VersaBank (VBNK) posts higher Q1 2026 earnings and details U.S., DRTC strategy
Rhea-AI Filing Summary
VersaBank reported strong first-quarter fiscal 2026 results, furnishing its interim financial statements and MD&A on a Form 6-K. Total revenue rose to
Basic and diluted earnings per share increased to $0.35 from $0.28, helped by growth in its Structured Receivable Program in both Canada and the U.S. Credit assets reached
The bank incurred
Positive
- None.
Negative
- None.
Insights
VersaBank delivered higher earnings with solid capital while advancing a strategic reshaping of its business.
VersaBank grew total revenue to
Asset quality metrics remained conservative, with a provision for credit losses of only
Non-interest expenses rose year over year to
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of
Commission File Number:
(Exact name of registrant as specified in its charter)
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☐ Form 40-F ☒
On March 4, 2026, VersaBank issued Interim Consolidated Financial Statements for the three months ended January 31, 2026 and 2025, Management’s Discussion and Analysis of Operations and Financial Condition for the three months ended January 31, 2026, a press release, dated March 4, 2026, titled VERSABANK REPORTS STRONG FIRST QUARTER RESULTS, a press release, dated March 4, 2026, titled VersaBank Declares Dividends, Form 52-109F2 certificate of interim filings by CEO and Form 52-109F2 certificate of interim filings by CFO, copies of which are furnished as Exhibit 99.1, Exhibit 99.2, Exhibit 99.3, Exhibit 99.4, Exhibit 99.5 and Exhibit 99.6, respectively, to this Report of Foreign Private Issuer on Form 6-K
The information in this Form 6-K (including Exhibit 99.1, Exhibit 99.2, Exhibit 99.3, Exhibit 99.4, Exhibit 99.5 and Exhibit 99.6) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VERSABANK |
|||
| Date: March 4, 2026 |
By: |
/s/ Nicolas Ospina |
|
| Name: |
Nicolas Ospina |
||
| Title: |
Chief Financial Officer |
||
EXHIBIT INDEX
| Exhibit No. |
Description |
|
| 99.1 |
Interim Consolidated Financial Statements for the three months ended January 31, 2026 and 2025. |
|
| 99.2 |
Management’s Discussion and Analysis of Operations and Financial Condition for the three months ended January 31, 2026. |
|
| 99.3 |
Press Release, dated March 4, 2026, titled VERSABANK REPORTS STRONG FIRST QUARTER RESULTS. |
|
| 99.4 |
Press Release, dated March 4, 2026, titled VersaBank Declares Dividends. |
|
| 99.5 |
VersaBank—Form 52-109F2 certificate of interim filings by CEO. |
|
| 99.6 |
VersaBank—Form 52-109F2 certificate of interim filings by CFO. |
|
Exhibit 99.1
Interim Consolidated Financial Statements
January 31, 2026
(Unaudited)
VERSABANK
Consolidated Balance Sheets
(Unaudited)
| (thousands of Canadian dollars) | ||||||||||||
| January 31 | October 31 | January 31 | ||||||||||
| As at | 2026 | 2025 | 2025 | |||||||||
| Assets | ||||||||||||
| Cash | $ | $ | $ | |||||||||
| Securities (note 4) | ||||||||||||
| Credit assets, net of allowance for credit losses (note 5) | ||||||||||||
| Property and equipment | ||||||||||||
| Goodwill | ||||||||||||
| Intangible assets | ||||||||||||
| Other assets (note 6) | ||||||||||||
| $ | $ | $ | ||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Deposits | $ | $ | $ | |||||||||
| Subordinated notes payable (note 7) | ||||||||||||
| Other liabilities (note 8) | ||||||||||||
| Shareholders' equity: | ||||||||||||
| Share capital (note 9) | ||||||||||||
| Contributed surplus | ||||||||||||
| Retained earnings | ||||||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||||||
| $ | $ | $ | ||||||||||
The accompanying notes are an integral part of these interim Consolidated Financial Statements.
VERSABANK
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
| (thousands of Canadian dollars, except per share amounts) | ||||||||
| for the three months ended | ||||||||
| January 31 | January 31 | |||||||
| 2026 | 2025 | |||||||
| Interest income: | ||||||||
| Credit assets | $ | $ | ||||||
| Other | ||||||||
| Interest expense: | ||||||||
| Deposits and other | ||||||||
| Subordinated notes | ||||||||
| Net interest income | ||||||||
| Non-interest income | ||||||||
| Total revenue | ||||||||
| Provision for (recovery of) credit losses (note 5) | ||||||||
| Non-interest expenses: | ||||||||
| Salaries and benefits | ||||||||
| General and administrative | ||||||||
| Premises and equipment | ||||||||
| Income before income taxes | ||||||||
| Income tax provision (note 10) | ||||||||
| Net income | ||||||||
| Other comprehensive income (loss): | ||||||||
| Item that may subsequently be reclassified to net income: | ||||||||
| Foreign exchange gain (loss) on translation of foreign operations | ( | ) | ( | ) | ||||
| Comprehensive income | $ | $ | ||||||
| Basic and diluted income per common share (note 11) | $ | $ | ||||||
The accompanying notes are an integral part of these interim Consolidated Financial Statements.
VERSABANK
Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
| (thousands of Canadian dollars) | ||||||||
| for the three months ended | ||||||||
| January 31 | January 31 | |||||||
| 2026 | 2025 | |||||||
| Common shares (note 9): | ||||||||
| Balance, beginning of the period | $ | $ | ||||||
| Issued during the period | ||||||||
| Balance, end of the period | $ | $ | ||||||
| Contributed surplus: | ||||||||
| Balance, beginning of the period | $ | $ | ||||||
| Stock-based compensation (note 9) | ( | ) | ||||||
| Balance, end of the period | $ | $ | ||||||
| Retained earnings: | ||||||||
| Balance, beginning of the period | $ | $ | ||||||
| Net income | ||||||||
| Dividends paid on common shares | ( | ) | ( | ) | ||||
| Balance, end of the period | $ | $ | ||||||
| Accumulated other comprehensive income (loss), net of taxes: | ||||||||
| Balance, beginning of the period | $ | $ | ( | ) | ||||
| Other comprehensive income (loss) | ( | ) | ( | ) | ||||
| Balance, end of the period | $ | ( | ) | $ | ( | ) | ||
| Total shareholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these interim Consolidated Financial Statements.
VERSABANK
Consolidated Statements of Cash Flows
(Unaudited)
| (thousands of Canadian dollars) | ||||||||
| for the three months ended | ||||||||
| January 31 | January 31 | |||||||
| 2026 | 2025 | |||||||
| Cash provided by (used in): | ||||||||
| Operations: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to determine net cash flows: | ||||||||
| Items not involving cash: | ||||||||
| Provision for (recovery of) credit losses | ||||||||
| Stock-based compensation | ||||||||
| Income tax provision | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| Interest expense | ||||||||
| Amortization | ||||||||
| Accretion of discount on securities | ( | ) | ( | ) | ||||
| Foreign exchange rate change on assets and liabilities | ( | ) | ||||||
| Interest received | ||||||||
| Interest paid | ( | ) | ( | ) | ||||
| Income taxes paid | ( | ) | ( | ) | ||||
| Change in operating assets and liabilities: | ||||||||
| Credit assets | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Change in other assets and liabilities | ( | ) | ||||||
| ( | ) | |||||||
| Investing: | ||||||||
| Foreign exchange forward settlement | ||||||||
| Disposal of Stablecorp shares | ||||||||
| Sale (purchase) of securities | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| ( | ) | |||||||
| Financing: | ||||||||
| Issuance of common shares, net of issue costs | ||||||||
| Dividends paid | ( | ) | ( | ) | ||||
| Repayment of lease obligations | ( | ) | ( | ) | ||||
| Change in cash | ||||||||
| Effect of exchange rate changes on cash | ||||||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
The accompanying notes are an integral part of these interim Consolidated Financial Statements.
| 1. | Reporting entity: |
In Canada, VersaBank (the “Bank”) operates as a Schedule I bank under the Bank Act (Canada) and is regulated by the Office of the Superintendent of Financial Institutions Canada (“OSFI”). Following its acquisition of Stearns Bank Holdingford N.A. and renaming it VersaBank USA N.A. (“VersaBank USA”), on August 30, 2024, in the United States, the Bank, through its wholly owned subsidiary, VersaBank USA, holds a national Office of the Comptroller of the Currency (“OCC”) charter and is regulated by the OCC. The Bank, whose shares trade on the Toronto Stock Exchange and Nasdaq, provides primarily commercial lending and banking services to select niche markets in Canada and the United States, as well as cybersecurity services through the operations of its wholly owned subsidiary DRT Cyber Inc., (“DRTC”). The Bank is incorporated and domiciled in Canada, and maintains its registered office at Suite 2002, 140 Fullarton Street, London, Ontario, Canada, N6A 5P2.
| 2. | Basis of preparation: |
a) Statement of compliance:
These interim Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting and do not include all the information required for full annual financial statements. These interim Consolidated Financial Statements should be read in conjunction with the Bank’s audited Consolidated Financial Statements for the year ended October 31, 2025.
The interim Consolidated Financial Statements for the three months ended January 31, 2026, and 2025 were approved by the Audit Committee of the Board of Directors on March 2, 2026.
b) Basis of measurement:
These interim Consolidated Financial Statements have been prepared on the historical cost basis except securities (note 4), the investment in Stablecorp Digital Currencies Inc. (note 6) and derivative instruments (note 12), which are measured at fair value in the Consolidated Balance Sheets.
c) Functional and presentation currency:
These interim Consolidated Financial Statements are presented in Canadian dollars, which is the Bank’s functional currency. Functional currency is also determined for each of the Bank’s subsidiaries, and items included in the interim financial statements of the subsidiaries are measured using their functional currency.
d) Use of estimates and judgements:
In preparing these interim Consolidated Financial Statements, management has exercised judgement and developed estimates in applying accounting policies and generating reported amounts of assets and liabilities at the date of the financial statements and income and expenses during the reporting periods. Areas where judgement was applied include assessing significant changes in credit risk on credit assets and in the selection of relevant forward-looking information in assessing the Bank’s allowance for expected credit losses on its credit assets as described in note 5 – Credit assets. Estimates are applied in the determination of the allowance for expected credit losses on credit assets, the fair value of stock options granted as described in note 9, the fair value of derivatives, the fair value of the investment in Stablecorp Digital Currencies Inc. as described in note 6, the impairment test applied to intangible assets and goodwill, the measurement of deferred income taxes and the revaluation of property and equipment. It is reasonably possible, based on existing knowledge, that actual results may vary from those expected in the development of these estimates. This could result in material adjustments to the carrying amounts of assets and/or liabilities affected in the future.
Estimates and their underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are applied prospectively once they are known.
| 3. | Material Accounting Policy Information and future accounting changes: |
The accounting policies applied by the Bank in these interim Consolidated Financial Statements are the same as those applied by the Bank as at and for the year ended October 31, 2025, and are detailed in note 3 of the Bank’s 2025 audited Consolidated Financial Statements.
| 4. | Securities: |
As at January 31, 2026, the Bank held securities totaling $
| 5. | Credit assets, net of allowance for credit losses: |
VersaBank organizes its Credit Asset portfolios into the following two broad asset categories: Structured Receivable Program (previously referred to as “Receivable Purchase Program”) and Multi-Family Residential Loans and Other. These categories have been established in VersaBank’s proprietary, internally developed asset management system and have been designed to catalogue individual lending assets as a function primarily of their key risk drivers, the nature of the underlying collateral, and the applicable market segment.
The Structured Receivable Program (“SRP”) category is composed of investments in the expected cash flow streams derived primarily from consumer and small business loans and leases that are originated and owned throughout their lifetime by VersaBank’s SRP partners, as well as asset-backed securities that have similar underlying assets noted in the SRP portfolio.
The Multi-Family Residential Loans and Other (“MROL”) category is composed of two major sub-segments: Multi-Family Residential Loans, which consists of CMHC-insured (zero-risk weighted for regulatory capital purposes) loans and uninsured loans to real estate developers to finance the construction phase of development of multi-family, student residence, condominium and retirement home properties, as well as term and bridge loans to real estate developers secured by completed aforementioned properties and units. It also includes the public sector and infrastructure loans and leases. The majority of these loans are business-to-business loans with the underlying credit risk exposure being primarily residential in nature given that the vast majority of the loans are related to properties that are designated primarily for residential use. The portfolio benefits from diversity in its underlying security in the form of a broad range of such collateral properties.
Summary of credit assets, net of allowance for credit losses:
| (thousands of Canadian dollars) | ||||||||||||
| January 31 | October 31 | January 31 | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Structured receivable program | $ | $ | $ | |||||||||
| Multi-family residential loans and other | ||||||||||||
| Allowance for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Accrued interest | ||||||||||||
| Total credit assets, net of allowance for credit losses | $ | $ | $ | |||||||||
The following table provides a summary of credit asset amounts, ECL allowance amounts, and expected loss (“EL”) rates by credit asset category:
| As at January 31, 2026 | ||||||||||||||||
| (thousands of Canadian dollars) | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||
| Structured receivable purchase program | $ | $ | $ | $ | ||||||||||||
| ECL allowance | ||||||||||||||||
| EL % | % | % | % | % | ||||||||||||
| Multi-family residential loans and other | $ | $ | $ | $ | ||||||||||||
| ECL allowance | ||||||||||||||||
| EL % | % | % | % | % | ||||||||||||
| Total credit assets | $ | $ | $ | $ | ||||||||||||
| Total ECL allowance | ||||||||||||||||
| Total EL % | % | % | % | % | ||||||||||||
| As at October 31, 2025 | |||||||||||||||||
| (thousands of Canadian dollars) | Stage 1 | Stage 2 | Stage 3 | Total | |||||||||||||
| Structured receivable purchase program | $ | $ | $ | $ | |||||||||||||
| ECL allowance | |||||||||||||||||
| EL % | % | % | % | % | |||||||||||||
| 0 | $ | $ | $ | $ | |||||||||||||
| ECL allowance | |||||||||||||||||
| EL % | % | % | % | % | |||||||||||||
| Total credit assets | $ | $ | $ | $ | |||||||||||||
| Total ECL allowance | |||||||||||||||||
| Total EL % | % | % | % | % | |||||||||||||
The Bank’s maximum exposure to credit risk is the carrying value of its financial assets. The Bank holds security against the majority of its credit assets in the form of mortgage interests over property, other registered securities over assets, guarantees and/or cash reserves (holdbacks) related to investments in receivables included in the SRP Financing portfolio (see note 8).
Allowance for credit losses
The Bank must maintain an allowance for expected credit losses that are adequate, in management’s opinion, to absorb all credit related losses in the Bank’s lending and treasury portfolios. The expected credit loss methodology requires recognition of credit losses based on 12 months of expected losses for performing credit assets, which is reflected in the Bank’s Stage 1 grouping. The Bank recognizes lifetime expected losses on credit assets that have experienced a significant increase in credit risk since its origination, which is reflected in the Bank’s Stage 2 grouping. Impaired credit assets require recognition of lifetime losses and are reflected in Stage 3 grouping.
Forward-looking Information
The Bank has sourced credit risk modeling systems and forecast macroeconomic scenario data from Moody’s Analytics, a third-party service provider for the purpose of computing forward-looking credit risk parameters under multiple macroeconomic scenarios that consider both market-wide and idiosyncratic factors and influences. The macroeconomic indicator data utilized by the Bank for the purpose of sensitizing probability of default and loss given default term structure data to forward economic conditions include, but are not limited to: real GDP, the national unemployment rate, long term interest rates, the consumer price index, the S&P/TSX Index and the price of oil. These specific macroeconomic indicators were selected in an attempt to ensure that the spectrum of fundamental macroeconomic influences on the key drivers of the credit risk profile of the bank’s assets, including: corporate, consumer and real estate market dynamics; corporate, consumer and SME borrower performance; geography; as well as collateral value volatility, are appropriately captured and incorporated into the Bank’s forward macroeconomic sensitivity analysis.
The key assumptions driving the quarterly outlook for 2026 include global tariff policies, which carry uncertainty regarding their size, scope, and timing. While policy volatility has eased, tariffs remain a key constraint, raising cross-border costs and weighing on supply chains, exports, and business investment in both Canada and the United States. As a result, economic growth is expected to remain modest through 2026, with no recession anticipated but limited upside amid ongoing geopolitical and trade-related risks. The Bank of Canada and the U.S. Federal Reserve are expected to maintain a cautious easing bias as growth slows, with some rate reductions likely in 2026, though the extent of easing may be constrained by residual inflation pressures. Labour market conditions are expected to soften modestly, with slower hiring reflecting weaker demand; in Canada, reduced immigration flows are expected to temper labour force growth. Inflation is expected to continue moderating gradually, supported by easing commodity prices and softer demand, though tariff-related cost pressures may slow the pace of disinflation.
Management developed ECL estimates using credit risk parameter term structure forecasts sensitized to individual baseline, upside and downside forecast macroeconomic scenarios, each weighted at 100%, and subsequently computed the variance of each to the Bank’s reported ECL as at January 31, 2026 in order to assess the alignment of the Bank’s reported ECL with the Bank’s credit risk profile, and further, to assess the scope, depth and ultimate effectiveness of the credit risk mitigation strategies that the Bank has applied to its lending portfolios (see Expected Credit Loss Sensitivity below).
Expected credit loss sensitivity:
The following table presents the sensitivity of the Bank’s estimated ECL to a range of individual macroeconomic scenarios, that in isolation may not reflect the Bank’s actual expected ECL exposure, as well as the variance of each to the Bank’s reported ECL as at January 31, 2026:
| (thousands of Canadian dollars) | ||||||||||||||||
| Reported | 100% | 100% | 100% | |||||||||||||
| ECL | Upside | Baseline | Downside | |||||||||||||
| Allowance for expected credit losses | $ | $ | $ | $ | ||||||||||||
| Provision (recovery) from reported ECL | ( | ) | ( | ) | ||||||||||||
| Variance from reported ECL (%) | ( | %) | ( | %) | % | |||||||||||
The following table provides a reconciliation of the Bank’s ECL allowance by lending asset category for the three months ended January 31, 2026:
| (thousands of Canadian dollars) | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||
| Structured receivable purchase program | ||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
| Transfer in (out) to Stage 1 | ||||||||||||||||
| Transfer in (out) to Stage 2 | ||||||||||||||||
| Transfer in (out) to Stage 3 | ||||||||||||||||
| Net remeasurement of loss allowance | ||||||||||||||||
| Credit asset originations | ||||||||||||||||
| Derecognitions and maturities | ||||||||||||||||
| Provision for (recovery of) credit losses | ||||||||||||||||
| Write-offs | ||||||||||||||||
| Recoveries | ||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | ||||||||||||
| Multi-family residential loans and other | ||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
| Transfer in (out) to Stage 1 | ( | ) | ||||||||||||||
| Transfer in (out) to Stage 2 | ( | ) | ||||||||||||||
| Transfer in (out) to Stage 3 | ( | ) | ||||||||||||||
| Net remeasurement of loss allowance | ( | ) | ( | ) | ||||||||||||
| Credit asset originations | ||||||||||||||||
| Derecognitions and maturities | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for (recovery of) credit losses | ( | ) | ( | ) | ( | ) | ||||||||||
| Write-offs | ( | ) | ( | ) | ||||||||||||
| Recoveries | ||||||||||||||||
| FX Impact | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance at end of period | $ | $ | $ | $ | ||||||||||||
| Total balance at end of period | $ | $ | $ | $ | ||||||||||||
The following table provides a reconciliation of the Bank’s ECL allowance by lending asset category for the three months ended January 31, 2025:
| (thousands of Canadian dollars) | Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||
| Structured receivable purchase program | ||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
| Transfer in (out) to Stage 1 | ||||||||||||||||
| Transfer in (out) to Stage 2 | ||||||||||||||||
| Transfer in (out) to Stage 3 | ||||||||||||||||
| Net remeasurement of loss allowance | ||||||||||||||||
| Credit asset originations | ||||||||||||||||
| Derecognitions and maturities | ||||||||||||||||
| Provision for (recovery of) credit losses | ||||||||||||||||
| Write-offs | ||||||||||||||||
| Recoveries | ||||||||||||||||
| Balance at end of period | $ | $ | $ | $ | ||||||||||||
| Multi-family residential loans and other | ||||||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
| Transfer in (out) to Stage 1 | ( | ) | ||||||||||||||
| Transfer in (out) to Stage 2 | ( | ) | ||||||||||||||
| Transfer in (out) to Stage 3 | ( | ) | ||||||||||||||
| Net remeasurement of loss allowance | ( | ) | ( | ) | ||||||||||||
| Credit asset originations | ( | ) | ||||||||||||||
| Derecognitions and maturities | ( | ) | ( | ) | ||||||||||||
| Provision for (recovery of) credit losses | ( | ) | ( | ) | ||||||||||||
| Write-offs | ( | ) | ( | ) | ||||||||||||
| Recoveries | ||||||||||||||||
| FX Impact | ( | ) | ||||||||||||||
| Balance at end of period | $ | $ | $ | $ | ||||||||||||
| Total balance at end of period | $ | $ | $ | $ | ||||||||||||
Credit quality:
The Bank assigns a risk rating to each credit asset comprising its credit asset portfolios. A risk rating is assigned or updated as a function of each new credit application, annual review or an amendment to a facility. The Bank updates borrower risk ratings to reflect any significant deterioration or improvement in credit quality. The risk rating considers the credit risk attributes of the credit asset, structure, individual borrower circumstances as well as local, regional and global macroeconomic and market conditions. The Bank aggregates its risk rating assignments into the following three broad categories:
i) Satisfactory – The borrower and credit asset valuation are of acceptable credit quality.
ii) Watchlist – The borrower or the credit asset valuation exhibits potential credit weakness or a downward trend which, if not mitigated, will potentially weaken the Bank’s position. The credit asset requires close supervision.
iii) Classified – The collection of the structural payment and/or the full repayment of the credit asset is uncertain.
