to-business bank in North America, focusing on underserved segments of the banking industry through proprietary technology [4] - The bank has successfully launched its RPP funding solution in the U.S., which has been effective in Canada for nearly 15 years, targeting the multi-trillion-dollar U.S. market [4] - VersaBank also owns DRT Cyber Inc., a leader in cybersecurity services, and Digital Meteor Inc., which focuses on next-generation digital assets [4] Thrive Financial Inc. - Thrive Financial is a technology platform that connects merchants, consumers, and financial institutions, providing home improvement merchants with access to a comprehensive suite of financing products [3] - The partnership with VersaBank aims to enhance Thrive's ability to offer competitive loan products and scale its platform efficiently [2][3]

Financial Data and Key Metrics Changes - Total assets grew 21% year over year and 9% sequentially to just shy of CAD 5.5 billion [13] - Consolidated revenue reached a record CAD 31.6 million, up 17% year over year and 5% sequentially [14] - Reported net income was CAD 6.6 million, with adjusted net income of CAD 9.7 million excluding restructuring costs [15] Business Line Data and Key Metrics Changes - Revenue for Canadian Banking operations was CAD 26.6 million, up 4% sequentially [15] - U.S. Banking operations revenue was CAD 3.1 million, a 25% sequential increase [16] - The credit asset portfolio grew to a record CAD 4.78 billion, with the receivable purchase program increasing 15% year over year [18] Market Data and Key Metrics Changes - Canadian consumer spending showed resilience despite economic uncertainties, contributing to growth in credit assets [7] - The Canadian insolvency deposit business remained stable, with expectations of increased deposits due to economic conditions [35] Company Strategy and Development Direction - The company is realigning its corporate structure to that of a standard U.S. bank, which is expected to enhance shareholder value and reduce corporate costs [5][22] - Expansion of the receivable purchase program in both the U.S. and Canada is a key focus, with the introduction of a securitized financing solution [10][21] - The company is advancing its digital deposit receipt initiative, which aims to provide interest-bearing stable coins that are federally insured [23][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a fiscal year-end target of CAD 290 million for U.S. RPP funding [21] - The outlook for Canadian RPP business is improving with the addition of securitization capabilities [21] - The company anticipates a breakout year in 2026, driven by growth in U.S. operations and digital deposit initiatives [20] Other Important Information - Non-interest expenses for Q3 included CAD 4.2 million related to corporate realignment, with expectations of similar charges in Q4 [15][56] - The net interest margin on credit assets was 2.55%, reflecting a 6% year-over-year increase [19] Q&A Session Summary Question: What were balances at quarter end for the US RPP program? - The balance was approximately CAD 125 million [29] Question: How many partners are generating loans currently? - Currently, only WaterCrest is funding loans, but there are several partners expected to enter the securitization program soon [30][31] Question: How will the securitized financing offering impact growth? - The securitized financing offering is expected to drive the majority of growth in the near term, with enhancements planned for the traditional RPP program [32] Question: What is the outlook for Canadian insolvency deposits? - The company expects an increase in insolvency deposits due to a decline in GDP, which may lead to more insolvencies [35] Question: Can you provide insight on the NIM trajectory going forward? - The company anticipates a flat net interest margin for the current quarter, with potential for slight increases in the future [45]

Group 1: US Receivable Purchase Program (RPP) - VersaBank has entered into an agreement with its second US RPP partner, aiming to leverage its innovative RPP to fund loan and lease originations [1] - The US RPP portfolio has surpassed US$70 million (approximately CAD$100 million) in assets within 75 days of adding the first partner, with a target of US$290 million in fiscal 2025 [2][3] - The company expects to add more RPP partners, driven by favorable market conditions as alternative funding costs rise [3] Group 2: Financial Performance and Net Interest Margin - VersaBank's net interest margin (NIM) has expanded significantly in the first two months of the second quarter of fiscal 2025, influenced by factors such as the normalization of the yield curve and the replacement of higher interest rate term deposits [4] - The addition of higher margin US RPP assets is also contributing positively to the NIM [4] Group 3: CMHC-Insured Loans - The bank is on track to reach its target of $1 billion in commitments for Canada Mortgage and Housing Corporation (CMHC)-insured loans by the end of fiscal 2025, with commitments exceeding $730 million as of April 15, 2025 [6] - CMHC-insured loans are zero risk-weighted, requiring no risk-weighted capital, thus generating an attractive spread that contributes favorably to the credit asset net interest margin [6] Group 4: Expansion of Deposit Broker Network - VersaBank has expanded its deposit broker network by adding BMO Nesbitt Burns Inc., which is expected to further enhance the bank's NIM in fiscal 2025 [5] Group 5: Overview of VersaBank - VersaBank operates a branchless, digital, business-to-business model, utilizing proprietary technology to address underserved segments of the banking industry [9] - The bank launched its Receivable Purchase Program in the US market, which has been successful in Canada for nearly 15 years [9]