As of January 31, 2026,
6. Other assets:
| (thousands of Canadian dollars) | ||||||||||||
| January 31 | October 31 | January 31 | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Accounts receivable | $ | $ | $ | |||||||||
| Prepaid expenses and other | ||||||||||||
| Right-of-use assets | ||||||||||||
| Deferred income tax asset | ||||||||||||
| Derivative instruments (note 12) | ||||||||||||
| Investment (note 6a) | ||||||||||||
| $ | $ | $ | ||||||||||
a) In February 2021, the Bank acquired an
7. Subordinated notes payable:
| (thousands of Canadian dollars) | ||||||||||||
| January 31 | October 31 | January 31 | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Issued April 2021, unsecured, non-viability contingent capital compliant, subordinated notes payable, principal amount of US $ million, fixed effective interest rate of %, maturing 2031. The fixed rate applies only until May 1, 2026, at which point the obligation switches to floating rate and the notes are redeemable by the Bank, subject to regulatory approval. | $ | $ | $ | |||||||||
| $ | $ | $ | ||||||||||
8. Other liabilities:
| (thousands of Canadian dollars) | ||||||||||||
| January 31 | October 31 | January 31 | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Accounts payable and other | $ | $ | $ | |||||||||
| Current income tax liability | ||||||||||||
| Deferred income tax liability | ||||||||||||
| Derivative instruments (note 12) | ||||||||||||
| Lease obligations | ||||||||||||
| Cash collateral and amounts held in escrow | ||||||||||||
| Cash reserves on structured receivable program | ||||||||||||
| $ | $ | $ | ||||||||||
9. Share capital:
a) Common shares:
At January 31, 2026, there were
On December 18, 2024, the Bank completed a treasury offering of
On April 28, 2025, the Bank received approval from the Toronto Stock Exchange ("TSX") to proceed with a Normal Course Issuer Bid ("NCIB") for its common shares. Pursuant to the NCIB, VersaBank may purchase for cancellation up to
The ability to make purchases commenced on April 30, 2025, and will terminate on April 29, 2026, or such an earlier date as VersaBank may complete its purchases pursuant to the NCIB. The purchases will be made by VersaBank through the facilities of the TSX and the Nasdaq and in accordance with the rules of the TSX or the Nasdaq, as applicable, and the prices that VersaBank will pay for any Common Shares will be the market price of such shares at the time of acquisition. VersaBank will make no purchases of Common Shares other than open market purchases. All shares purchased under the NCIB will be cancelled.
For the quarter ended January 31, 2026, the Bank did purchase or cancel any common shares under its normal course issuer bid. As
For the quarter ended January 31, 2026, the Bank issued
b) Stock options
Stock option transactions during the three month periods ended January 31, 2026, and 2025:
| for the three months ended | ||||||||||||||||
| January 31, 2026 | January 31, 2025 | |||||||||||||||
| Weighted | Weighted | |||||||||||||||
| Number of | average | Number of | average | |||||||||||||
| options | exercise price | options | exercise price | |||||||||||||
| Outstanding, beginning of period | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited/cancelled | ||||||||||||||||
| Expired | ||||||||||||||||
| Outstanding, end of period | $ | $ | ||||||||||||||
For the three month period ended January 31, 2026, the Bank recognized ( January 31, 2025 - $
10. Income tax provision:
Income tax provision for the three month period ended January 31, 2026 was $
11. Income per common share:
| (thousands of Canadian dollars, except shares outstanding and per share amounts) | ||||||||
| for the three months ended | ||||||||
| January 31 | January 31 | |||||||
| 2026 | 2025 | |||||||
| Net income | $ | $ | ||||||
| Weighted average number of common shares outstanding | ||||||||
| Income per common share: | $ | $ | ||||||
12. Derivative instruments:
Designated Hedges
At January 31, 2026, the Bank had an outstanding contract established for asset liability management purposes to swap between fixed and floating interest rates with an amortizing notional amount currently totaling $
As of October 31, 2025, the Bank utilized a foreign exchange forward contract to mitigate foreign exchange risk on its net investments in VersaBank USA. This hedging strategy is aimed at minimizing foreign exchange risk related to fluctuations between VersaBank’s functional currency, CAD, and the foreign currency of its net investment, USD. Changes in the fair value of these derivatives, attributable to the effective portion of the hedge, are recognized in other comprehensive income, while the ineffective portion, if any, is recorded in profit or loss. As of January 31, 2026, the outstanding foreign exchange forward contract had a notional value of USD $
As of January 31, 2026, an accounting hedge exists for the remaining USD $
Economic Hedges
As at January 31, 2026, the Bank entered into a foreign exchange forward contract to mitigate foreign exchange risk on its net investment in VersaFinance US Corp. This hedging arrangement was established during 2025. The hedge is intended to reduce exposure to fluctuations between VersaBank’s functional currency, CAD, and the currency of the net investment, USD. Changes in the fair value of the instrument attributable to the portion of the hedge are recognized in profit or loss. As at January 31, 2026, the outstanding foreign exchange forward contract had a notional value of USD $
As of January 31, 2026, the Bank utilized a foreign exchange forward contract to mitigate foreign exchange risk associated with the intercompany loan denominated in USD, resulting from intercompany transfer of assets, which aims to minimize foreign exchange risk related to fluctuations between the Bank’s functional currency, CAD, and the foreign currency denominated loan. As of January 31, 2026 the outstanding foreign exchange forward contract relating to this intercompany loan had a notional value of USD $
13. Commitments and contingencies:
The amount of credit-related commitments represents the maximum amount of additional credit that the Bank could be obligated to extend.
| (thousands of Canadian dollars) | ||||||||||||
| January 31 | October 31 | January 31 | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Credit asset commitments | $ | $ | $ | |||||||||
| Letters of credit | ||||||||||||
| $ | $ | $ | ||||||||||
14. Related party transactions:
The Bank’s related parties include members of the Board of Directors and Senior Executive Officers represented as key management personnel, and significant minority shareholders. At January 31, 2026, amounts due from these related parties totaled $
15. Capital management:
a) Overview:
The Bank’s policy is to maintain a strong capital base so as to retain investor, creditor, market and regulator confidence, as well as to support the future growth and development of the business. The impact of the level of capital held on shareholders’ return is an important consideration, and the Bank recognizes the need to maintain a balance between the higher returns that may be possible with greater leverage and the advantages and security that may be afforded by a more robust capital position.
Capital is managed in accordance with policies and plans that are regularly reviewed and approved by the Board of Directors and that take into account, amongst other items, forecasted capital requirements, current and anticipated financial market conditions and any capital ratio targets that are communicated to the Bank by Office of the Superintendent of Financial Institutions (“OSFI”).
The goal is to maintain adequate regulatory capital for the Bank to be considered well capitalized, protect deposits and provide capacity to support organic growth, as well as to capitalize on strategic opportunities that do not otherwise require access to the public capital markets, all the while providing a satisfactory return to shareholders. The Bank’s regulatory capital is comprised of share capital, retained earnings and unrealized gains and losses on fair value through other comprehensive income securities (Common Equity Tier 1 capital) and subordinated notes (Tier 2 capital).
The Bank monitors its capital adequacy and related capital ratios on a daily basis and has stipulated policies, which are approved by the Board of Directors, setting internal targets and thresholds for its capital ratios. These capital ratios consist of the leverage ratio and the risk-based capital ratios.
The Bank makes use of the Standardized Approach for credit risk as prescribed by OSFI and, therefore, may include eligible ECL allowance amounts in its Tier 2 capital, up to a maximum of
b) Risk-based capital ratios:
The Basel Committee on Banking Supervision has published the Basel III rules on capital adequacy and liquidity (“Basel III”). OSFI requires that all Canadian banks must comply with the Basel III standards on an “all-in” basis for the purpose of determining their risk-based capital ratios. Required minimum regulatory capital ratios are a
OSFI also requires banks to measure capital adequacy in accordance with guidelines for determining risk- adjusted capital and risk-weighted assets, including off-balance sheet credit instruments as specified in the Basel III regulations. Based on the deemed credit risk for each type of asset, both on and off-balance sheet assets of the Bank are assigned a weighting ranging from 0% to 400% to determine the Bank’s risk-weighted equivalent assets and its risk-based capital ratios.
The Bank’s risk-based capital ratios are calculated as follows:
| (thousands of Canadian dollars) | ||||||||
| January 31 | October 31 | |||||||
| 2026 | 2025 | |||||||
| Common Equity Tier 1 (CET1) capital | ||||||||
| Directly issued qualifying common share capital | $ | $ | ||||||
| Contributed surplus | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income (loss) | ( | ) | ||||||
| CET1 before regulatory adjustments | ||||||||
| Regulatory adjustments applied to CET1 | ( | ) | ( | ) | ||||
| Common Equity Tier 1 capital | $ | $ | ||||||
| Additional Tier 1 capital | ||||||||
| Directly issued qualifying Additional Tier 1 instruments | $ | $ | ||||||
| Total Tier 1 capital | $ | $ | ||||||
| Tier 2 capital | ||||||||
| Directly issued Tier 2 capital instruments | $ | $ | ||||||
| Tier 2 capital before regulatory adjustments | ||||||||
| Eligible stage 1 and stage 2 allowance | ||||||||
| Total Tier 2 capital | $ | $ | ||||||
| Total regulatory capital | $ | $ | ||||||
| Total risk-weighted assets | $ | $ | ||||||
| Capital ratios | ||||||||
| CET1 capital ratio | % | % | ||||||
| Tier 1 capital ratio | % | % | ||||||
| Total capital ratio | % | % | ||||||
As of January 31, 2026, and October 31, 2025, the Bank maintained capital levels above all of the minimum Basel III regulatory capital requirements prescribed by OSFI.
c) Leverage ratio:
The leverage ratio, which is prescribed under the Basel III Accord, is a supplementary measure to the risk-based capital requirements and is defined as the ratio of Tier 1 capital to the Bank’s total exposures. The Basel III minimum leverage ratio is
| (thousands of Canadian dollars) | ||||||||
| January 31 | October 31 | |||||||
| 2026 | 2025 | |||||||
| On-balance sheet assets | $ | $ | ||||||
| Assets amounts adjusted in determining the Basel III | ||||||||
| Tier 1 capital | ( | ) | ( | ) | ||||
| Total on-balance sheet exposures | ||||||||
| Replacement cost associated with all derivative transactions | $ | $ | ||||||
| Add-on amounts for PFE associated with all derivative transactions | ||||||||
| Total derivative exposures | ||||||||
| Total off-balance sheet exposure at gross notional amount | $ | $ | ||||||
| Adjustments for conversion to credit equivalent amount | ( | ) | ( | ) | ||||
| Total off-balance sheet exposures | ||||||||
| Tier 1 capital | ||||||||
| Total exposures | ||||||||
| Leverage ratio | % | % | ||||||
As at January 31, 2026, and October 31, 2025, the Bank was in compliance with the leverage ratio prescribed by OSFI.
16. Interest rate risk position:
The Bank is subject to interest rate risk, which is the risk that a movement in interest rates could negatively impact net interest margin, net interest income and the economic value of assets, liabilities and shareholders’ equity. The following table provides the duration difference between the Bank’s assets and liabilities and the potential after-tax impact of a 100 basis point shift in interest rates on the Bank’s earnings during a 12 month period.
| (thousands of Canadian dollars) | ||||||||||||||||
| January 31, 2026 | October 31, 2025 | |||||||||||||||
| Increase 100 bps | Decrease 100 bps | Increase 100 bps | Decrease 100 bps | |||||||||||||
| Increase (decrease): | ||||||||||||||||
| Impact on projected net interest income during a 12 month period | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Duration difference between assets and liabilities (months) | ) | ( | ) | |||||||||||||
17. Fair value of financial instruments:
Fair values are based on management’s best estimates of market conditions and valuation policies at a certain point in time. The estimates are subjective and involve particular assumptions and judgement and, as such, may not be reflective of future fair values. The Bank’s credit assets and deposits lack an available market as they are not typically exchanged and, therefore, the book value of these instruments is not necessarily representative of amounts realizable upon immediate settlement. See note 21 of October 31, 2025, audited Consolidated Financial Statements for more information on fair values.
| (thousands of Canadian dollars) | ||||||||||||||||||||||||||||||||||||||||
| January 31, 2026 | October 31, 2025 | |||||||||||||||||||||||||||||||||||||||
| Carrying Value | Fair value Level 1 | Fair Value Level 2 | Fair Value Level 3 | Total Fair Value | Carrying Value | Fair value Level 1 | Fair Value Level 2 | Fair Value Level 3 | Total Fair Value | |||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||
| Cash | ||||||||||||||||||||||||||||||||||||||||
| Amortized cost | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
| Securities | ||||||||||||||||||||||||||||||||||||||||
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| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
| Derivative instruments | ||||||||||||||||||||||||||||||||||||||||
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| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
| Other financial assets | ||||||||||||||||||||||||||||||||||||||||
| Amortized cost | ||||||||||||||||||||||||||||||||||||||||
| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||||||||||||
| Amortized cost | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
| Subordinated notes payable | ||||||||||||||||||||||||||||||||||||||||
| Amortized cost | ||||||||||||||||||||||||||||||||||||||||
| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
| Derivative instruments | ||||||||||||||||||||||||||||||||||||||||
| Amortized cost | ||||||||||||||||||||||||||||||||||||||||
| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
| Other financial liabilities | ||||||||||||||||||||||||||||||||||||||||
| Amortized cost | ||||||||||||||||||||||||||||||||||||||||
| FVOCI | ||||||||||||||||||||||||||||||||||||||||
| FVTPL | ||||||||||||||||||||||||||||||||||||||||
18. Operating segmentation:
The Bank has established reportable operating segments: Digital Banking Canada, Digital Banking USA, DRTC, and Digital Meteor. These operating segments represent strategic business operations that provide distinct products and services to different markets. They are separately managed due to the differences in the nature of each business. The following summarizes the operations of each of the reportable segments:
Digital Banking Canada - The Bank employs a business-to-business model using its proprietary financial technology to address underserved segments in the Canadian banking market. VersaBank obtains its deposits and provides the majority of its credit assets electronically via innovative deposit and lending solutions for financial intermediaries.
Digital Banking USA - The Bank has adopted a business-to-business model, leveraging its proprietary financial technology to address underserved segments of the US banking market. VersaBank USA obtains its deposits and delivers the majority of its credit assets electronically through innovative deposit and lending solutions tailored for financial intermediaries.
DRTC (cybersecurity services and banking and financial technology development) - Leveraging its internally developed IT security software and capabilities, VersaBank established a wholly owned subsidiary, DRTC, to pursue significant large-market opportunities in cybersecurity and to develop innovative solutions to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities.
Digital Meteor - Through its wholly owned subsidiary, DRTC, VersaBank owns proprietary intellectual property and technology to enable the next generation of digital assets by the banking and financial community, including the Bank’s revolutionary Real Bank Tokenized Deposits™ (“RBTD”s™) (formerly known as Real Bank Deposit Tokens (“RBDT”) and Digital Deposit Receipts (“DDR”)). Digital Meteor operates as a business segment within DRTC.
The basis for the determination of the reportable segments is a function primarily of the systematic, consistent process employed by the Bank’s chief operating decision maker, the President, and the Chief Financial Officer, in reviewing and interpreting the operations and performance of each segment. The accounting policies applied to these segments are consistent with those employed in the preparation of the Bank’s Consolidated Financial Statements, as disclosed in note 3 of the Bank’s 2025 audited Consolidated Financial Statements.
Performance is measured based on segment net income, as included in the Bank’s internal management reporting. Management has determined that this measure is the most relevant in evaluating segment results and in the allocation of resources.
The following table sets out the results of each reportable operating segment as at and for the three months ended January 31, 2026, and 2025:
| (thousands of Canadian dollars) | ||||||||||||||||||||||||
| for the three months ended | January 31, 2026 | |||||||||||||||||||||||
| Digital Banking | Digital Banking | Digital Meteor | DRTC | Eliminations/ | Consolidated | |||||||||||||||||||
| Canada | USA | Adjustments | ||||||||||||||||||||||
| Net interest income | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Non-interest income | ( | ) | ||||||||||||||||||||||
| Total revenue | ( | ) | ||||||||||||||||||||||
| Provision for (recovery of) credit losses | ||||||||||||||||||||||||
| ( | ) | |||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||
| Salaries and benefits | ||||||||||||||||||||||||
| General and administrative | ( | ) | ||||||||||||||||||||||
| Premises and equipment | ||||||||||||||||||||||||
| ( | ) | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||||||||||||||
| Income tax provision | ( | ) | ||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
| for the three months ended | January 31, 2025 | |||||||||||||||||||||||
| Digital Banking | Digital Banking | Digital Meteor | DRTC | Eliminations/ | Consolidated | |||||||||||||||||||
| Canada | USA | Adjustments | ||||||||||||||||||||||
| Net interest income | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Non-interest income | ( | ) | ||||||||||||||||||||||
| Total revenue | ( | ) | ||||||||||||||||||||||
| Provision for (recovery of) credit losses | ( | ) | ||||||||||||||||||||||
| ( | ) | |||||||||||||||||||||||
| Non-interest expenses: | ||||||||||||||||||||||||
| Salaries and benefits | ||||||||||||||||||||||||
| General and administrative | ( | ) | ||||||||||||||||||||||
| Premises and equipment | ||||||||||||||||||||||||
| ( | ) | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||||||||||||||
| Income tax provision | ( | ) | ||||||||||||||||||||||
| Net income (loss) | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
| Total assets | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Prior to the year ended October 31, 2025, substantially all Digital Banking’s operations were based in Canada.
19. Strategic Divestiture of DRTC:
In furtherance of the Bank’s strategic initiatives and in consideration of current U.S. regulatory requirements, management has expressed its intention to cease and/or divest of certain non-bank activities housed within DRTC, a subsidiary operating within the cybersecurity and financial technology industry, and Digital Boundary Group, Inc. and Digital Boundary Group Canada Inc. (collectively, the “Digital Boundary Group Entities”), subsidiaries of DRTC operating within the penetration testing industry. The Bank has initiated an active program to locate a buyer and complete the divestiture plan.
As of January 31, 2026, DRTC and the Digital Boundary Group Entities have not been classified as “held for sale” under IFRS 5 –Non‑current Assets Held for Sale and Discontinued Operations, as certain required criteria have not yet been fully satisfied. While management has not begun actively marketing DRTC and the Digital Boundary Group Entities for sale, these subsidiaries are also not yet available for immediate sale in their present condition, and continue to be integral to the Bank’s ongoing operations. Management will continue to monitor and evaluate the status of the planned divestiture, including the progress of the active sales program. The subsidiaries will be reclassified as “held for sale” and presented in accordance with IFRS 5 once all conditions for such classification are met.
Certain members of management hold convertible preferred shares in DRTC. In accordance with DRTC’s by‑laws, these shares will automatically convert into an aggregate
20. Subsequent events:
On January 7, 2026, the Bank entered into a Purchase and Assumption Agreement with Stearns Bank National Association. Under the Agreement, the Bank agreed to sell certain assets associated with VersaBank USA’s branch located at 580 Main Street, Holdingford, Minnesota, to Stearns Bank National Association, which also agreed to assume certain deposit liabilities related to that location. The timing and financial impact to the Bank relating to this deal are still to be determined due to uncertainty relating to regulatory approvals.
21. Comparative balances:
The financial statements have been reclassified, where applicable, to conform to the presentation used in the current year. The changes do not affect prior year earnings.
Exhibit 99.2
Management’s Discussion and Analysis
This management’s discussion and analysis (“MD&A”) of operations and financial condition for the first quarter of fiscal 2026, dated March 2, 2026, should be read in conjunction with the unaudited interim consolidated financial statements for the period ended January 31, 2026, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). This MD&A should also be read in conjunction with VersaBank’s MD&A and Audited Consolidated Financial Statements for the year ended October 31, 2025, which are available on VersaBank’s website at www.versabank.com, SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar. Except as discussed below, all other factors discussed and referred to in the MD&A for the year ended October 31, 2025, remain substantially unchanged. All currency amounts in this document are in Canadian dollars unless otherwise indicated.
|
Cautionary Note Regarding Forward-Looking Statements |
2 |
|
About VersaBank |
3 |
|
Strategy |
4 |
|
Overview of Performance |
8 |
|
Selected Financial Highlights |
13 |
|
Financial Review – Earnings |
14 |
|
Financial Review – Balance Sheet |
19 |
|
Off-Balance Sheet Arrangements |
28 |
|
Related Party Transactions |
28 |
|
Capital Management and Capital Resources |
29 |
|
Results of Operating Segments |
31 |
|
Summary of Quarterly Results |
34 |
|
Non-GAAP and Other Financial Measures |
35 |
|
Material Accounting Policies and Use of Estimates and Judgements |
38 |
|
Controls and Procedures |
38 |
|
Additional Information |
38 |
Cautionary Note Regarding Forward-Looking Statements
VersaBank’s public communications often include written or oral forward-looking statements. Statements of this type are included in this document and may also be included in other filings with Canadian securities regulators or the US Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the “safe harbor” provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. The statements in this management’s discussion and analysis that relate to future events or future performance including, without limitation, statements regarding the proposed Reorganization (defined below) are forward-looking statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, many of which are beyond VersaBank’s control. There is a risk that predictions, forecasts, projections and other forward-looking statements will not be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements, as a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such statements. These factors include, but are not limited to: the strength of the Canadian and US economies in general and the local economies within in which VersaBank operates; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Bank of Canada and the US Federal Reserve; global commodity prices; the effects of competition in the markets in which VersaBank operates; inflation; capital market fluctuations; the timely development and introduction of new products in receptive markets; the impact of changes in laws, including trade laws and tariffs, and regulations applicable to financial services; changes in tax laws; technological changes; unexpected judicial or regulatory proceedings; unexpected changes in consumer spending and savings habits; the impact of wars or conflicts and related effects on global supply chains and markets; the impact of outbreaks of disease or illness affecting local, national or international economies; the possible effects of terrorist activities; natural disasters and disruptions to public infrastructure (including transportation, communications, power or water supply); and VersaBank’s ability to anticipate and manage the risks associated with these factors.
Completion of the Reorganization is subject to numerous risks and uncertainties, many of which are beyond the Bank’s control, including but not limited to, the failure to obtain required shareholder, regulatory and other approvals, as well as the other important factors disclosed previously and from time to time in the Bank’s filings with the SEC and with the securities commissions or similar regulatory authorities in each of the provinces or territories of Canada.
The foregoing list of important factors is not exhaustive. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors as well as other uncertainties and potential events. The forward-looking information contained in this management’s discussion and analysis is presented to assist VersaBank shareholders and others in understanding VersaBank’s financial position and may not be appropriate for any other purposes. Except as required by applicable securities laws, VersaBank does not undertake to update any forward-looking statement contained in this management’s discussion and analysis or made from time to time by VersaBank or on its behalf.
About VersaBank
Digital Banking Products and Services
VersaBank (“VersaBank” or the “Bank”) is a North American bank (federally chartered in Canada and the United States) with a difference. VersaBank was one of the world's first fully digital financial institutions and today employs a cloud-based, branchless, business-to-business model based on its proprietary state-of-the-art technology that enables it to profitably address underserved segments of the banking industry. The Bank’s model is based on obtaining its deposits and providing financing digitally through other third-party financial intermediaries (referred to as “partners”) who themselves engage with the actual depositors and borrowers. This provides VersaBank with significant operating leverage, which drives efficiency and return on common equity, and significantly reduces the Bank’s risk.
VersaBank’s recent and expected continued growth is primarily the result of its unique Structured Receivable Program (“SRP”) (formerly referred to as the Receivable Purchase Program, or “RPP”), which invests in cash flow streams generated by credit assets originated and owned by companies that provide financing at the point of sale to consumers and small businesses for “big ticket” purchases. In September 2024, following its acquisition of a US bank, VersaBank broadly launched its SRP, which has been highly successful in Canada for over 15 years, to the underserved multi-trillion-dollar US market.
Tokenized Deposit Services (Digital Meteor)
VersaBank has developed and owns proprietary intellectual property and technology to enable the next generation of digital assets for the banking and financial community, including the Bank’s revolutionary Real Bank Tokenized Deposits™ (“RBTD”s™) (formerly referred to as Digital Deposit Receipts, or DDRs). RBTDs™ were developed exclusively by VersaBank using the Bank’s own banking and cybersecurity technologies, including VersaVault®. We believe that DRTC’s VersaVault® is the world’s first digital vault for security conscious organizations looking to secure their highly sensitive and confidential documents, data, code, blockchain-based assets and more.
VersaBank’s RBTDs™ are proprietary bank-issued tokenized deposits that provide superior security, stability, and regulatory compliance compared to stablecoins as highly encrypted digital representations of actual fiat currency deposits with the Bank, combining the safety and soundness of traditional banking with the efficiency, cost savings, security, and programmability of blockchain technology. In addition, the Bank expects its RBTDs™ to be eligible for conventional federal deposit insurance (subject to confirmation by regulators) and have the legal ability to pay interest, which non-bank issued stablecoins are not allowed to provide.
VersaBank is also using its proprietary VersaVault® technology to address the need in both the United States and Canada to expand its regulated custody services to the digital asset market. The Bank has signed a definitive agreement with Stablecorp Digital Currencies Inc. ("Stablecorp") under which it will serve as the custodian for Stablecorp's QCAD stablecoin, which recently became Canada's first regulatory compliant Canadian-dollar stablecoin.
Cybersecurity Products and Services
VersaBank also owns Minnesota-based DRT Cyber Inc. (“DRTC”), a North America leader in the provision of cybersecurity services to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities. DRTC deploys technology solutions to support the functions of cybersecurity, privacy, and risk management, with experience across numerous sectors to enable it to develop and deploy flexible solutions to partners’ exact requirements. The majority of DRTC’s revenue is generated and the majority of DRTC’s costs are incurred by DRTC’s wholly owned subsidiaries, Digital Boundary Group, Inc. and Digital Boundary Group Canada Inc. (collectively “Digital Boundary Group”).
VersaBank’s common shares trade on the Toronto Stock Exchange and Nasdaq under the symbol VBNK. The underlying drivers of VersaBank’s performance changes for the current and comparative periods are set out in the following sections of this MD&A.
Strategy
VersaBank’s goal is to consistently and sustainably deliver outsized growth in earnings per share by utilizing its proprietary technology and established financial intermediary partner networks to deliver innovative digital banking, financial and related solutions to under-served markets, while maintaining its low-risk profile. The Bank’s use of proprietary technology in its cloud-based, branchless, business-to-business model enables significant operating leverage, enabling the Bank to grow its assets and resulting revenue at a significantly faster rate than its non-interest expenses. A significant portion of VersaBank’s workforce are software engineers and technology support staff who are continuously upgrading and enhancing VersaBank’s software, as well as developing new software to support new business initiatives.
Digital Banking Products and Services
VersaBank’s largest opportunity and primary focus is growth in revenue (driven primarily by growth in net interest income) from its Digital Banking Operations significantly in excess of growth in non-interest expense. VersaBank expects the majority of revenue growth to be driven by the ramp up of its unique Structured Receivable Program (“SRP”) (formerly referred to as the Receivable Purchase Program, or RPP) in the underserved multi-trillion dollar US point-of-sale market. The SRP has driven the majority of VersaBank’s growth in Canada over the past five years.
VersaBank's SRP is an innovative and highly attractive digital funding solution for finance companies that provide loans and leases to consumers and small businesses for "big ticket" purchases (e.g. consumer home improvement/HVAC projects and a wide variety of commercial and recreational equipment). It was specifically designed to address an unmet need by point-of-sale financing companies for consistently available, readily accessible, and economically attractive capital using VersaBank's proprietary, state-of-the-art banking technology. Consistent with its branchless, business-to-business, partner-based digital banking strategy, VersaBank's SRP enables it to access the massive and growing consumer and small business financing market in an indirect, efficient and highly risk-mitigated manner.
In the US, following its acquisition of a US bank (including its national US bank charter) in September 2024, VersaBank broadly launched its SRP to the underserved multi-trillion-dollar US point-of-sale financing market. The Bank has a strong and growing pipeline of prospective SRP partners that it is aggressively pursuing. The Bank surpassed its first-year target of US$290 million with total US SRP assets of US$310 million in fiscal 2025. The Bank expects to continue to expand its business with existing US partners while adding new US partners in fiscal 2026 as the program scales.
In Canada, VersaBank remains focused on expanding its well-established SRP portfolio by deepening relationships with existing partners, adding new participants, and capturing growth opportunities driven by broader economic recovery and continued demand for SRP financing. VersaBank has access to sufficient low-cost deposit sources to fund its expected strong growth in credit assets. The Bank’s low-cost deposit sources, combined with the efficiency of its technology-based, business-to-business model, supports its objectives of maintaining a stable net interest margin over the short term and expanding its net interest margin over time. Management believes that VersaBank has one of the strongest liquidity risk profiles among North American banks, attributable to the quality, stability and stickiness of its deposit base. The majority of VersaBank’s Canadian and US deposits are sourced through deposit brokers, specifically the investment dealers, wealth management firms and financial advisory firms that distribute the Bank’s term deposit products. VersaBank has high visibility into the fixed maturities of these deposits, further enhancing its liquidity risk profile. In Canada, the Bank also sources deposits through Licensed Insolvency Trustee firms, which value the ability to use proprietary technology developed by VersaBank to seamlessly and efficiently interface with their respective administrative software, which results in a lower cost of funds to the Bank compared to conventional deposits. The Bank expects its Insolvency Trustee deposits to increase in the short- to medium-term as the number of insolvency filings in Canada is expected to grow.
Cybersecurity Products and Services
VersaBank’s wholly owned, Minnesota-based subsidiary, DRT Cyber Inc. (“DRTC”), generates the vast majority of its revenue and incurs the vast majority of its costs through Digital Boundary Group, which addresses the high-growth market for cybersecurity and related IT privacy services arising from the growing volume of cyber threats and privacy issues challenging businesses of all sizes across all sectors (with a specialty in financial institutions) and government entities on a daily basis. DRTC has established itself as a North American leader in the markets it serves, with more than 400 clients, including large financial services companies, critical infrastructure companies and indispensable government organizations such as metropolitan police departments. DRTC is focused on growing revenue through offering new products and services to existing clients and adding new clients, capitalizing on the significant expected long-term growth in the cybersecurity and privacy market globally.
Under the US Federal Reserve’s approval of VersaBank’s 2024 acquisition of a US bank, the Bank is required to cease or divest of certain impermissible activities, including the cybersecurity services housed within DRTC and Digital Boundary Group before September 2026, or such later date as may be permitted. Such divestment could be accomplished through a number of corporate actions and the Bank has initiated a process to identify and evaluate strategic alternatives with the objective to maximize the value derived from the divestiture for shareholders.
Tokenized Deposit Services (Digital Meteor)
VersaBank also expects to capitalize on its leading-edge, proprietary technology enabling highly encrypted digital assets that combine the regulatory oversight and safety of traditional banking with the efficiency, cost savings, security, and flexibility of blockchain technology. VersaBank believes that its technology provides superior security, stability, and regulatory compliance compared to conventional alternatives. Held within its wholly owned subsidiary, DRTC, VersaBank’s RBTDs™ are tokenized deposits, which are digital representations of traditional bank deposits on a blockchain, offering enhanced efficiency, programmability, and security in financial transactions. RBTDs™ provide a trusted alternative for mainstream financial applications, including efficient payments, addressing the rapidly growing propensity of consumers and businesses to hold assets in e-wallets and engage in financial transactions digitally. VersaBank believes its RBTDs™ represent the next step in the evolution of such digital assets and a superior alternative to stablecoins. We expect our RBTDs to be eligible for conventional federal deposit insurance (subject to confirmation by regulators) and to have the legal ability to pay interest, while stablecoins issued in the United States under the U.S. GENIUS Act are not allowed to pay interest, and in Canada, where stablecoin legislation has been proposed but not yet adopted, it is possible that stablecoins may become subject to similar restrictions.
Management believes that licensed banks, as the trusted, regulated safekeepers of personal and business cash assets and other valuables, are naturally positioned to do the same for tokenized deposits. VersaBank has established itself as a leader in digital asset innovation. Management believes its trusted and secure solutions, along with the potential for RBTDs™ to be an ultra-low-cost source of deposit funding, will play a meaningful role in enabling banks and other entities to confidently engage in the rapidly developing field of digital commerce. Management is encouraged by the favorable stance of the current US administration with respect to digital assets and the role they can play in the future of banking and commerce in the United States, as well as around the world. To its knowledge, VersaBank is the first bank to have successfully completed a pilot program with a blockchain-based RBTDs™, in which VersaBank’s RBTDs™ provided a secure representation of federally regulated bank deposits on the Algorand, Ethereum and Stellar blockchains. As a digital asset with a continuously known value, VersaBank’s RBTDs™ provide a trusted alternative for mainstream financial applications and can be seamlessly converted to and from other digital currencies such as Bitcoin.
VersaBank is also using its proprietary VersaVault® technology to address the need in both the United States and Canada for regulated custody services for stablecoin issuers. The VersaVault system was audited and confirmed as compliant with System Organization Controls 2 Type 1 (“SOC2 Type 1”) in 2022. The Bank has signed a definitive agreement with Stablecorp Digital Currencies Inc. ("Stablecorp") under which it will serve as the custodian for Stablecorp's QCAD stablecoin, which recently became Canada's first regulatory compliant Canadian-dollar stablecoin.
The Bank expects both the issuance of its RBTDs™ and the provision of Stablecoin custody services to be an incremental source of low-cost deposits for its credit asset businesses, predominantly its SRP business.
Although the intellectual property, software and other assets related to VersaVault and the RBTD™ and Stablecoin Custody Services technology currently reside within DRTC, they are not expected to be part of any divestiture of the cybersecurity services business within DRTC.
In addition, VersaBank remains highly committed to, and focused on, further developing and enhancing its technology advantage, a key component of its value proposition that not only provides efficient access to VersaBank’s chosen underserved lending and deposit markets, but also delivers superior financial products and better customer service to its clients.
The underlying drivers of VersaBank’s performance for the current and comparative periods are set out in the following sections of this MD&A.
Overview of Performance
Note Regarding VersaBank’s First Quarter Fiscal 2026 Financial Results: VersaBank’s financial results for the first quarter of fiscal 2026 reflect non-interest expense in the amount of $1.5 million related to the project costs associated with the Reorganization (see comment below). The Reorganization is intended to enhance shareholder value, mitigate risk and reduce corporate costs over the long term. The Bank expects that the anticipated benefits of the Reorganization will exceed the associated investment however, these expected benefits are subject to various assumptions and uncertainties. The Bank incurred the majority of the costs associated with the Reorganization in fiscal 2025 and expects the Reorganization to be completed in fiscal 2026.
Note Regarding The Change In Name Of “Receivable Purchase Program” (“RPP”) To “Structured Receivable Program” (“SRP”): As part of its previously announced Reorganization (see note below), VersaBank has changed the name of its Receivable Purchase Program (“RPP”) to Structured Receivable Program (“SRP”). The underlying business model of the SRP has not changed in any way.
* See definition in the "Non-GAAP and Other Financial Measures" section below.
Reorganization
 |
In May 2025, the Bank announced its intention, subject to the approval of VersaBank’s shareholders, the US Federal Reserve, the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”), the Minister of Finance (Canada), the Toronto Stock Exchange (“TSX”), the Nasdaq Global Select Market (“Nasdaq”), and other applicable approvals, to implement a series of transactions that would result in, among other things, a newly incorporated Delaware corporation (the “Parent”), succeeding VersaBank as the publicly traded entity in which existing shareholders hold their equity interests, thereby domesticating that public company as a US reporting issuer incorporated in Delaware (the “Reorganization”). Under the proposed terms of the Reorganization, among other things, VersaBank will adopt an amendment to its by-laws and effect certain transactions to exchange all of its outstanding common shares for shares of the Parent (the “Share Exchange”). Following the Share Exchange, VersaBank will sell all of its shares of VersaHoldings US Corp. to the Parent in exchange for a promissory note equal to the aggregate fair market value of those shares (the “Parent Note”) , which will subsequently be distributed to the Parent as a return of capital. |
Items of note for Q1 2026
|
|
The Bank continued to realize rapid expansion of its credit asset portfolio in the US through the successful ramp up of its SRP. Following the achievement of its first-year target for SRP credit assets and the signing of an agreement with its largest US SRP partner to date at the end of the Q4 2025, the Bank grew its total SRP assets to US$472.0 million at the end of the first quarter of fiscal 2026 and is on pace to achieve its target for additional US SRP fundings in fiscal 2026 of US$1 billion. |
|
|
The Bank enhanced its Canadian Mortgage and Housing Corporation ("CMHC") insured lending program such that the Bank will begin utilizing its Canadian Mortgage Bond ("CMB") Program allocation capacity to invest in CMHC-insured multi-unit residential ("MUR") term mortgages originated by partners who are well-established leaders in the Canadian MUR mortgage industry (the "Mortgage Originator") (the "Enhanced CMHC Program"). |
|
Following the Canadian federal government’s announcement of planned regulation of stablecoins in the 2025 Federal Budget, the Bank initiated collaborations with third-party stablecoin issuers on national bank-based, SOC2 Type 1-certified custody solutions that are consistent with the government's planned regulation for stablecoins in Canada. Subsequent to the end of the first quarter, the Bank announced its first stablecoin custody customer, signing a definitive agreement with Stablecorp Digital Currencies Inc. ("Stablecorp"), a pioneering Canadian digital asset infrastructure company and servicer of the QCAD Digital Trust and whose investors include Coinbase, Circle, DeFi Technologies and FTP Ventures, under which the Bank will serve as the custodian for Stablecorp's QCAD stablecoin. QCAD recently became Canada's first regulatory compliant Canadian-dollar stablecoin. |
|
The Bank continued to steadily progress on its Reorganization and in support of that Reorganization appointed Nicolas Ospina to the newly created role of Global Chief Financial Officer with responsibility for oversight of the Bank's finance function at the corporate level and John Asma, previously Chief Financial Officer of the Bank, to Executive Vice President with responsibilities for operation and execution of strategy for Canadian Digital Banking operations. |
Q1 2026 vs Q1 2025
|
Credit assets increased 23% to a record $5.33 billion, driven primarily by strong growth in each of the US and Canadian SRP portfolios, which, combined, increased 29%. |
|
Total revenue increased 31% to a record $36.5 million, composed of a record net interest income of $33.9 million and non-interest income of $2.6 million; |
|
Net interest margin (“NIM”) on credit assets was 2.64%, an increase of 28 bps. NIM was 2.25%, an increase of 17 bps. The increase in NIM was primarily due to lower cost of funds resulting from lower interest rates on renewals of maturing deposits throughout fiscal 2025 and the diminished impact of the atypically inverted yield curve that existed in the early part of fiscal 2025. The Bank’s NIM remains amongst the highest of the publicly traded Canadian Schedule I banks; |
|
Provision for credit losses (“PCL”) was $700,000 compared with a provision for credit losses of $1.0 million, with the decrease being primarily due to changes in the forward-looking information used by VersaBank in its credit risk models; |
|
Provision for credit losses as a percentage of average credit assets was 0.05% compared with 0.09%, which remains among the lowest of the publicly traded Canadian Schedule I banks; |
|
Non-interest expense, excluding the $1.5 million in project costs associated with the Reorganization, was $19.0 million compared with $15.7 million, with the increase due primarily to higher general operating costs consistent with increased business activities, in particular to support the Bank’s ongoing growth of the VersaBank USA operation that began on August 30, 2024; |
|
Non-interest expenses, including the $1.5 million project costs noted above, were $20.5 million compared with $15.7 million; |
|
Adjusted net income (excluding the $1.5 million consisting of primarily project costs associated with the Reorganization) was $12.2 million compared with $8.1 million (see Non-GAAP and Other Financial Measures), with the increase primarily due to higher revenues driven by growth in the Bank’s SRP portfolio, offset partially by incremental operating costs associated with the VersaBank USA operation; |
|
Net income (including the $1.5 million project costs noted above) was $11.1 million compared with $8.1 million; |
|
Adjusted income or earnings per common share (“Adjusted EPS”) (excluding the $1.5 million cost noted above) increased to $0.38 from $0.28, with the increase primarily due to higher revenues driven by the growth in the Bank’s SRP portfolio, offset partially by the impact of the December 18, 2024, treasury common share offering (see Non-GAAP and Other Financial Measures); |
|
Income or earnings per common share (“EPS”) (including the $1.5 million project costs noted above) was $0.35 compared with $0.28; |
|
Adjusted return on average common equity (excluding the $1.5 million in project costs associated with the Reorganization) was 8.95% compared with 7.02% (see Non-GAAP and Other Financial Measures); |
|
Return on average common equity (including the $1.5 million in project costs noted above) was 8.16% compared with 7.02%; |
|
Adjusted efficiency ratio (excluding the $1.5 million project costs noted above) was 52% compared with 56% (see Non-GAAP and Other Financial Measures); and, |
|
Efficiency ratio (including the $1.5 million the project costs noted above) was unchanged at 56%. |
Q1 2026 vs Q4 2025
|
Credit assets increased 5% to a record $5.33 billion, driven primarily by strong growth in each of the US and Canadian SRP portfolios, which, combined, increased 9%; |
|
Total revenue increased 4% to a record $36.5 million, composed of a record net interest income of $33.9 million and non-interest income of $2.6 million; |
|
Net interest margin (“NIM”) on credit assets was 2.64%, a marginal decrease. NIM was 2.25%, a decrease of 4 bps. The decrease in NIM was primarily due to the planned transition of some higher yielding, higher risk-weighted Multi-Family Residential Loans (“MROL”) to lower yielding, lower risk-weighted MROL as part of the Bank’s strategy to capitalize on opportunities for lower-risk weighted credit assets with a higher return on capital and the continued growth in the SRP portfolio, which is also composed of lower risk-weighted, lower yielding assets, offset partially by lower cost of funds. The Bank’s NIM remains amongst the highest of the publicly traded Canadian Schedule I banks; |
|
Provision for credit losses (“PCL”) was $700,000 compared with a provision for credit losses of $1.3 million, with the decrease being primarily due to changes in the forward-looking information used by VersaBank in its credit risk models; |
|
Provision for credit losses as a percentage of average credit assets was 0.05% compared with 0.11%, which remains among the lowest of the publicly traded Canadian Schedule I banks; |
|
Non-interest expense, excluding the $1.5 million in project costs associated with the Reorganization, was $19.0 million compared with $18.2 million (which excludes Reorganization project costs of $5.7 million); |
|
Non-interest expenses, including the $1.5 million of project costs noted above, were $20.5 million compared with $23.9 million (which includes Reorganization costs of $5.7 million), reflecting a scale down of the Reorganization costs; |
|
Adjusted net income (excluding the $1.5 million project costs noted above) was $12.2 million compared with $10.5 million (see Non-GAAP and Other Financial Measures), with the increase primarily due to higher revenues driven by growth in the Bank’s SRP portfolio and lower non-interest expenses; |
|
Net income (including the $1.5 million project costs noted above) was $11.1 million compared with $5.2 million, with the increase primarily due to higher revenues driven by the Bank’s expanding SRP portfolio and lower non-interest expenses, including significantly lower Reorganization costs; |
|
Adjusted income or earnings per common share (“Adjusted EPS”) (excluding the $1.5 million project costs noted above) increased to $0.38 from $0.33, with the increase primarily due to higher revenues driven by the Bank’s expanding SRP portfolio with the growth of VersaBank USA operations (see Non-GAAP and Other Financial Measures); |
|
Income or earnings per common share (“EPS”) (including the $1.5 million project costs noted above) was $0.35 compared with $0.16; |
|
Adjusted return on average common equity (excluding the $1.5 million in project costs associated with the Reorganization) was 8.95% compared with 7.81% (see Non-GAAP and Other Financial Measures); |
|
Return on average common equity (including the $1.5 million in project costs noted above) was 8.16% compared with 3.89%; |
|
Adjusted efficiency ratio (excluding the $1.5 million project costs noted above) was unchanged at 52% (see Non-GAAP and Other Financial Measures); and, |
|
Efficiency ratio (including the $1.5 million project costs noted above) was 56% compared with 68%. |
Selected Financial Highlights
|
(unaudited) |
For the three months ended |
|||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars except per share amounts) |
2026 |
2025 |
2025 |
|||||||||
|
Results of operations |
||||||||||||
|
Interest income |
$ | 81,216 | $ | 77,471 | $ | 73,246 | ||||||
|
Net interest income |
33,881 | 32,633 | 25,724 | |||||||||
|
Non-interest income |
2,633 | 2,459 | 2,103 | |||||||||
|
Total revenue |
36,514 | 35,092 | 27,827 | |||||||||
|
Provision for (recovery of) credit losses |
700 | 1,319 | 1,024 | |||||||||
|
Non-interest expenses |
20,546 | 23,871 | 15,699 | |||||||||
|
Digital Banking |
17,773 | 21,776 | 12,788 | |||||||||
|
DRTC |
2,835 | 2,525 | 2,966 | |||||||||
|
Digital Meteor |
284 | (83 | ) | 309 | ||||||||
|
Net income |
11,069 | 5,204 | 8,143 | |||||||||
|
Adjusted net income* |
12,162 | 10,549 | 8,143 | |||||||||
|
Income per common share: |
||||||||||||
|
Basic |
$ | 0.35 | $ | 0.16 | $ | 0.28 | ||||||
|
Diluted |
$ | 0.35 | $ | 0.16 | $ | 0.28 | ||||||
|
Adjusted income per common share basic and diluted* |
$ | 0.38 | $ | 0.33 | $ | 0.28 | ||||||
|
Dividends paid on common shares |
$ | 799 | $ | 802 | $ | 813 | ||||||
|
Yield* |
5.39 | % | 5.45 | % | 5.92 | % | ||||||
|
Cost of funds* |
3.14 | % | 3.15 | % | 3.84 | % | ||||||
|
Net interest margin* |
2.25 | % | 2.29 | % | 2.08 | % | ||||||
|
Net interest margin on credit assets* |
2.64 | % | 2.65 | % | 2.36 | % | ||||||
|
Return on average common equity* |
8.16 | % | 3.89 | % | 7.02 | % | ||||||
|
Adjusted return on average common equity* |
8.95 | % | 7.81 | % | 7.02 | % | ||||||
|
Book value per common share* |
$ | 16.93 | $ | 16.67 | $ | 16.03 | ||||||
|
Efficiency ratio* |
56 | % | 68 | % | 56 | % | ||||||
|
Adjusted efficiency ratio* |
52 | % | 52 | % | 56 | % | ||||||
|
Return on average total assets* |
0.73 | % | 0.37 | % | 0.66 | % | ||||||
|
Provision for (recovery of) credit losses as a % of average credit assets* |
0.05 | % | 0.11 | % | 0.09 | % | ||||||
|
As at |
||||||||||||
|
Balance Sheet Summary |
||||||||||||
|
Cash |
$ | 628,002 | $ | 581,710 | $ | 386,693 | ||||||
|
Securities |
101,276 | 80,923 | 158,546 | |||||||||
|
Credit assets, net of allowance for credit losses |
5,333,279 | 5,066,378 | 4,346,748 | |||||||||
|
Average credit assets |
5,199,829 | 4,922,347 | 4,291,432 | |||||||||
|
Total assets |
6,146,010 | 5,808,475 | 4,971,732 | |||||||||
|
Deposits |
5,248,955 | 4,860,863 | 4,133,438 | |||||||||
|
Subordinated notes payable |
100,160 | 103,516 | 106,824 | |||||||||
|
Shareholders' equity |
543,076 | 532,673 | 521,295 | |||||||||
|
Capital ratios** |
||||||||||||
|
Risk-weighted assets |
$ | 4,031,913 | $ | 3,943,657 | $ | 3,422,768 | ||||||
|
Common Equity Tier 1 capital |
516,815 | 509,650 | 500,158 | |||||||||
|
Total regulatory capital |
623,825 | 619,890 | 613,021 | |||||||||
|
Common Equity Tier 1 (CET1) capital ratio |
12.82 | % | 12.92 | % | 14.61 | % | ||||||
|
Tier 1 capital ratio |
12.82 | % | 12.92 | % | 14.61 | % | ||||||
|
Total capital ratio |
15.47 | % | 15.72 | % | 17.91 | % | ||||||
|
Leverage ratio |
8.17 | % | 8.47 | % | 9.67 | % | ||||||
* See definition in "Non-GAAP and Other Financial Measures" section below.
** Capital management and leverage measures are in accordance with OSFI's Capital Adequacy Requirements and Basel III Accord.
Financial Review – Earnings
Total Revenue
Total revenue, which consists of net interest income and non-interest income, for the quarter ended January 31, 2026 increased 31% to a record $36.5 million compared with the same period a year ago and increased 4% compared with the fourth quarter of fiscal 2025.
Net Interest Income
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
For the three months ended: |
2026 |
2025 |
Change |
2025 |
Change |
|||||||||||||||
|
Interest income |
||||||||||||||||||||
|
Structured receivable program |
$ | 61,322 | $ | 55,030 | 11% | $ | 50,455 | 22% | ||||||||||||
|
Multi-family residential loans and other |
14,330 | 16,832 | (15%) | 16,504 | (13%) | |||||||||||||||
|
Other |
5,564 | 5,609 | (1%) | 6,287 | (11%) | |||||||||||||||
|
Interest income |
$ | 81,216 | $ | 77,471 | 5% | $ | 73,246 | 11% | ||||||||||||
|
Interest expense |
||||||||||||||||||||
|
Deposit and other |
$ | 45,970 | $ | 43,473 | 6% | $ | 46,130 | 0% | ||||||||||||
|
Subordinated notes |
1,365 | 1,365 | 0% | 1,392 | (2%) | |||||||||||||||
|
Interest expense |
$ | 47,335 | $ | 44,838 | 6% | $ | 47,522 | 0% | ||||||||||||
|
Net interest income |
$ | 33,881 | $ | 32,633 | 4% | $ | 25,724 | 32% | ||||||||||||
|
Non-interest income |
$ | 2,633 | $ | 2,459 | 7% | $ | 2,103 | 25% | ||||||||||||
|
Total revenue |
$ | 36,514 | $ | 35,092 | 4% | $ | 27,827 | 31% | ||||||||||||
Q1 2026 vs Q1 2025
Net interest income increased 32% to a record $33.9 million due primarily to:
|
Higher interest income attributable to continued SRP portfolio growth in Canada and in US; and, |
|
Lower interest expense attributable primarily to the renewal of maturing deposits at lower interest rates and the diminished impact of the atypically inverted yield curve that existed throughout the early part of fiscal 2025, and which is now normalized in fiscal 2026. |
Offset partially by:
|
The impact of the planned transition of some higher yielding, higher risk-weighted MROL to lower yielding, lower risk-weighted MROL as part of the Bank’s strategy to capitalize on opportunities for lower regulatory capital risk-weighted credit assets with a higher return on capital deployed. |
Q1 2026 vs Q4 2025
Net interest income increased 4% to $33.9 million due primarily to:
|
Higher interest income attributable to continued SRP portfolio growth in Canada and in US. |
Offset partially by:
|
Higher interest expense attributable primarily to support ongoing SRP portfolio growth, and; |
|
The impact of the planned transition of some higher yielding, higher risk-weighted MROL to lower yielding, lower risk-weighted MROL as part of the Bank’s strategy to capitalize on opportunities for lower regulatory capital risk-weighted credit assets with a higher return on capital deployed. |
Net Interest Margin
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
For the three months ended: |
2026 |
2025 |
Change |
2025 |
Change |
|||||||||||||||
|
Interest income |
$ | 81,216 | $ | 77,471 | 5% | $ | 73,246 | 11% | ||||||||||||
|
Interest expense |
47,335 | 44,838 | 6% | 47,522 | 0% | |||||||||||||||
|
Net interest income |
33,881 | 32,633 | 4% | 25,724 | 32% | |||||||||||||||
|
Average assets |
$ | 5,977,243 | $ | 5,642,982 | 6% | $ | 4,905,108 | 22% | ||||||||||||
|
Yield* |
5.39 | % | 5.45 | % | (1%) | 5.92 | % | (9%) | ||||||||||||
|
Cost of funds* |
3.14 | % | 3.15 | % | 0% | 3.84 | % | (18%) | ||||||||||||
|
Net interest margin* |
2.25 | % | 2.29 | % | (2%) | 2.08 | % | 8% | ||||||||||||
|
Average gross credit assets |
$ | 5,183,260 | $ | 4,633,941 | 12% | $ | 4,273,474 | 21% | ||||||||||||
|
Net interest margin on credit assets* |
2.64 | % | 2.65 | % | 0% | 2.36 | % | 12% | ||||||||||||
|
* See definition in "Non-GAAP and Other Financial Measures" section below. |
|||||
Q1 2026 vs Q1 2025
Net interest margin increased 17 bps due primarily to:
|
|
Reductions in the cost of funds due to lower rates on renewals of maturing deposits over the course of fiscal 2025, and; |
|
The diminished impact of the atypically inverted yield curve that existed in the early part of fiscal 2025. |
Offset partially by:
|
The continued growth in the SRP portfolio, which is composed of lower risk-weighted, lower yielding assets; and a reduction in cost of funds resulting from the renewal of maturing deposits at lower interest rates; and, |
|
The impact of the planned transition of some higher yielding, higher risk-weighted MROL to lower yielding, lower risk-weighted MROL as part of the Bank’s strategy to capitalize on opportunities for lower-risk weighted credit assets with a higher return on capital. |
Q1 2026 vs Q4 2025
Net interest margin decreased 4 bps due primarily to:
|
Continued growth in the SRP portfolio, which is composed of lower risk-weighted, lower yielding assets; and, |
|
The impact of the planned transition of some higher yielding, higher risk-weighted MROL to lower yielding, lower risk-weighted MROL as part of the Bank’s strategy to capitalize on opportunities for lower-risk weighted credit assets with a higher return on capital. |
Offset partially by:
|
Reduction in cost of funds resulting from the renewal of maturing deposits at lower interest rates; and, |
|
Lower interest expense attributable primarily due to the diminished impact of the atypically inverted yield curve that existed in the early part of fiscal 2025. |
The Bank’s NIM remains amongst the highest of the publicly traded Canadian Schedule I banks.
Non-Interest Income
Non-interest income is composed of revenue generated by DRTC, MUR securitization transactions and income derived from miscellaneous transaction fees not directly attributable to credit assets.
Non-interest income increased 25% to $2.6 million from $2.1 million last year and increased 7% from $2.5 million last quarter. The increase was a function primarily of a gain on sale of all of the Bank's legacy equity investment in Stablecorp and a MUR securitization, partially offset by lower client engagements quarter over quarter and higher engagements year over year.
Provision for Credit Losses
|
(thousands of Canadian dollars) |
||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||
|
For the three months ended: |
2026 |
2025 |
2025 |
|||||||||
|
Provision for (recovery of) credit losses by credit asset: |
||||||||||||
|
Structured receivable program |
$ | 796 | $ | 1,450 | $ | 1,188 | ||||||
|
Multi-family residential loans and other |
(96 | ) | (131 | ) | (164 | ) | ||||||
|
Total provision for (recovery of) credit losses |
$ | 700 | $ | 1,319 | $ | 1,024 | ||||||
Q1 2026 vs Q1 2025 vs Q4 2025
VersaBank recorded a provision for credit losses in the amount of $700,000 in the current quarter compared to $1.0 million last year and $1.3 million last quarter due primarily to changes in the forward-looking information used by the Bank in its credit risk models. Provision for credit losses as a percentage of average credit assets was 0.05% compared with 0.09% last year and 0.11% last quarter, which remains among the lowest of the publicly traded Canadian Schedule I banks.
Non-Interest Expenses
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
For the three months ended: |
2026 |
2025 |
Change |
2025 |
Change |
|||||||||||||||
|
Salaries and benefits |
$ | 10,383 | $ | 10,116 | 3% | $ | 8,614 | 21% | ||||||||||||
|
General and administrative |
8,367 | 11,801 | (29%) | 5,489 | 52% | |||||||||||||||
|
Premises and equipment |
1,796 | 1,954 | (8%) | 1,596 | 13% | |||||||||||||||
|
Total non-interest expenses |
$ | 20,546 | $ | 23,871 | (14%) | $ | 15,699 | 31% | ||||||||||||
|
Efficiency Ratio |
56 | % | 68 | % | (18%) | 56 | % | 0% | ||||||||||||
Q1 2026 vs Q1 2025
Non-interest expenses, including $1.5 million consisting primarily of project costs associated with the Reorganization, increased 31% to $20.5 million due primarily to:
|
Higher general operating costs consistent with increased business activities, including costs being incurred ahead of anticipated asset growth and revenue generated from the US SRP through VersaBank USA, and; |
|
Project costs associated with the Reorganization. |
Q1 2026 vs Q4 2025
Non-interest expenses decreased 14% due primarily to:
|
A scale down of project costs associated with the Reorganization, and; |
|
Lower general operating costs. |
Income Tax Provision
The Bank’s effective tax rate for the current year is estimated to be approximately 27% compared with approximately 27% a year ago. Shifts in the Bank’s effective tax rate from the statutory rates was a function primarily of adjustments to changes in assumptions on non-deductible expenses and other permanent tax differences, the foreign exchange impact on various assets, as well as changes in earnings allocation between different tax jurisdictions. Provision for income taxes for the current quarter was $4.2 million compared with $3.0 million last year and $4.7 million last quarter.
Financial Review – Balance Sheet
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
2026 |
2025 |
Change |
2025 |
Change |
||||||||||||||||
|
Total assets |
$ | 6,146,010 | $ | 5,808,475 | 6% | $ | 4,971,732 | 24% | ||||||||||||
|
Cash and securities |
729,278 | 662,633 | 10% | 545,239 | 34% | |||||||||||||||
|
Credit assets, net of allowance for credit losses |
5,333,279 | 5,066,378 | 5% | 4,346,748 | 23% | |||||||||||||||
|
Deposits |
5,248,955 | 4,860,863 | 8% | 4,133,438 | 27% | |||||||||||||||
Total Assets
Total assets as at January 31, 2026, were $6.15 billion compared with $4.97 billion a year ago and $5.81 billion last quarter. The year-over-year and sequential increases were due primarily to growth in VersaBank’s SRP portfolio.
Cash and securities
Cash and securities, which are held primarily for liquidity purposes, at January 31, 2026, were $729.3 million, or 12% of total assets, compared with $545.2 million, or 11% of total assets a year ago, and $662.6 million, or 11% of total assets last quarter. The increase in liquidity asset balances reflects the impact of the additional liquidity held at VersaBank USA in advance of projected growth.
As at January 31, 2026, the Bank held securities totaling $101.3 million (October 31, 2025 - $80.9 million), including accrued interest, comprised of US Treasury Bills with a carrying value of $91.7 million, Government of Canada Treasury Bills with a carrying value of $2.1 million and other securities with a carrying value of $7.5 million.
Credit assets
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
2026 |
2025 |
Change |
2025 |
Change |
||||||||||||||||
|
Structured receivable program |
$ | 4,393,457 | $ | 4,043,007 | 9% | $ | 3,401,328 | 29% | ||||||||||||
|
Multi-family residential loans and other |
922,823 | 1,007,232 | (8%) | 927,978 | (1%) | |||||||||||||||
| 5,316,280 | 5,050,239 | 5% | 4,329,306 | 23% | ||||||||||||||||
|
Allowance for credit losses |
(7,916 | ) | (7,279 | ) | (4,233 | ) | ||||||||||||||
|
Accrued interest |
24,915 | 23,418 | 21,675 | |||||||||||||||||
|
Total credit assets, net of allowance for credit losses |
$ | 5,333,279 | $ | 5,066,378 | 5% | $ | 4,346,748 | 23% | ||||||||||||
VersaBank organizes its Credit Asset portfolios into the following two broad asset categories: Structured Receivable Program (previously referred to as “Receivable Purchase Program”) and Multi-Family Residential Loans and Other . These categories have been established in VersaBank’s proprietary, internally developed asset management system and have been designed to catalogue individual lending assets as a function primarily of their key risk drivers, the nature of the underlying collateral, and the applicable market segment.
The Structured Receivable Program (“SRP”) category is composed of investments in the expected cash flow streams derived primarily from consumer and small business loans and leases that are originated and owned throughout their lifetime by VersaBank’s SRP partners, as well as asset-backed securities that have similar underlying assets noted in the SRP portfolio.
The Multi-Family Residential Loans and Other (“MROL”) category is composed of two major sub-segments: Multi-Family Residential Loans, which consists of CMHC-insured (zero-risk weighted for regulatory capital purposes) loans and uninsured loans to real estate developers to finance the construction phase of development of multi-family, student residence, condominium and retirement home properties, as well as term and bridge loans to real estate developers secured by completed aforementioned properties and units. It also includes the public sector and infrastructure loans and leases. The majority of these loans are business-to-business loans with the underlying credit risk exposure being primarily residential in nature, given that the vast majority of the loans are related to properties that are designated primarily for residential use. The portfolio benefits from diversity in its underlying security in the form of a broad range of such collateral properties.
Credit assets increased 23% year-over-year and 5% sequentially to $5.33 billion due primarily to:
|
|
Higher SRP portfolio balances, which increased 29% year-over-year and 9% sequentially, due primarily to consistent demand for home improvement/HVAC receivable financing in Canada and the US. |
Offset partially by:
|
|
Lower multi-family residential lending balances, primarily in the lower risk-weighted CMHC-insured portfolio. |
Residential Mortgage Exposures
In accordance with the OSFI Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures, additional information is provided regarding the Bank’s residential mortgage exposure. For the purposes of the Guideline, a residential mortgage is defined as a loan to an individual that is secured by residential property (one-to-four-unit dwellings) and includes home equity lines of credit (“HELOCs”). This differs from the classification of residential mortgages used by the Bank which also includes multi-family residential mortgages.
Under OSFI’s definition, the Bank’s exposure to residential mortgages at January 31, 2026 was $5.6 million compared with $4.1 million a year ago and $4.5 million last quarter. The Bank does not currently offer residential mortgages to the public. The Bank did not have any HELOCs outstanding at January 31, 2026, last quarter or a year ago.
Credit Quality and Allowance for Credit Losses
VersaBank closely monitors its credit asset portfolio, the portfolio’s underlying borrowers, as well as its origination partners to ensure that management maintains effective visibility on credit trends that could provide an early warning indication of the emergence of any elevated risk in VersaBank’s credit asset portfolios.
Allowance for Credit Losses
The Bank maintains an allowance for expected credit losses (or ECL allowance) that is adequate, in management’s opinion, to absorb all credit-related losses in the Bank’s credit assets and treasury portfolios. Under IFRS 9 the Bank’s allowance for expected credit losses is estimated using the expected credit loss methodology and is comprised of expected credit losses recognized on both performing credit assets, and non-performing, or impaired credit assets, even if no actual loss event has occurred.
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
2026 |
2025 |
Change |
2025 |
Change |
||||||||||||||||
|
ECL allowance by lending asset: |
||||||||||||||||||||
|
Structured receivable program |
$ | 6,227 | $ | 5,431 | 15% | $ | 1,971 | 216% | ||||||||||||
|
Multi-family residential loans and other |
1,689 | 1,848 | (9%) | 2,262 | (25%) | |||||||||||||||
|
Total ECL allowance |
$ | 7,916 | $ | 7,279 | 9% | $ | 4,233 | 87% | ||||||||||||
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
2026 |
2025 |
Change |
2025 |
Change |
||||||||||||||||
|
ECL allowance by stage: |
||||||||||||||||||||
|
ECL allowance stage 1 |
$ | 5,014 | $ | 4,679 | 7 | % | $ | 3,683 | 36 | % | ||||||||||
|
ECL allowance stage 2 |
280 | 426 | (34% | ) | 492 | (43% | ) | |||||||||||||
|
ECL allowance stage 3 |
2,622 | 2,174 | 21 | % | 58 | |||||||||||||||
|
Total ECL allowance |
$ | 7,916 | $ | 7,279 | 9 | % | $ | 4,233 | 87 | % | ||||||||||
VersaBank’s ECL allowance as at January 31, 2026, was $7.92 million compared with $4.23 million a year ago and $7.28 million last quarter due primarily to:
|
|
Changes in the forward-looking information used by the Bank in its credit risk models, and; |
|
|
Higher credit asset balances. |
Forward-looking information
The Bank incorporates the impact of future economic conditions, or more specifically forward-looking information, into the estimation of expected credit losses at the credit risk parameter level. This is accomplished via the credit risk parameter models and proxy datasets that the Bank utilizes to develop probability of default (“PD”) and loss-given default (“LGD”) term structure forecasts for its credit assets. The Bank has sourced credit risk modeling systems and forecast macroeconomic scenario data from Moody’s Analytics, a third-party service provider for the purpose of computing forward-looking credit risk parameters under multiple macroeconomic scenarios that consider both market-wide and idiosyncratic factors and influences. These systems are used in conjunction with the Bank’s internally developed ECL models. Given that the Bank has experienced very limited historical losses and, therefore, does not have available statistically significant loss data inventory for use in developing internal, forward-looking expected credit loss trends, the use of unbiased, third-party forward-looking credit risk parameter modeling systems is particularly important for the Bank in the context of the estimation of expected credit losses.
The Bank utilizes macroeconomic indicator data derived from multiple macroeconomic scenarios in order to mitigate volatility in the estimation of expected credit losses, as well as to satisfy the IFRS 9 requirement that future economic conditions are to be based on an unbiased, probability-weighted assessment of possible future outcomes. More specifically, the macroeconomic indicators set out in the macroeconomic scenarios are used as inputs for the credit risk parameter models utilized by the Bank to sensitize the individual PD and LGD term structure forecasts to the respective macroeconomic trajectory set out in each of the scenarios (see Expected Credit Loss Sensitivity below). Currently the Bank utilizes upside, downside and baseline forecast macroeconomic scenarios, and assigns discrete weights to each for use in the estimation of its reported ECL. The Bank has also applied expert credit judgement, where appropriate, to reflect, amongst other items, uncertainty in the Canadian and US macroeconomic environments.
The macroeconomic indicator data sourced from Moody’s Analytics and utilized by the Bank for the purpose of sensitizing probability of default and loss given default term structure data to forward economic conditions include, but are not limited to: real GDP, the national unemployment rate, long term interest rates, the consumer price index, the S&P/TSX Index and the price of oil. These specific macroeconomic indicators were selected in an attempt to ensure that the spectrum of fundamental macroeconomic influences on the key drivers of the credit risk profile of the bank’s assets, including: corporate, consumer and real estate market dynamics; corporate, consumer and SME borrower performance; geography; as well as collateral value volatility, are appropriately captured and incorporated into the Bank’s forward macroeconomic sensitivity analysis.
The key assumptions driving the quarterly outlook for 2026 include global tariff policies, which carry uncertainty regarding their size, scope, and timing. While policy volatility has eased, tariffs remain a key constraint, raising cross border costs and weighing on supply chains, exports, and business investment in both Canada and the United States. As a result, economic growth is expected to remain modest through 2026, with no recession anticipated but limited upside amid ongoing geopolitical and trade related risks. The Bank of Canada and the US Federal Reserve are expected to maintain a cautious easing bias as growth slows, with some rate reductions likely in 2026, though the extent of easing may be constrained by residual inflation pressures. Labour market conditions are expected to soften modestly, with slower hiring reflecting weaker demand; in Canada, reduced immigration flows are expected to temper labour force growth. Inflation is expected to continue moderating gradually, supported by easing commodity prices and softer demand, though tariff related cost pressures may slow the pace of disinflation.
Management developed ECL estimates using credit risk parameter term structure forecasts sensitized to individual baseline, upside and downside forecast macroeconomic scenarios, each weighted at 100%, and subsequently computed the variance of each to the Bank’s reported ECL as at January 31, 2026 in order to assess the alignment of the Bank’s reported ECL with the Bank’s credit risk profile, and further, to assess the scope, depth and ultimate effectiveness of the credit risk mitigation strategies that the Bank has applied to its lending portfolios.
A summary of the key forecast macroeconomic indicator data trends utilized by VersaBank for the purpose of sensitizing lending asset credit risk parameter term structure forecasts to forward looking information, which in turn are used in the estimation of VersaBank’s reported ECL, as well as in the assessment of same are presented in the charts below (see Expected Credit Loss Sensitivity below).
Expected Credit Loss Sensitivity:
The following table presents the sensitivity of the Bank’s estimated ECL to a range of individual forecast macroeconomic scenarios, that in isolation may not reflect the Bank’s actual expected ECL exposure, as well as the variance of each to the Bank’s reported ECL as at January 31, 2026:
|
(thousands of Canadian dollars) |
||||||||||||||||
|
Reported |
100% |
100% |
100% |
|||||||||||||
|
ECL |
Upside |
Baseline |
Downside |
|||||||||||||
|
Allowance for expected credit losses |
$ | 7,916 | $ | 7,384 | $ | 7,829 | $ | 8,582 | ||||||||
|
Provision (recovery) from reported ECL |
(533 | ) | (88 | ) | 666 | |||||||||||
|
Variance from reported ECL (%) |
(7% | ) | (1% | ) | 8 | % | ||||||||||
The uncertainty associated with interest rates, inflation and unemployment trends given the expectation of an economic slowdown in both Canada and the US, as well as elevated geo-political risk, may result in VersaBank’s estimated ECL amounts exhibiting some future volatility, which in turn may result in the Bank recognizing higher provisions for credit losses in the future.
Considering the analysis set out above and based on management’s review of the credit asset and credit data comprising VersaBank’s lending portfolio, combined with management’s interpretation of the available forecast macroeconomic and industry data, management is of the view that its reported ECL allowance represents a reasonable proxy for potential future credit losses.
Deposits
VersaBank has established three core low-cost deposit funding channels: Deposit brokers in Canada and the US, Licensed Insolvency Trustee firms in Canada, and cash reserves retained from VersaBank’s SRP partners, which are classified as other liabilities.
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
2026 |
2025 |
Change |
2025 |
Change |
||||||||||||||||
|
Licensed insolvency trustee firms |
$ | 880,034 | $ | 888,620 | (1%) | $ | 781,962 | 13% | ||||||||||||
|
Deposit brokers |
4,368,921 | 3,972,243 | 10% | 3,351,476 | 30% | |||||||||||||||
|
Total deposits |
$ | 5,248,955 | $ | 4,860,863 | 8% | $ | 4,133,438 | 27% | ||||||||||||
The majority of VersaBank’s Canadian and US deposits are sourced through deposit brokers, specifically investment dealers, wealth management firms and financial advisory firms that distribute the Bank’s term deposit products to their respective end clients.
In Canada, the Bank also sources deposits through Licensed Insolvency Trustee firms that value the ability to use VersaBank’s proprietary technology to seamlessly and efficiently interface with their administrative software, which results in a lower cost of funds to the Bank compared to conventional deposits.
Substantially all of the Bank's deposits are eligible for federal government -funded insurance, by CDIC in Canada and by FDIC in the US, up to their respective limits.
Q1 2026 vs Q1 2025
Deposits increased 27% to $5.2 billion due primarily to:
|
|
Higher deposits from brokers attributable to VersaBank increasing activity in its broker market network to fund balance sheet growth; and, |
|
|
Higher deposits from Licensed Insolvency Trustee firms attributable to an increase in the volume of Canadian consumer and commercial bankruptcy and proposal restructuring proceedings year-over-year. |
Q1 2026 vs Q4 2025
Deposits increased 8% due primarily to:
|
|
Higher deposits from brokers attributable to VersaBank increasing activity in its broker market network to fund balance sheet growth. |
Subordinated Notes Payable
|
(thousands of Canadian dollars) |
||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||
|
2026 |
2025 |
2025 |
||||||||||
|
Issued April 2021, unsecured, non-viability contingent capital compliant, subordinated notes payable, principal amount of US $75.0 million, fixed effective interest rate of 5.38%, maturing May 2031. The fixed rate applies only until May 1, 2026, at which point the obligation switches to floating rate and the notes are redeemable by the Bank, subject to regulatory approval. |
$ | 100,160 | $ | 103,516 | $ | 106,824 | ||||||
| $ | 100,160 | $ | 103,516 | $ | 106,824 | |||||||
Subordinated notes payable, net of issue costs, were $100.2 million as at January 31, 2026, compared with $106.8 million a year ago and $103.5 million last quarter. The year-over-year and quarter-over-quarter variances were a function primarily attributable to the change in the USD/CAD foreign exchange spot rate related to the US $75.0 million subordinated note.
Shareholders’ Equity
Shareholders’ equity was $543.1 million as at January 31, 2026, compared with $521.3 million a year ago and $532.7 million last quarter.
On December 18, 2024 the Bank completed a treasury offering of 5,660,378 common shares at a price of USD $13.25 per share, at the time the equivalent of CAD $18.95 per share, for gross proceeds of USD $75.0 million. On December 24, 2024, the underwriters of the aforementioned offering exercised their full over-allotment option to purchase an additional 849,056 common shares (15% of the 5,660,378 common shares issued via the base offering referenced above) at a price of USD $13.25 per share, or at the time the equivalent of CAD $19.07 per share, for gross proceeds of USD $11.2 million. Total net cash proceeds from the common share offering was CAD $116.0 million. However, the Bank’s share capital increased by CAD $116.3 million corresponding to the common share offering and tax effected issue costs in the amount of CAD $6.2 million.
At January 31, 2026, there were 32,069,447 common shares outstanding compared with 32,518,786 common shares outstanding a year ago and 31,945,535 common shares outstanding last quarter.
The Bank issued 123,912 Common Shares in connection with the exercise of stock options during the current quarter for proceeds of $2.0 million. In the same period year ago, the Bank issued 6,775 Common Shares in connection with the exercise of stock options for proceeds of $108,000. No common shares were issued in connection with the exercise of stock options in the sequential quarter.
On April 28, 2025, the Bank received approval from the TSX to proceed with a Normal Course Issuer Bid ("NCIB") for its common shares. Pursuant to the NCIB, VersaBank may purchase for cancellation up to 2,000,000 of its common shares, representing approximately 8.99% of its public float. As of April 21, 2025, the public float comprised 22,237,283 common shares and there were 32,518,786 issued and outstanding common shares in total. The average daily trading volume ("ADTV") of VersaBank's common shares on the TSX for the six months of October 1, 2024 – March 31, 2025 (the "Preceding Six Month Period") was 37,761 common shares. Daily purchases under the NCIB will be limited to 25% of the ADTV, which is 9,440 common shares, other than block purchase exceptions. During the Preceding Six-Month Period, 20,321,293 VersaBank common shares were traded on all exchanges. Of that total, 4,720,219 common shares were traded on the TSX and the remaining 15,601,074 common shares were traded on other exchanges including the Nasdaq.
The ability to make purchases commenced on April 30, 2025 and will terminate on April 29, 2026, or such earlier date as VersaBank may complete its purchases pursuant to the NCIB. The purchases will be made by VersaBank through the facilities of the TSX and the Nasdaq and in accordance with the rules of the TSX or the Nasdaq, as applicable, and the prices that VersaBank will pay for any common shares will be the market price of such shares at the time of acquisition. VersaBank will make no purchases of common shares other than open market purchases. All common shares purchased under the NCIB will be cancelled.
For the quarter ended January 31, 2026, no shares were purchased and cancelled by the Bank. In the same period year ago, no shares were purchased and cancelled. In the sequential quarter, the Bank purchased and cancelled 222,109 common shares for $3.5 million, reducing the Bank’s common share capital value by $2.4 million and retained earnings by $1.1 million.
Q1 2026 vs Q1 2025 vs Q4 2025
Shareholders’ equity increased 4% compared with a year ago and 2% compared with last quarter. The year-over-year and sequential increases were due primarily to higher retained earnings attributable to net income earned over the current quarter and common shares issued on stock options exercised, offset partially by payment of common share dividends in the current quarter.
VersaBank’s book value per common share as at January 31, 2026, was $16.93 compared with $16.03 a year ago and $16.67 last quarter. The year-over-year and sequential increases were due primarily to higher retained earnings attributable to net income earned in the current quarter, offset partially by common shares issued on stock options exercised and the payment of dividends over the same period.
See note 9 to the unaudited interim consolidated financial statements for additional information relating to share capital.
Stock-Based Compensation
Stock options are accounted for using the fair value method which recognizes the fair value of the stock option over the applicable vesting period as an increase in salaries and benefits expense with the same amount being recorded in contributed surplus. VersaBank recognized compensation expense for the current quarter totaling $nil compared with $75,000 for the same period a year ago and $6,000 last quarter, relating to the estimated fair value of stock options granted. See note 9 to the unaudited interim consolidated financial statements for additional information relating to stock options.
Updated Share Information
As at March 2, 2026, there were no changes since January 31, 2026 in the number of common shares and common share options outstanding.
Off-Balance Sheet Arrangements
As at January 31, 2026, VersaBank did not have any significant off-balance sheet arrangements other than an interest rate swap contract, a foreign exchange forward contract, loan commitments and letters of credit attributable to normal course business activities. See notes 12 and 13 to the unaudited interim consolidated financial statements for more information.
Related Party Transactions
VersaBank’s related parties include members of the Board of Directors and Senior Executive Officers represented as key management personnel and significant minority shareholders. See note 14 to the unaudited interim consolidated financial statements for additional information on related party transactions and balances.
Capital Management and Capital Resources
The table below presents VersaBank’s regulatory capital position, risk-weighted assets and regulatory capital and leverage ratios for the current and comparative periods.
|
(thousands of Canadian dollars) |
||||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
2026 |
2025 |
Change |
2025 |
Change |
||||||||||||||||
|
Common Equity Tier 1 capital |
$ | 516,815 | $ | 509,650 | 1% | $ | 500,158 | 3% | ||||||||||||
|
Total Tier 1 capital |
$ | 516,815 | $ | 509,650 | 1% | $ | 500,158 | 3% | ||||||||||||
|
Total Tier 2 capital |
$ | 107,010 | $ | 110,240 | (3%) | $ | 112,863 | (5%) | ||||||||||||
|
Total regulatory capital |
$ | 623,825 | $ | 619,890 | 1% | $ | 613,021 | 2% | ||||||||||||
|
Total risk-weighted assets |
$ | 4,031,913 | $ | 3,943,657 | 2% | $ | 3,422,768 | 18% | ||||||||||||
|
Capital ratios |
||||||||||||||||||||
|
CET1 capital ratio |
12.82 | % | 12.92 | % | (1%) | 14.61 | % | (12%) | ||||||||||||
|
Tier 1 capital ratio |
12.82 | % | 12.92 | % | (1%) | 14.61 | % | (12%) | ||||||||||||
|
Total capital ratio |
15.47 | % | 15.72 | % | (2%) | 17.91 | % | (14%) | ||||||||||||
|
Leverage ratio |
8.17 | % | 8.47 | % | (4%) | 9.67 | % | (16%) | ||||||||||||
VersaBank reports its regulatory capital ratios using the Standardized approach for calculating risk-weighted assets, as defined under Basel III, which may require VersaBank to carry more capital for certain credit exposures compared with requirements under the Advanced Internal Ratings Based (“AIRB”) methodology. As a result, regulatory capital ratios of banks that utilize the Standardized approach are not directly comparable with the large Canadian banks that employ the AIRB methodology.
OSFI requires that all Canadian banks must comply with the Basel III standards on an “all-in” basis for purposes of determining their risk-based capital ratios. Required minimum regulatory capital ratios are a 7.0% Common Equity Tier 1 (“CET1”) capital ratio, an 8.5% Tier 1 capital ratio and a 10.5% total capital ratio, all of which include a 2.5% capital conservation buffer.
The year-over-year and sequential changes exhibited by VersaBank’s reported regulatory capital levels, regulatory capital ratios and leverage ratio were a function primarily of retained earnings growth and changes to VersaBank’s risk-weighted asset balances and composition. The year-over-year variance also reflects the treasury offering of common shares on December 18, 2024 and the purchase and cancellation of common shares under the NCIB.
For more information regarding capital management, please see note 15 to VersaBank’s January 31, 2026, unaudited interim Consolidated Financial Statements as well as the Capital Management and Capital Resources section of VersaBank’s MD&A for the year ended October 31, 2025.
Liquidity
The unaudited Consolidated Statement of Cash Flows for the three months ended January 31, 2026, shows cash provided by operations in the amount of $55.6 million compared with cash used in operations in the amount of $89.1 million for the same period last year. The current period reflects deposits raised and cash from operations exceeding the outflows to fund credit assets. The comparative period reflects outflows to fund credit assets as well as a net cash outflows from deposits maturity exceeding deposits raised and cash from operations. Based on factors such as liquidity requirements and opportunities for investment in credit assets and securities, VersaBank may manage the amount of deposits it raises and credit assets it funds in ways that result in the balances of these items giving rise to either negative or positive cash flow from operations. VersaBank will continue to fund its operations and meet contractual obligations as they become due using cash on hand and by closely managing its flow of deposit raising activities.
Interest Rate Sensitivity
The table below presents the duration difference between VersaBank’s assets and liabilities and the potential after-tax impact of a 100-basis point shift in interest rates on VersaBank’s earnings during a 12-month period if no remedial actions are taken. As at January 31, 2026, the duration difference between assets and liabilities was (2.0) months compared with (0.9) months as at October 31, 2025. As at January 31, 2026, VersaBank’s assets would reprice faster than its liabilities in the event of a future change in interest rates.
|
(thousands of Canadian dollars) |
||||||||||||||||
|
January 31, 2026 |
October 31, 2025 |
|||||||||||||||
|
Increase 100 bps |
Decrease 100 bps |
Increase 100 bps |
Decrease 100 bps |
|||||||||||||
|
Increase (decrease): |
||||||||||||||||
|
Impact on projected net interest income during a 12 month period |
$ | 2,229 | $ | (2,468 | ) | $ | 2,582 | $ | (2,824 | ) | ||||||
|
Duration difference between assets and liabilities (months) |
(2.0 | ) | (0.9 | ) | ||||||||||||
Contractual Obligations
As at January 31, 2026, the Bank held a number of designated hedging instruments to manage interest rate and foreign exchange exposures. The Bank had an outstanding interest rate swap with a notional amount of $19.7 million, entered into for asset liability management purposes and qualifying for hedge accounting, which swaps between fixed and floating interest rates.
In addition, the Bank has designated foreign exchange forward contracts as net investment hedges in respect of its US operations: a USD $138.6 million forward to hedge the net investment in VersaBank USA and a USD $14.0 million forward, entered during 2025, to hedge the net investment in VersaFinance US Corp; both instruments are intended to reduce exposure to fluctuations between the Group’s functional currency (CAD) and the US dollar. The Bank also entered into a USD $12.1 million foreign exchange forward to mitigate foreign exchange risk on an intercompany loan denominated in USD arising from an intercompany transfer of assets. These hedging arrangements are intended to minimize the Banks exposure to movements in interest rates and in the CAD/USD exchange rate.
There have been no other significant changes in contractual obligations as disclosed in VersaBank’s MD&A and Audited Consolidated Financial Statements for the year ended October 31, 2025.
Results of Operating Segments
|
(thousands of Canadian dollars) |
||||||||||||||||||||||||
|
for the three months ended |
January 31, 2026 |
|||||||||||||||||||||||
|
Digital Banking |
Digital Banking |
Digital Meteor |
DRTC |
Eliminations/ |
Consolidated |
|||||||||||||||||||
|
Canada |
USA |
Adjustments |
||||||||||||||||||||||
|
Net interest income |
$ | 27,107 | $ | 6,774 | $ | - | $ | - | $ | - | $ | 33,881 | ||||||||||||
|
Non-interest income |
476 | - | 528 | 1,975 | (346 | ) | 2,633 | |||||||||||||||||
|
Total revenue |
27,583 | 6,774 | 528 | 1,975 | (346 | ) | 36,514 | |||||||||||||||||
|
Provision for (recovery of) credit losses |
681 | 19 | - | - | - | 700 | ||||||||||||||||||
| 26,902 | 6,755 | 528 | 1,975 | (346 | ) | 35,814 | ||||||||||||||||||
|
Non-interest expenses: |
||||||||||||||||||||||||
|
Salaries and benefits |
6,663 | 1,733 | 206 | 1,781 | - | 10,383 | ||||||||||||||||||
|
General and administrative |
7,378 | 799 | 30 | 506 | (346 | ) | 8,367 | |||||||||||||||||
|
Premises and equipment |
925 | 275 | 48 | 548 | - | 1,796 | ||||||||||||||||||
| 14,966 | 2,807 | 284 | 2,835 | (346 | ) | 20,546 | ||||||||||||||||||
|
Income (loss) before income taxes |
11,936 | 3,948 | 244 | (860 | ) | - | 15,268 | |||||||||||||||||
|
Income tax provision |
3,222 | 1,142 | 65 | (230 | ) | - | 4,199 | |||||||||||||||||
|
Net income (loss) |
$ | 8,714 | $ | 2,806 | $ | 179 | $ | (630 | ) | $ | - | $ | 11,069 | |||||||||||
|
Total assets |
$ | 5,134,288 | $ | 1,009,961 | $ | 10,535 | $ | 16,139 | $ | (24,913 | ) | $ | 6,146,010 | |||||||||||
|
Total liabilities |
$ | 4,850,594 | $ | 754,775 | $ | 517 | $ | 28,263 | $ | (31,215 | ) | $ | 5,602,934 | |||||||||||
|
for the three months ended |
October 31, 2025 |
|||||||||||||||||||||||
|
Digital Banking |
Digital Banking |
Digital Meteor |
DRTC |
Eliminations/ |
Consolidated |
|||||||||||||||||||
|
Canada |
USA |
Adjustments |
||||||||||||||||||||||
|
Net interest income |
$ | 27,399 | $ | 5,234 | $ | - | $ | - | $ | - | $ | 32,633 | ||||||||||||
|
Non-interest income |
250 | (15 | ) | 673 | 1,898 | (347 | ) | 2,459 | ||||||||||||||||
|
Total revenue |
27,649 | 5,219 | 673 | 1,898 | (347 | ) | 35,092 | |||||||||||||||||
|
Provision for (recovery of) credit losses |
1,365 | (46 | ) | - | - | - | 1,319 | |||||||||||||||||
| 26,284 | 5,265 | 673 | 1,898 | (347 | ) | 33,773 | ||||||||||||||||||
|
Non-interest expenses: |
||||||||||||||||||||||||
|
Salaries and benefits |
7,446 | 1,213 | 130 | 1,327 | - | 10,116 | ||||||||||||||||||
|
General and administrative |
10,941 | 924 | 140 | 143 | (347 | ) | 11,801 | |||||||||||||||||
|
Premises and equipment |
929 | 323 | 276 | 426 | - | 1,954 | ||||||||||||||||||
| 19,316 | 2,460 | 546 | 1,896 | (347 | ) | 23,871 | ||||||||||||||||||
|
Income (loss) before income taxes |
6,968 | 2,805 | 127 | 2 | - | 9,902 | ||||||||||||||||||
|
Income tax provision |
3,840 | 806 | 33 | 19 | - | 4,698 | ||||||||||||||||||
|
Net income (loss) |
$ | 3,128 | $ | 1,999 | $ | 94 | $ | (17 | ) | $ | - | $ | 5,204 | |||||||||||
|
Total assets |
$ | 5,050,922 | $ | 759,733 | $ | 10,207 | $ | 24,538 | $ | (36,925 | ) | $ | 5,808,475 | |||||||||||
|
Total liabilities |
$ | 4,777,508 | $ | 498,822 | $ | 8,006 | $ | 28,319 | $ | (36,853 | ) | $ | 5,275,802 | |||||||||||
|
for the three months ended |
January 31, 2025 |
|||||||||||||||||||||||
|
Digital Banking |
Digital Banking |
Digital Meteor |
DRTC |
Eliminations/ |
Consolidated |
|||||||||||||||||||
|
Canada |
USA |
Adjustments |
||||||||||||||||||||||
|
Net interest income |
$ | 23,685 | $ | 2,039 | $ | - | $ | - | $ | - | $ | 25,724 | ||||||||||||
|
Non-interest income |
125 | 1 | 342 | 1,989 | (354 | ) | 2,103 | |||||||||||||||||
|
Total revenue |
23,810 | 2,040 | 342 | 1,989 | (354 | ) | 27,827 | |||||||||||||||||
|
Provision for (recovery of) credit losses |
1,033 | (9 | ) | - | - | - | 1,024 | |||||||||||||||||
| 22,777 | 2,049 | 342 | 1,989 | (354 | ) | 26,803 | ||||||||||||||||||
|
Non-interest expenses: |
||||||||||||||||||||||||
|
Salaries and benefits |
5,289 | 1,164 | 217 | 1,944 | - | 8,614 | ||||||||||||||||||
|
General and administrative |
4,716 | 597 | 44 | 486 | (354 | ) | 5,489 | |||||||||||||||||
|
Premises and equipment |
903 | 109 | 48 | 536 | - | 1,596 | ||||||||||||||||||
| 10,908 | 1,870 | 309 | 2,966 | (354 | ) | 15,699 | ||||||||||||||||||
|
Income (loss) before income taxes |
11,869 | 179 | 33 | (977 | ) | - | 11,104 | |||||||||||||||||
|
Income tax provision |
3,105 | 76 | - | (220 | ) | - | 2,961 | |||||||||||||||||
|
Net income (loss) |
$ | 8,764 | $ | 103 | $ | 33 | $ | (757 | ) | $ | - | $ | 8,143 | |||||||||||
|
Total assets |
$ | 4,707,062 | $ | 256,627 | $ | 11,236 | $ | 25,340 | $ | (28,533 | ) | $ | 4,971,732 | |||||||||||
|
Total liabilities |
$ | 4,350,601 | $ | 115,351 | $ | 8,922 | $ | 21,548 | $ | (45,985 | ) | $ | 4,450,437 | |||||||||||
Digital Banking Canada
Note: The financial results for Digital Banking Canada contain certain non-interest expenses for general corporate administrative costs.
Q1 2026 vs Q1 2025
Net income decreased $50,000, or 1%, to $8.7 million due primarily to the $1.5 million in project costs associated with the Reorganization and higher general corporate administrative costs, offset partially by higher net interest income and lower provision for credit losses.
Q1 2026 vs Q4 2025
Net income increased $5.6 million, or 179%, due primarily to higher net interest income, lower project costs associated with the Reorganization, lower general non-interest expenses and a lower provision for credit losses.
Digital Banking USA
Q1 2026 vs Q1 2025
Net income increased $2.7 million to $2.8 million due primarily to higher net interest income, offset partially by higher non-interest expenses, reflecting the onboarding of staff and related operating expenses to support the expansion of VersaBank USA.
Q1 2026 vs Q4 2025
Net income increased $800,000 due primarily to higher net interest income, offset partially by higher non-interest expenses reflecting the onboarding of staff and related operating expense to support the expansion of VersaBank USA.
DRTC (Cybersecurity Services)
Q1 2026 vs Q1 2025
DRTC net loss was $630,000 compared to a net loss of $757,000 last year. The decreased loss was due primarily to higher operating expenses a year ago related to the onboarding support cost for new cybersecurity offerings beginning in fiscal 2025.
Q1 2026 vs Q4 2025
DRTC net loss was $630,000 compared to a net loss of $17,000 last quarter. The decrease was due primarily higher operating expenses and lower revenue driven by lower client engagements in the current quarter.
Strategic Divestiture of DRTC:
In furtherance of the Bank’s strategic initiatives and in consideration of current U.S. regulatory requirements, management has expressed its intention to cease and/or divest of certain non-bank activities housed within DRTC, a subsidiary operating within the cybersecurity and financial technology industry, and Digital Boundary Group, Inc. and Digital Boundary Group Canada Inc. (collectively, the “Digital Boundary Group Entities”), subsidiaries of DRTC operating within the penetration testing industry. The Bank has initiated an active program to locate a buyer and complete the divestiture plan.
As of January 31, 2026, DRTC and the Digital Boundary Group Entities have not been classified as “held for sale” under IFRS 5 –Non‑current Assets Held for Sale and Discontinued Operations, as certain required criteria have not yet been fully satisfied. While management has not begun actively marketing DRTC and the Digital Boundary Group Entities for sale, these subsidiaries are also not yet available for immediate sale in their present condition and continue to be integral to the Bank’s ongoing operations. Management will continue to monitor and evaluate the status of the planned divestiture, including the progress of the active sales program. The subsidiaries will be reclassified as “held for sale” and presented in accordance with IFRS 5 once all conditions for such classification are met.
Certain members of management hold convertible preferred shares in DRTC. In accordance with DRTC’s by‑laws, these shares will automatically convert into an aggregate 28% common share ownership stake in DRTC upon the occurrence of a change‑of‑control event.
Digital Meteor Inc.
Q1 2026 vs Q1 2025
Digital Meteor Inc. net income was $179,000 compared to a net income of $33,000 last year. The trend in earnings was due primarily to higher revenue driven by higher client engagements in the current period and lower operating expenses.
Q1 2026 vs Q4 2025
Digital Meteor Inc. net income was $179,000 compared to a net income of $94,000 last quarter. The trend in earnings was due primarily to lower operating expenses, offset partially by lower revenue driven by lower client engagements in the current quarter.
Summary of Quarterly Results
|
(thousands of Canadian dollars, |
||||||||||||||||||||||||||||||||
|
except per share amounts) |
2026 |
2025 |
2024 |
|||||||||||||||||||||||||||||
|
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
|||||||||||||||||||||||||
|
Results of operations: |
||||||||||||||||||||||||||||||||
|
Interest income |
$ | 81,216 | $ | 77,471 | $ | 73,987 | $ | 70,976 | $ | 73,246 | $ | 73,238 | $ | 71,646 | $ | 71,243 | ||||||||||||||||
|
Yield on assets (%) |
5.39 | % | 5.45 | % | 5.58 | % | 5.81 | % | 5.92 | % | 6.23 | % | 6.40 | % | 6.66 | % | ||||||||||||||||
|
Interest expense |
47,335 | 44,838 | 44,208 | 42,944 | 47,522 | 48,337 | 46,702 | 45,001 | ||||||||||||||||||||||||
|
Cost of funds (%) |
3.14 | % | 3.15 | % | 3.33 | % | 3.52 | % | 3.84 | % | 4.11 | % | 4.17 | % | 4.21 | % | ||||||||||||||||
|
Net interest income |
33,881 | 32,633 | 29,779 | 28,032 | 25,724 | 24,901 | 24,944 | 26,242 | ||||||||||||||||||||||||
|
Net interest margin (%) |
2.25 | % | 2.29 | % | 2.25 | % | 2.29 | % | 2.08 | % | 2.12 | % | 2.23 | % | 2.45 | % | ||||||||||||||||
|
Net interest margin on credit assets (%) |
2.64 | % | 2.65 | % | 2.55 | % | 2.59 | % | 2.36 | % | 2.34 | % | 2.41 | % | 2.52 | % | ||||||||||||||||
|
Non-interest income |
2,633 | 2,459 | 1,804 | 2,107 | 2,103 | 2,384 | 2,052 | 2,259 | ||||||||||||||||||||||||
|
Total revenue |
36,514 | 35,092 | 31,583 | 30,139 | 27,827 | 27,285 | 26,996 | 28,501 | ||||||||||||||||||||||||
|
Provision for (recovery of) credit losses |
700 | 1,319 | 1,181 | 889 | 1,024 | (156 | ) | (1 | ) | 16 | ||||||||||||||||||||||
|
Non-interest expenses |
20,546 | 23,871 | 21,649 | 17,516 | 15,699 | 19,365 | 13,534 | 12,185 | ||||||||||||||||||||||||
|
Efficiency ratio |
56 | % | 68 | % | 69 | % | 58 | % | 56 | % | 71 | % | 50 | % | 43 | % | ||||||||||||||||
|
Adjusted efficiency ratio |
52 | % | 52 | % | 55 | % | 58 | % | 56 | % | 71 | % | 50 | % | 43 | % | ||||||||||||||||
|
Tax provision |
4,199 | 4,698 | 2,171 | 3,205 | 2,961 | 2,560 | 3,758 | 4,472 | ||||||||||||||||||||||||
|
Net income |
$ | 11,069 | $ | 5,204 | $ | 6,582 | $ | 8,529 | $ | 8,143 | $ | 5,516 | $ | 9,705 | $ | 11,828 | ||||||||||||||||
|
Adjusted net income |
$ | 12,162 | $ | 10,549 | $ | 9,670 | $ | 8,529 | $ | 8,143 | $ | 5,516 | $ | 9,705 | $ | 11,828 | ||||||||||||||||
|
Income per share |
||||||||||||||||||||||||||||||||
|
Basic |
$ | 0.35 | $ | 0.16 | $ | 0.20 | $ | 0.26 | $ | 0.28 | $ | 0.20 | $ | 0.36 | $ | 0.45 | ||||||||||||||||
|
Diluted |
$ | 0.35 | $ | 0.16 | $ | 0.20 | $ | 0.26 | $ | 0.28 | $ | 0.20 | $ | 0.36 | $ | 0.45 | ||||||||||||||||
|
Adjusted income per common share basic and diluted |
$ | 0.38 | $ | 0.33 | $ | 0.30 | $ | 0.26 | $ | 0.28 | $ | 0.20 | $ | 0.36 | $ | 0.45 | ||||||||||||||||
|
Return on average common equity |
8.16 | % | 3.89 | % | 4.94 | % | 6.67 | % | 7.02 | % | 5.28 | % | 9.63 | % | 12.36 | % | ||||||||||||||||
|
Adjusted return on average common equity |
8.95 | % | 7.81 | % | 7.24 | % | 6.67 | % | 7.02 | % | 5.28 | % | 9.63 | % | 12.36 | % | ||||||||||||||||
|
Return on average total assets |
0.73 | % | 0.37 | % | 0.50 | % | 0.70 | % | 0.66 | % | 0.45 | % | 0.85 | % | 1.08 | % | ||||||||||||||||
The financial results for each of the last eight quarters are summarized above. Key drivers of VersaBank’s sequential performance changes for the current reporting period were:
|
|
Credit asset growth attributable to continued growth in the SRP portfolio; |
|
Lower NIM attributable primarily to lower yields earned on the Bank’s credit assets, offset partially by lower cost of funds; |
|
Lower provision for credit losses attributable primarily to changes in the forward-looking information used by the Bank in its credit risk models; and, |
|
Lower non-interest expense attributable primarily to a scale down of project costs associated with the Reorganization and lower general operating costs in the quarter. |
Subsequent events
On January 7, 2026, the Bank entered into a Purchase and Assumption Agreement with Stearns Bank National Association. Under the Agreement, the Bank agreed to sell certain assets associated with the Bank’s branch located at 580 Main Street, Holdingford, Minnesota, to Stearns Bank National Association, which also agreed to assume certain deposit liabilities related to that location. The timing and financial impact to the Bank relating to this deal are still to be determined due to uncertainty relating to regulatory approvals.
Non-GAAP and Other Financial Measures
Non-GAAP and other financial measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements of the Bank to which these measures relate. These measures may not be comparable to similar financial measures disclosed by other issuers. The Bank uses these financial measures to assess its performance and as such believes these financial measures are useful in providing readers with a better understanding of how management assesses the Bank’s performance.
Non-GAAP Measures
Return on Average Common Equity is defined as annualized net income less amounts relating to preferred share dividends, divided by average common shareholders’ equity, which is average shareholders’ equity less amounts relating to preferred shares recorded in equity.
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars) |
2026 |
2025 |
2025 |
|||||||||
|
Return on average common equity |
||||||||||||
|
Net income |
$ | 11,069 | $ | 5,204 | $ | 8,143 | ||||||
|
Annualized net income |
43,915 | 20,646 | 32,306 | |||||||||
|
Average common equity |
$ | 538,294 | $ | 530,408 | $ | 460,249 | ||||||
|
Return on average common equity |
8.16 | % | 3.89 | % | 7.02 | % | ||||||
Adjusted Return on Average Common Equity is defined as annualized net income less amounts relating to the Reorganization and related tax effect and amounts relating to preferred share dividends, divided by adjusted average common shareholders’ equity, which is average shareholders’ equity less amounts relating to the Reorganization and related tax effect and amounts relating to preferred shares recorded in equity.
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars) |
2026 |
2025 |
2025 |
|||||||||
|
Adjusted return on average common equity |
||||||||||||
|
Net income |
$ | 11,069 | $ | 5,204 | $ | 8,143 | ||||||
|
Adjustment to non-interest expenses |
1,507 | 5,678 | - | |||||||||
|
Ajdustment to income tax provisions |
(414 | ) | (333 | ) | - | |||||||
|
Adjusted net income |
12,162 | 10,549 | 12,452 | |||||||||
|
Annualized adjusted net income |
48,251 | 41,852 | 32,306 | |||||||||
|
Adjusted average common equity |
$ | 538,840 | $ | 535,682 | $ | 460,249 | ||||||
|
Adjusted return on average common equity |
8.95 | % | 7.81 | % | 7.02 | % | ||||||
Book Value per Common Share is defined as Shareholders’ Equity less amounts relating to preferred shares recorded in equity, divided by the number of common shares outstanding.
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars) |
2026 |
2025 |
2025 |
|||||||||
|
Book value per common share |
||||||||||||
|
Common equity |
$ | 543,076 | $ | 532,673 | $ | 521,295 | ||||||
|
Shares outstanding |
32,069,447 | 31,945,535 | 32,518,786 | |||||||||
|
Book value per common share |
$ | 16.93 | $ | 16.67 | $ | 16.03 | ||||||
Return on Average Total Assets is defined as annualized net income less amounts relating to preferred share dividends, divided by average total assets.
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars) |
2026 |
2025 |
2025 |
|||||||||
|
Return on average total assets |
||||||||||||
|
Net income |
$ | 11,069 | $ | 5,204 | $ | 8,143 | ||||||
|
Annualized net income |
43,915 | 20,646 | 32,306 | |||||||||
|
Average Assets |
$ | 5,977,243 | $ | 5,642,982 | $ | 4,905,108 | ||||||
|
Return on average total assets |
0.73 | % | 0.37 | % | 0.66 | % | ||||||
Adjusted Net Income is defined as net income less amounts relating primarily to the Reorganization and related tax effect. This metric does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars) |
2026 |
2025 |
2025 |
|||||||||
|
Adjusted net income |
||||||||||||
|
Net income |
$ | 11,069 | $ | 5,204 | $ | 8,143 | ||||||
|
Adjustment to non-interest expenses |
1,507 | 5,678 | - | |||||||||
|
Ajdustment to income tax provisions |
(414 | ) | (333 | ) | - | |||||||
|
Adjusted net income |
$ | 12,162 | $ | 10,549 | $ | 8,143 | ||||||
Adjusted EPS is defined as annualized net income less amounts relating primarily to the Reorganization and related tax effect and amounts relating to preferred share dividends, divided by weighted average numbers of common shares. This metric does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars) |
2026 |
2025 |
2025 |
|||||||||
|
Adjusted income per common share |
||||||||||||
|
Net income |
$ | 11,069 | $ | 5,204 | $ | 8,143 | ||||||
|
Adjustment to non-interest expenses |
1,507 | 5,678 | - | |||||||||
|
Ajdustment to income tax provisions |
(414 | ) | (333 | ) | - | |||||||
|
Adjusted net income |
12,162 | 10,549 | 8,143 | |||||||||
|
Weighted average number of common shares outstanding |
31,968,831 | 32,111,346 | 29,060,949 | |||||||||
|
Adjusted income per common share |
$ | 0.38 | $ | 0.33 | $ | 0.28 | ||||||
Other Financial Measures
Yield is calculated as interest income (as presented in the Consolidated Statements of Comprehensive Income) divided by average total assets. Yield does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
Cost of Funds is calculated as interest expense (as presented in the Consolidated Statements of Comprehensive Income) divided by average total assets. Cost of funds does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
Net Interest Margin or Spread are calculated as net interest income divided by average total assets. Net interest margin or spread does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
Net Interest Margin on Credit Assets is calculated as net interest income adjusted for the impact of cash, securities and other assets, divided by average gross credit assets. This metric does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
Efficiency Ratio is calculated as non-interest expenses from consolidated operations as a percentage of total revenue (as presented in the interim Consolidated Statements of Comprehensive Income). This ratio does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
Adjusted Efficiency Ratio is calculated as non-interest expenses from consolidated operations income less amounts relating primarily to project costs associated with the Reorganization, as a percentage of total revenue (as presented in the interim Consolidated Statements of Comprehensive Income). This ratio does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars) |
2026 |
2025 |
2025 |
|||||||||
|
Adjusted efficiency ratio |
||||||||||||
|
Non-interest expenses |
$ | 20,546 | $ | 23,871 | $ | 15,699 | ||||||
|
Adjustment to non-interest expenses |
(1,507 | ) | (5,678 | ) | - | |||||||
|
Adjusted non-interest expenses |
19,039 | 18,193 | 15,699 | |||||||||
|
Total revenue |
36,514 | 35,092 | 27,827 | |||||||||
|
Adjusted efficiency ratio |
52 | % | 52 | % | 56 | % | ||||||
Provision for (Recovery of) Credit Losses as a Percentage of Average Total Credit Assets captures the provision for (recovery of) credit losses (as presented in the interim Consolidated Statements of Comprehensive Income) as a percentage of VersaBank’s average credit assets, net of allowance for credit losses. This percentage does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.
Basel III Common Equity Tier 1, Tier 1, Total Capital Adequacy and Leverage Ratios are determined in accordance with guidelines issued by the Office of the Superintendent of Financial Institutions (Canada) (OSFI).
Material Accounting Policies and Use of Estimates and Judgements
Material accounting policies and use of estimates and judgements are detailed in note 2 and note 3 of VersaBank’s 2025 Audited Consolidated Financial Statements. There have been no material changes in accounting policies since October 31, 2025.
Controls and Procedures
During the quarter ended January 31, 2026, there were no changes in VersaBank’s internal controls over financial reporting, that have materially affected or are reasonably likely to materially affect VersaBank’s internal controls over financial reporting.
Additional Information
Additional information regarding VersaBank, including its Annual Information Form for the year ended October 31, 2025, is available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar, as well as on VersaBank’s website at www.versabank.com.
Exhibit 99.3
For Immediate Release: March 4, 2026
Attention: Business Editors
VERSABANK REPORTS STRONG FIRST QUARTER RESULTS: ACCELERATED U.S. GROWTH DRIVES 31% YEAR-OVER-YEAR INCREASE IN REVENUE, 36% YEAR-OVER-YEAR GROWTH IN NET INCOME, 49% YEAR-OVER-YEAR GROWTH IN ADJUSTED NET INCOME
All amounts are unaudited and in Canadian dollars and are based on financial statements prepared in compliance with International Accounting Standard 34 Interim Financial Reporting, unless otherwise noted. Our first quarter 2026 (“Q1 2026”) unaudited Interim Consolidated Financial Statements for the period ended January 31, 2026 and Management’s Discussion and Analysis ("MD&A"), are available online at www.versabank.com/investor-relations, SEDAR at www.sedarplus.ca and EDGAR at www.sec.gov/edgar. Supplementary Financial Information will also be available on our website at www.versabank.com/investor-relations.
LONDON, ON/CNW – VersaBank (or the “Bank”) (TSX: VBNK; NASDAQ: VBNK), a North American leader in business-to-business digital banking, as well as technology solutions for cybersecurity, today reported its results for the first quarter ended January 31, 2026. All figures are in Canadian dollars unless otherwise stated.
CONSOLIDATED FINANCIAL SUMMARY
|
(unaudited) |
As at or for the three months ended |
|||||||||||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||||||||||
|
(thousands of Canadian dollars except per share amounts) |
2026 |
2025 |
Change |
2025 |
Change |
|||||||||||||||
|
Financial results |
||||||||||||||||||||
|
Total revenue |
$ | 36,514 | $ | 35,092 | 4% | $ | 27,827 | 31% | ||||||||||||
|
Cost of funds* |
3.14 | % | 3.15 | % | (0%) | 3.84 | % | (18%) | ||||||||||||
|
Net interest margin* |
2.25 | % | 2.29 | % | (2%) | 2.08 | % | 8% | ||||||||||||
|
Net interest margin on credit assets* |
2.64 | % | 2.65 | % | (0%) | 2.36 | % | 12% | ||||||||||||
|
Return on average common equity* |
8.16 | % | 3.89 | % | 110% | 7.02 | % | 16% | ||||||||||||
|
Adjusted return on average common equity* |
8.95 | % | 7.81 | % | 15% | 7.02 | % | 27% | ||||||||||||
|
Net income |
11,069 | 5,204 | 113% | 8,143 | 36% | |||||||||||||||
|
Adjusted net income* |
12,162 | 10,549 | 15% | 8,143 | 49% | |||||||||||||||
|
Net income per common share basic and diluted |
0.35 | 0.16 | 119% | 0.28 | 25% | |||||||||||||||
|
Adjusted net income per common share basic and diluted* |
0.38 | 0.33 | 15% | 0.28 | 36% | |||||||||||||||
|
Balance sheet and capital ratios** |
||||||||||||||||||||
|
Total assets |
$ | 6,146,010 | $ | 5,808,475 | 6% | $ | 4,971,732 | 24% | ||||||||||||
|
Book value per common share* |
16.93 | 16.67 | 2% | 16.03 | 6% | |||||||||||||||
|
Common Equity Tier 1 (CET1) capital ratio |
12.82 | % | 12.92 | % | (1%) | 14.61 | % | (12%) | ||||||||||||
|
Total capital ratio |
15.47 | % | 15.72 | % | (2%) | 17.91 | % | (14%) | ||||||||||||
|
Leverage ratio |
8.17 | % | 8.47 | % | (4%) | 9.67 | % | (16%) | ||||||||||||
* See definitions under ‘Non-GAAP and Other Financial Measures' in the Q1 2026 Management’s Discussion and Analysis.
** Capital management and leverage measures are in accordance with OSFI's Capital Adequacy Requirements and Basel III Accord.
SEGMENTED FINANCIAL SUMMARY – QUARTERLY
|
(thousands of Canadian dollars) |
||||||||||||||||||||||||
|
for the three months ended |
January 31, 2026 |
|||||||||||||||||||||||
|
Digital Banking |
Digital Banking |
Digital Meteor |
DRTC |
Eliminations/ |
Consolidated |
|||||||||||||||||||
|
Canada |
USA |
Adjustments |
||||||||||||||||||||||
|
Net interest income |
$ | 27,107 | $ | 6,774 | $ | - | $ | - | $ | - | $ | 33,881 | ||||||||||||
|
Non-interest income |
476 | - | 528 | 1,975 | (346 | ) | 2,633 | |||||||||||||||||
|
Total revenue |
27,583 | 6,774 | 528 | 1,975 | (346 | ) | 36,514 | |||||||||||||||||
|
Provision for (recovery of) credit losses |
681 | 19 | - | - | - | 700 | ||||||||||||||||||
| 26,902 | 6,755 | 528 | 1,975 | (346 | ) | 35,814 | ||||||||||||||||||
|
Non-interest expenses: |
||||||||||||||||||||||||
|
Salaries and benefits |
6,663 | 1,733 | 206 | 1,781 | - | 10,383 | ||||||||||||||||||
|
General and administrative |
7,378 | 799 | 30 | 506 | (346 | ) | 8,367 | |||||||||||||||||
|
Premises and equipment |
925 | 275 | 48 | 548 | - | 1,796 | ||||||||||||||||||
| 14,966 | 2,807 | 284 | 2,835 | (346 | ) | 20,546 | ||||||||||||||||||
|
Income (loss) before income taxes |
11,936 | 3,948 | 244 | (860 | ) | - | 15,268 | |||||||||||||||||
|
Income tax provision |
3,222 | 1,142 | 65 | (230 | ) | - | 4,199 | |||||||||||||||||
|
Net income (loss) |
$ | 8,714 | $ | 2,806 | $ | 179 | $ | (630 | ) | $ | - | $ | 11,069 | |||||||||||
|
Total assets |
$ | 5,134,288 | $ | 1,009,961 | $ | 10,535 | $ | 16,139 | $ | (24,913 | ) | $ | 6,146,010 | |||||||||||
|
Total liabilities |
$ | 4,850,594 | $ | 754,775 | $ | 517 | $ | 28,263 | $ | (31,215 | ) | $ | 5,602,934 | |||||||||||
|
for the three months ended |
October 31, 2025 |
|||||||||||||||||||||||
|
Digital Banking |
Digital Banking |
Digital Meteor |
DRTC |
Eliminations/ |
Consolidated |
|||||||||||||||||||
|
Canada |
USA |
Adjustments |
||||||||||||||||||||||
|
Net interest income |
$ | 27,399 | $ | 5,234 | $ | - | $ | - | $ | - | $ | 32,633 | ||||||||||||
|
Non-interest income |
250 | (15 | ) | 673 | 1,898 | (347 | ) | 2,459 | ||||||||||||||||
|
Total revenue |
27,649 | 5,219 | 673 | 1,898 | (347 | ) | 35,092 | |||||||||||||||||
|
Provision for (recovery of) credit losses |
1,365 | (46 | ) | - | - | - | 1,319 | |||||||||||||||||
| 26,284 | 5,265 | 673 | 1,898 | (347 | ) | 33,773 | ||||||||||||||||||
|
Non-interest expenses: |
||||||||||||||||||||||||
|
Salaries and benefits |
7,446 | 1,213 | 130 | 1,327 | - | 10,116 | ||||||||||||||||||
|
General and administrative |
10,941 | 924 | 140 | 143 | (347 | ) | 11,801 | |||||||||||||||||
|
Premises and equipment |
929 | 323 | 276 | 426 | - | 1,954 | ||||||||||||||||||
| 19,316 | 2,460 | 546 | 1,896 | (347 | ) | 23,871 | ||||||||||||||||||
|
Income (loss) before income taxes |
6,968 | 2,805 | 127 | 2 | - | 9,902 | ||||||||||||||||||
|
Income tax provision |
3,840 | 806 | 33 | 19 | - | 4,698 | ||||||||||||||||||
|
Net income (loss) |
$ | 3,128 | $ | 1,999 | $ | 94 | $ | (17 | ) | $ | - | $ | 5,204 | |||||||||||
|
Total assets |
$ | 5,050,922 | $ | 759,733 | $ | 10,207 | $ | 24,538 | $ | (36,925 | ) | $ | 5,808,475 | |||||||||||
|
Total liabilities |
$ | 4,777,508 | $ | 498,822 | $ | 8,006 | $ | 28,319 | $ | (36,853 | ) | $ | 5,275,802 | |||||||||||
|
for the three months ended |
January 31, 2025 |
|||||||||||||||||||||||
|
Digital Banking |
Digital Banking |
Digital Meteor |
DRTC |
Eliminations/ |
Consolidated |
|||||||||||||||||||
|
Canada |
USA |
Adjustments |
||||||||||||||||||||||
|
Net interest income |
$ | 23,685 | $ | 2,039 | $ | - | $ | - | $ | - | $ | 25,724 | ||||||||||||
|
Non-interest income |
125 | 1 | 342 | 1,989 | (354 | ) | 2,103 | |||||||||||||||||
|
Total revenue |
23,810 | 2,040 | 342 | 1,989 | (354 | ) | 27,827 | |||||||||||||||||
|
Provision for (recovery of) credit losses |
1,033 | (9 | ) | - | - | - | 1,024 | |||||||||||||||||
| 22,777 | 2,049 | 342 | 1,989 | (354 | ) | 26,803 | ||||||||||||||||||
|
Non-interest expenses: |
||||||||||||||||||||||||
|
Salaries and benefits |
5,289 | 1,164 | 217 | 1,944 | - | 8,614 | ||||||||||||||||||
|
General and administrative |
4,716 | 597 | 44 | 486 | (354 | ) | 5,489 | |||||||||||||||||
|
Premises and equipment |
903 | 109 | 48 | 536 | - | 1,596 | ||||||||||||||||||
| 10,908 | 1,870 | 309 | 2,966 | (354 | ) | 15,699 | ||||||||||||||||||
|
Income (loss) before income taxes |
11,869 | 179 | 33 | (977 | ) | - | 11,104 | |||||||||||||||||
|
Income tax provision |
3,105 | 76 | - | (220 | ) | - | 2,961 | |||||||||||||||||
|
Net income (loss) |
$ | 8,764 | $ | 103 | $ | 33 | $ | (757 | ) | $ | - | $ | 8,143 | |||||||||||
|
Total assets |
$ | 4,707,062 | $ | 256,627 | $ | 11,236 | $ | 25,340 | $ | (28,533 | ) | $ | 4,971,732 | |||||||||||
|
Total liabilities |
$ | 4,350,601 | $ | 115,351 | $ | 8,922 | $ | 21,548 | $ | (45,985 | ) | $ | 4,450,437 | |||||||||||
NOTE REGARDING THE CHANGE IN NAME OF “RECEIVABLE PURCHASE PROGRAM” (“RPP”) TO “STRUCTURED RECEIVEABLE PROGRAM” (“SRP”)
As part of its previously announced Reorganization (see note below), VersaBank has changed the name of its Receivable Purchase Program (“RPP”) to Structured Receivable Program (“SRP”). The underlying business model of the SRP has not changed in any way.
MANAGEMENT COMMENTARY
“The first quarter of 2026 saw the acceleration of our Structured Receivable Program, or SRP (previously known as our Receivable Purchase Program) in the United States, which, combined with steady growth in Canada and a strengthened net interest margin, contributed to 31% year-over-year growth in revenue,” said David Taylor, Founder and President, VersaBank. “Per our strategy, we are increasingly benefitting from the operating leverage in our business model. Our investment over the past several years in establishing and ramping up our U.S. business is yielding results in terms of improved operating leverage, with net income up 36% and adjusted net income up 49%, year-over-year. Notably, adjusted net income grew 15% sequentially.”
“After surpassing our fiscal 2025 target, during the first quarter of fiscal 2026 we grew our U.S. SRP 55% sequentially. Our pace of funding has us firmly on track to achieve our target of growing our US SRP fundings by at least $1 billion in fiscal 2026. Notably, the efficiency of our U.S. banking operations has already surpassed that of our Canadian banking operations and, with substantially all of our U.S. cost structure in place, will expand meaningfully as we grow our U.S. portfolio.”
“In addition to the expected continued strong growth in our core Digital Banking business, we are increasingly encouraged by the opportunity for our Real Bank Tokenized Deposits™ (RBTD™s) as digital assets gain adoption by the mainstream financial industry amidst a favourable regulatory environment. During the quarter, we continued to advance our RBTD™s towards commercialization, with a specific focus on ensuring we position ourselves to fully capitalize on their specific advantage in the marketplace.”
“The first quarter was also highlighted by our extension of our custody services to the stablecoin market and, subsequent to quarter end, we announced our first customer, Stablecorp Digital Currencies, for which the Bank will serve as the custodian for Stablecorp's QCAD stablecoin -- Canada's first regulatory compliant Canadian-dollar stablecoin. Stablecorp has an impressive list of investors including Coinbase, Circle, DeFi Technologies and FTP Ventures.”
“We continue to make steady progress on our reorganization with the goal of including our shareholder vote on the matter as apart of our annual shareholders meeting in early April, subject to the timing of review of the required filings and approval by the requisite regulators. We continue to expect the benefits of the reorganization to meaningfully outweigh the investment in the process and allow the Bank to fully capitalize on its US SRP opportunity, as well as our Tokenized Deposit and Stablecoin Custody Services opportunities.”
KEY OPERATIONAL DEVELOPMENTS
|
● |
The Bank continued to realize rapid expansion of its credit asset portfolio in the US through the successful ramp up of its SRP. Following the achievement of its first-year target for SRP credit assets and the signing of an agreement with its largest US SRP partner to date at the end of the Q4 2025, the Bank grew its total US SRP credit assets to US$472.0 million at the end of the first quarter of fiscal 2026 and is on pace to achieve its target for additional US SRP fundings in fiscal 2026 of US$1 billion; |
|
● |
The Bank enhanced its Canadian Mortgage and Housing Corporation ("CMHC") insured lending program such that the Bank will begin utilizing its Canadian Mortgage Bond ("CMB") Program allocation capacity to invest in CMHC-insured multi-unit residential ("MUR") term mortgages originated by partners who are well-established leaders in the Canadian MUR mortgage industry (the "Mortgage Originator") (the "Enhanced CMHC Program"); |
|
● |
Following the Canadian federal government’s announcement of planned regulation of stablecoins in the 2025 Federal Budget, the Bank initiated collaborations with third-party stablecoin issuers on national bank-based, SOC2 Type 1-certified custody solutions that are consistent with the government's planned regulation for stablecoins in Canada. Subsequent to the end of the first quarter, the Bank announced its first stablecoin custody customer, signing a definitive agreement with Stablecorp Digital Currencies Inc. ("Stablecorp"), a pioneering Canadian digital asset infrastructure company and servicer of the QCAD Digital Trust and whose investors include Coinbase, Circle, DeFi Technologies and FTP Ventures, under which the Bank will serve as the custodian for Stablecorp's QCAD stablecoin. QCAD recently became Canada's first regulatory compliant Canadian-dollar stablecoin; and, |
|
● |
The Bank continued to steadily progress on its Reorganization (see note below) and in support of that Reorganization appointed Nicolas Ospina to the newly created role of Global Chief Financial Officer with responsibility for oversight of the Bank's finance function at the corporate level and John Asma, previously Chief Financial Officer of the Bank, to Executive Vice President with responsibilities for operation and execution of strategy for Canadian Digital Banking operations. |
HIGHLIGHTS FOR THE FIRST QUARTER OF FISCAL 2026
Consolidated (Canadian and US Digital Banking Operations, Digital Meteor and DRTC)
|
● |
Total assets increased 24% year-over-year and 6% sequentially to a record $6.1 billion, with the increase driven primarily by growth of the Digital Banking operations’ credit asset portfolios, in particular, the Structured Receivable Program (“SRP”) portfolio, in both the US and Canada; |
|
● |
Consolidated total revenue increased 31% year-over-year and increased 4% sequentially to a record $36.5 million, with the year-over-year and sequential increases primarily due to the continued growth in credit assets, which were up 23% year-over-year and 5% sequentially; |
|
● |
Consolidated net income was $11.1 million compared with $8.1 million for the first quarter of last year and $5.2 million for the fourth quarter of fiscal 2025. Consolidated net income for the first quarter of fiscal 2026 included $1.5 million of non-interest expenses related primarily to the costs associated with the Reorganization (see note below), compared to $5.4 million in the sequential quarter, which also had higher than typical tax provision attributable to various one-time tax expense adjustments; |
|
● |
Consolidated adjusted net income was $12.2 million, an increase of 49% year-over-year and an increase of 15% sequentially; |
|
● |
Consolidated income per common share was $0.35 compared with $0.28 for the first quarter of last year and $0.16 for the fourth quarter of 2025. In addition to the impact of the items noted above, the variance to prior year reflects the impact of the 25% higher number of shares outstanding following the treasury common share offering in December 2024; |
|
● |
Consolidated adjusted income per common share was $0.38 compared with $0.28 for the first quarter of 2025 and $0.33 for the fourth quarter of 2025; and, |
|
● |
As at January 31, 2026, the Bank has purchased and cancelled 573,251 common shares under its Normal Course Issuer Bid (NCIB), under which the Bank may purchase for cancellation up to 2,000,000 of its common shares representing approximately 8.99% of its public float (as of April 28, 2025). |
Digital Banking (Combined Canada and US)
|
● |
Total Digital Banking operations (combined Canada and US) credit assets increased 23% year-over-year and 5% sequentially to a record $5.33 billion, driven primarily by strong growth in each of the US and Canadian SRP portfolios, which, combined, increased 29% year-over-year and 9% sequentially; |
|
● |
Total Digital Banking operations revenue increased 33% year-over-year and 5% sequentially to a record $34.4 million, with the year-over-year and sequential increases primarily due to the continued growth in credit assets; |
|
● |
Total Digital Banking operations net interest margin on credit assets increased 28 bps, or 12%, year-over-year, and decreased 1 bps sequentially, to 2.64%. The year-over-year increase was primarily due to the lower cost of funds, attributable to the renewal of maturing deposits at lower interest rates and the diminished impact of the atypically inverted yield curve that existed in the early part of fiscal 2025 and which is no longer inverted. The sequential decrease reflects the planned transition of some higher yielding, higher risk-weighted Multi-Family Residential Loans (“MROL”) to lower yielding, lower risk-weighted MROL as part of the Bank’s strategy to capitalize on opportunities for lower-risk weighted credit assets with a higher return on capital and the continued growth in the SRP portfolio, which is also composed of lower risk-weighted, lower yielding assets, offset partially by lower cost of funds; |
|
● |
Total Digital Banking operations overall net interest margin increased 17 bps, or 8%, year-over-year and decreased 4 bps, or 2%, sequentially to 2.25%. The Bank’s net interest margin remained among the highest of the publicly traded Canadian Schedule I (federally licensed) banks; |
|
● |
Total Digital Banking operations provision for credit losses as a percentage of average credit assets remained negligible at 0.05%, compared with a 12-quarter average of 0.04%, which remains among the lowest of the publicly traded Canadian Schedule I (federally licensed) banks; |
|
● |
Total Digital Banking operations net income was $11.5 million compared with $8.9 million for the first quarter of last year and $5.1 million for the fourth quarter of 2025. Net income for the first quarter of fiscal 2026 included $1.5 million (before tax) of non-interest expenses primarily related to the Reorganization, compared to the sequential quarter of $5.4 million, which also had one-time tax expense adjustments; |
|
● |
Total Digital Banking operations income per common share was $0.36 compared with $0.30 for the first quarter of last year and $0.16 for the fourth quarter of 2025. In addition to the impact of the items noted above, the variance to prior year reflects the impact of the 25% higher number of shares outstanding following the treasury common share offering in December 2024. |
Digital Banking Canada
Note: The financial results for Digital Banking Canada contain certain non-interest expenses for general corporate administrative costs.
|
● |
Canadian Digital Banking operations net income was $8.7 million compared with $8.8 million for the first quarter of last year and $3.1 million for the fourth quarter of 2025; and, |
|
● |
Canadian Digital Banking operations net income per common share was $0.28 compared with $0.30 for the first quarter of last year and $0.10 for the fourth quarter of 2025. In addition to the impact of the items noted above, the variance to prior year reflects the impact of the 25% higher number of shares outstanding following the treasury common share offering in December 2024; |
Digital Banking US
|
● |
US Digital Banking operations net income was $2.8 million compared with $103,000 for the first quarter of last year and $2.0 million for the fourth quarter of 2025. The sequential increase was primarily attributable to the strong growth in the SRP portfolio. US Digital Banking operations include expenses that are being incurred ahead of asset growth and revenue generated by the ramp up of the US SRP portfolio. |
Digital Meteor
|
● |
Digital Meteor’s net income was $179,000 compared with net income of $33,000 for the first quarter of last year and a net income of $94,000 for the fourth quarter of 2025; |
|
● |
The Bank started an internal pilot program in the United States for its USDVBs, the US-dollar version of its proprietary Real Bank Tokenized Deposits™ (“RBTDs”™); and, |
|
● |
The Bank commenced a refresh of its previously completed pilot program for its CADVBs, the Canadian-dollar version of its proprietary RBTDs™. |
DRTC’s Cybersecurity Services Operations
|
● |
DRTC’s net loss was $630,000 compared with a net loss of $757,000 for the first quarter of last year and a net loss of $17,000 for the fourth quarter of 2025. |
Reorganization (previously referred to as the Proposed Corporate Realignment)
In May 2025, the Bank announced its intention, subject to the approval of VersaBank’s shareholders, the U.S. Federal Reserve, the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”), the Minister of Finance (Canada), the Toronto Stock Exchange (“TSX”), the Nasdaq Global Select Market (“Nasdaq”), and other applicable approvals, to implement a series of transactions that would result in, among other things, a new entity (the “Parent”), a newly incorporated Delaware corporation, succeeding VersaBank as the publicly traded entity in which existing shareholders hold their equity interests, thereby domesticating that public company as a U.S. reporting issuer incorporated in Delaware (the “Reorganization”). Under the proposed terms of the Reorganization, among other things, VersaBank will adopt an amendment to its by-laws and effect certain transactions to exchange all of its outstanding common shares for shares of the Parent (the “Share Exchange”). Following the Share Exchange, VersaBank will sell all of its shares of VersaHoldings US Corp. to the Parent in exchange for a promissory note equal to the aggregate fair market value of those shares (the “Parent Note”), which will subsequently be distributed to the Parent as a return of capital.
FINANCIAL SUMMARY
|
(unaudited) |
For the three months ended |
|||||||||||
|
January 31 |
October 31 |
January 31 |
||||||||||
|
(thousands of Canadian dollars except per share amounts) |
2026 |
2025 |
2025 |
|||||||||
|
Results of operations |
||||||||||||
|
Interest income |
$ | 81,216 | $ | 77,471 | $ | 73,246 | ||||||
|
Net interest income |
33,881 | 32,633 | 25,724 | |||||||||
|
Non-interest income |
2,633 | 2,459 | 2,103 | |||||||||
|
Total revenue |
36,514 | 35,092 | 27,827 | |||||||||
|
Provision for (recovery of) credit losses |
700 | 1,319 | 1,024 | |||||||||
|
Non-interest expenses |
20,546 | 23,871 | 15,699 | |||||||||
|
Digital Banking |
17,773 | 21,776 | 12,788 | |||||||||
|
DRTC |
2,835 | 2,525 | 2,966 | |||||||||
|
Digital Meteor |
284 | (83 | ) | 309 | ||||||||
|
Net income |
11,069 | 5,204 | 8,143 | |||||||||
|
Adjusted net income* |
12,162 | 10,549 | 8,143 | |||||||||
|
Income per common share: |
||||||||||||
|
Basic |
$ | 0.35 | $ | 0.16 | $ | 0.28 | ||||||
|
Diluted |
$ | 0.35 | $ | 0.16 | $ | 0.28 | ||||||
|
Adjusted income per common share basic and diluted* |
$ | 0.38 | $ | 0.33 | $ | 0.28 | ||||||
|
Dividends paid on common shares |
$ | 799 | $ | 802 | $ | 813 | ||||||
|
Yield* |
5.39 | % | 5.45 | % | 5.92 | % | ||||||
|
Cost of funds* |
3.14 | % | 3.15 | % | 3.84 | % | ||||||
|
Net interest margin* |
2.25 | % | 2.29 | % | 2.08 | % | ||||||
|
Net interest margin on credit assets* |
2.64 | % | 2.65 | % | 2.36 | % | ||||||
|
Return on average common equity* |
8.16 | % | 3.89 | % | 7.02 | % | ||||||
|
Adjusted return on average common equity* |
8.95 | % | 7.81 | % | 7.02 | % | ||||||
|
Book value per common share* |
$ | 16.93 | $ | 16.67 | $ | 16.03 | ||||||
|
Efficiency ratio* |
56 | % | 68 | % | 56 | % | ||||||
|
Adjusted efficiency ratio* |
52 | % | 52 | % | 56 | % | ||||||
|
Return on average total assets* |
0.73 | % | 0.37 | % | 0.66 | % | ||||||
|
Provision for (recovery of) credit losses as a % of average credit assets* |
0.05 | % | 0.11 | % | 0.09 | % | ||||||
|
As at |
||||||||||||
|
Balance Sheet Summary |
||||||||||||
|
Cash |
$ | 628,002 | $ | 581,710 | $ | 386,693 | ||||||
|
Securities |
101,276 | 80,923 | 158,546 | |||||||||
|
Credit assets, net of allowance for credit losses |
5,333,279 | 5,066,378 | 4,346,748 | |||||||||
|
Average credit assets |
5,199,829 | 4,922,347 | 4,291,432 | |||||||||
|
Total assets |
6,146,010 | 5,808,475 | 4,971,732 | |||||||||
|
Deposits |
5,248,955 | 4,860,863 | 4,133,438 | |||||||||
|
Subordinated notes payable |
100,160 | 103,516 | 106,824 | |||||||||
|
Shareholders' equity |
543,076 | 532,673 | 521,295 | |||||||||
|
Capital ratios** |
||||||||||||
|
Risk-weighted assets |
$ | 4,031,913 | $ | 3,943,657 | $ | 3,422,768 | ||||||
|
Common Equity Tier 1 capital |
516,815 | 509,650 | 500,158 | |||||||||
|
Total regulatory capital |
623,825 | 619,890 | 613,021 | |||||||||
|
Common Equity Tier 1 (CET1) capital ratio |
12.82 | % | 12.92 | % | 14.61 | % | ||||||
|
Tier 1 capital ratio |
12.82 | % | 12.92 | % | 14.61 | % | ||||||
|
Total capital ratio |
15.47 | % | 15.72 | % | 17.91 | % | ||||||
|
Leverage ratio |
8.17 | % | 8.47 | % | 9.67 | % | ||||||
* See definition under 'Non-GAAP and Other Financial Measures' in the Q1 2026 Management's Discussion and Analysis.
** Capital management and leverage measures are in accordance with OSFI's Capital Adequacy Requirements and Basel III Accord.
This news release is intended to be read in conjunction with the Bank’s Consolidated Financial Statements and Management’s Discussion & Analysis (MD&A) for the three months ended January 31, 2026, which are available on VersaBank’s website at www.versabank.com, SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.
Conference Call
VersaBank will host a conference call and webcast today, Wednesday, March 4, 2026, at 9:00 a.m. (ET) to discuss its fourth quarter results, featuring a presentation by David Taylor, President & CEO and Nicolas Ospina, Global CFO, followed by a question-and-answer period. To join the conference call by telephone without operator assistance, you may register and enter your phone number in advance at: https://emportal.ink/4qKHiM1 to receive an instant automated call back. Alternatively, you may also dial direct and be entered into the call by an Operator at: 1-416-945-7677 or 1-888-699-1199 (toll free).
For those preferring to listen to the presentation via the Internet, a live webcast will be available at https://app.webinar.net/GjAar8prvln or on the Bank's web site at: https://www.versabank.com/investor-relations/events-presentations/. The slide presentation management will use during the conference call/webcast will be available on the Bank's web site at: https://www.versabank.com/investor-relations/financial-results/.
The archived webcast presentation will be available for 90 days following the live event at https://app.webinar.net/GjAar8prvln and on the Bank's web site at: https://www.versabank.com/investor-relations/events-presentations/. Replay of the teleconference will be available until April 4, 2026 by calling 289-819-1450 or 1-888-660-6345 (toll free) and the passcode is: 79538#
About VersaBank
VersaBank is a North American bank with a difference. Federally chartered in both Canada and the US, VersaBank has a branchless, digital, business-to-business model based on its proprietary state-of-the-art technology that enables it to profitably address underserved segments of the banking industry in a significantly risk mitigated manner. Because VersaBank obtains substantially all of its deposits and undertakes the majority of its funding activities electronically through financial intermediary partners, it benefits from significant operating leverage that drives efficiency and return on common equity. In August 2024, VersaBank launched its unique Receivable Purchase Program funding solution for point-of-sale finance companies, which has been highly successful in Canada for over 15 years, to the underserved multi-trillion-dollar US market. VersaBank also owns Minnesota-based DRT Cyber Inc., a North America leader in the provision of cyber security services to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities. Through its wholly owned subsidiary, DBG Inc., VersaBank owns proprietary intellectual property and technology to enable the next generation of digital assets for the banking and financial community, including the Bank’s revolutionary and proprietary Real Bank Tokenized Deposits™).
VersaBank’s Common Shares trade on the Toronto Stock Exchange and NASDAQ under the symbol VBNK.
Forward-Looking Statements
This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws (“forward-looking statements”) including statements regarding the ability to obtain shareholder, regulatory and other approvals of the Reorganization; the expected realization of additional shareholder value, the simplification of the regulatory structure and the reduction of costs as a result of the Reorganization; the key elements of the Reorganization; the ability to obtain inclusion on stock indices, including the Russell 2000; the ability to continue to grow the US Receive Purchase Program; the ability to expand our net interest margin; and the ability to continue to grow the CMHC residential construction loan program. Forward-looking statements of this type are included in this document and may be included in other filings and with Canadian securities regulators or the US Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the “safe harbor” provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. The statements in this press release that relate to the future are forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, many of which are out of VersaBank’s control. Risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the Canadian and US economies in general and the strength of the local economies within Canada and the US in which VersaBank conducts operations; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Bank of Canada and the US Federal Reserve; global commodity prices; the effects of competition in the markets in which VersaBank operates; changes in trade laws and tariffs; inflation; capital market fluctuations; the timely development and introduction of new products in receptive markets; the impact of changes in the laws and regulations pertaining to financial services; changes in tax laws; technological changes; unexpected judicial or regulatory proceedings; unexpected changes in consumer spending and savings habits; the impact of wars or conflicts and the impact of both on global supply chains and markets; the impact of outbreaks of disease or illness that affect local, national or international economies; the possible effects on our business of terrorist activities; natural disasters and disruptions to public infrastructure, such as transportation, communications, power or water supply; and VersaBank’s anticipation of and success in managing the risks implicated by the foregoing.
Completion of VersaBank’s plan to realign its corporate structure to a standard US bank framework is subject to numerous factors, many of which are beyond the Bank’s control, including but not limited to, the failure to obtain required shareholder, regulatory and other approvals, and other important factors disclosed previously and from time to time in the Bank’s filings with the SEC and the securities commissions or similar securities regulatory authorities in each of the provinces or territories of Canada.
The foregoing list of important factors is not exhaustive. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The forward-looking information contained in the management’s discussion and analysis is presented to assist VersaBank shareholders and others in understanding VersaBank’s financial position and may not be appropriate for any other purposes.
For a detailed discussion of certain key factors that may affect VersaBank’s future results, please see VersaBank’s annual MD&A for the year ended October 31, 2026. Except as required by securities law, VersaBank does not undertake to update any forward-looking statement that is contained in this press release or made from time to time by VersaBank or on its behalf.
FOR FURTHER INFORMATION, PLEASE CONTACT:
LodeRock Advisors
Lawrence Chamberlain
(416) 519-4196
lawrence.chamberlain@loderockadvisors.com
Visit our website at: www.versabank.com
Follow VersaBank on Facebook, Instagram, LinkedIn and X.
Exhibit 99.4
For Immediate Release: March 4, 2026
Attention: Business Editors
VERSABANK DECLARES DIVIDENDS
LONDON, ON/CNW - VersaBank (the “Bank”) (TSX: VBNK; NASDAQ: VBNK) today announced that cash dividends in the amount of CAD $0.025 per Common Share of the Bank have been declared for the quarter ending April 30, 2026, payable as of April 30, 2026, to shareholders of record at the close of business on April 10, 2026.
The dividends to which this notice relates are eligible dividends for tax purposes.
About VersaBank
VersaBank is a North American bank with a difference. Federally chartered in both Canada and the US, VersaBank has a branchless, digital, business-to-business model based on its proprietary state-of-the-art technology that enables it to profitably address underserved segments of the banking industry in a significantly risk mitigated manner. Because VersaBank obtains substantially all of its deposits and undertakes the majority of its funding electronically through financial intermediary partners, it benefits from significant operating leverage that drives efficiency and return on common equity. In August 2024, VersaBank launched its unique Receivable Purchase Program funding solution for point-of-sale finance companies, which has been highly successful in Canada for nearly 15 years, to the underserved multi-trillion-dollar US market. VersaBank also owns Minneapolis-based DRT Cyber Inc., a North American leader in the provision of cyber security services to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities. Through DRT Cyber Inc., VersaBank owns proprietary intellectual property and technology to enable the next generation of digital assets for the banking and financial community, including the Bank’s revolutionary tokenized deposits.
VersaBank’s Common Shares trade on the Toronto Stock Exchange and NASDAQ under the symbol VBNK.
FOR FURTHER INFORMATION, PLEASE CONTACT:
LodeRock Advisors
Lawrence Chamberlain
(416) 519-4196
lawrence.chamberlain@loderockadvisors.com
Visit our website at: www.versabank.com
Follow VersaBank on Facebook, Instagram, LinkedIn and X (formerly Twitter)
Exhibit 99.5
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Susan McGovern, Interim Chief Executive Officer of VersaBank, certify the following:
|
1. |
Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of VersaBank (the “issuer”) for the interim period ended January 31, 2026. |
|
2. |
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
|
3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
|
4. |
Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
|
5. |
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
|
5.1 |
Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. |
|
5.2 |
N/A |
|
5.3 |
N/A |
|
6. |
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on November 1, 2025 and ended on January 31, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
|
Date: |
March 4, 2026 |
/s/ Susan McGovern
Susan McGovern
Interim Chief Executive Officer
Exhibit 99.6
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Nicolas Ospina, Global Chief Financial Officer of VersaBank, certify the following:
|
1. |
Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of VersaBank (the “issuer”) for the interim period ended January 31, 2026. |
|
2. |
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
|
3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
|
4. |
Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| 5.
|
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
|
5.1 |
Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. |
|
5.2 |
N/A |
|
5.3 |
N/A |
|
6. |
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on November 1, 2025 and ended on January 31, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
|
Date: |
March 4, 2026 |
/s/ Nicolas Ospina
Nicolas Ospina
Global Chief Financial Officer
FAQ
How did VersaBank (VBNK) perform financially in Q1 2026?
What happened to VersaBank’s net interest income and margin in Q1 2026?
What were VersaBank’s credit quality and loan loss provisions in Q1 2026?
How well capitalized was VersaBank at January 31, 2026?
What strategic changes is VersaBank making to its DRTC cybersecurity business?
What is the significance of VersaBank’s Structured Receivable Program (SRP)?
Did VersaBank announce any notable subsequent events after Q1 2026?
Filing Exhibits & Attachments
11 documentsPress Releases
