Q3 fiscal 2026
Filed Sep 3, 2026VersaBank reported record revenue and total assets, with US Structured Receivable Program growth driving 23% year-over-year revenue growth and 53% net-income growth.
Total revenue increased 23% year-over-year to $38,809, net income increased 53% to $10,060, and total assets increased 26% to $6,875,238, led by US and Canadian Structured Receivable Program growth. Net interest margin declined year-over-year and sequentially, while capital ratios also declined year-over-year.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue (thousands of Canadian dollars)other | $38.81M | 1 % | 23 % |
| Net interest income (thousands of Canadian dollars)other | $36.77M | – | – |
| Non-interest income (thousands of Canadian dollars)other | $2.04M | – | – |
| Provision for (recovery of) credit losses (thousands of Canadian dollars)other | −229K | – | – |
| Non-interest expenses (thousands of Canadian dollars)other | 25.16M | – | – |
| Income before income taxes (thousands of Canadian dollars)other | 13.88M | – | – |
| Net income (thousands of Canadian dollars)other | 10.06M | 34 % | 53 % |
| Adjusted (Core) net income (thousands of Canadian dollars)non-GAAP | 12.30M | (1 %) | 27 % |
| Income per common share basicother | $ 0.31 | 35 % | 55 % |
| Income per common share dilutedother | $ 0.31 | – | – |
| Adjusted (Core) income per common share basic and dilutednon-GAAP | $ 0.38 | (3 %) | 27 % |
| Cost of fundsnon-GAAP | 3.16 % | 2 % | (5 %) |
| Net interest marginnon-GAAP | 2.19 % | (6 %) | (3 %) |
| Net interest margin on credit assetsnon-GAAP | 2.44 % | (10 %) | (4 %) |
| Return on average common equitynon-GAAP | 7.14 % | 27 % | 45 % |
| Adjusted (Core) return on average common equitynon-GAAP | 8.72 % | (6 %) | 20 % |
| Efficiency rationon-GAAP | 65 % | – | – |
| Adjusted (Core) efficiency rationon-GAAP | 57 % | – | – |
| Total assets (thousands of Canadian dollars)other | $6.88B | 7 % | 26 % |
| Credit assets, net of allowance for credit losses (thousands of Canadian dollars)other | 6.16B | – | – |
| Cash (thousands of Canadian dollars)other | $490.0M | – | – |
| Deposits (thousands of Canadian dollars)other | 5.91B | – | – |
| Subordinated notes payable (thousands of Canadian dollars)other | 103.8M | – | – |
| Shareholders' equity (thousands of Canadian dollars)other | 565.6M | – | – |
| Common Equity Tier 1 (CET1) capital ratioother | 11.47 % | (7 %) | (15 %) |
| Total capital ratioother | 13.32 % | (10 %) | (19 %) |
| Leverage ratioother | 7.64 % | (4 %) | (14 %) |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Digital Banking CanadaCanadian Digital Banking operations net income was dampened by non-core non-interest expenses of $2.5 million, composed of project costs associated with the Reorganization. | $27.57M | – | – |
| Digital Banking USAThe sequential increase in US Digital Banking operations net income was primarily attributable to the strong growth in the SRP portfolio. | $9.30M | – | – |
| Digital MeteorDigital Meteor reported net income of $114,000. | $ 413 | – | – |
| DRTCThe increased loss was primarily due to higher non-interest expense, offset partially by higher revenues from an increase in new cybersecurity offerings. | $1.88M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
fiscal 2027 outlook
- NoteTarget to grow the US SRP portfolio by at least US$3 billion (more than CAD$4 billion) in new fundings on its own balance sheet.
- NoteThe ECN Subsidiary is expected to contribute at least US$300 million in additional US SRP fundings annually.
- NoteVersaBank and ECN Capital believe the ECN Subsidiary program could grow well beyond US$500 million per year in funding in the future.
- NoteThe Reorganization is targeted for completion by the end of October of this year, subject to requisite approvals.
Capital returns
- Dividends paid on common shares: $ 809
- Yield: 5.35 %
What drove it
- Combined US and Canadian SRP portfolios increased 40% year-over-year and 11% sequentially.
- Total Digital Banking credit assets increased 29% year-over-year and 9% sequentially to a record $6.16 billion.
- US SRP assets reached US$793 million at the end of the third quarter of fiscal 2026.
- The Bank launched Real-Time SRP and expects it to add financing business with existing partners and support acquisition of new partners.
- Provision for credit losses was a recovery of (229 ) in the quarter.
Concerns
- Net interest margin declined to 2.19 % from 2.25 % a year earlier and 2.33 % in the preceding quarter.
- Net interest margin on credit assets declined to 2.44 % from 2.55 % a year earlier and 2.71 % in the preceding quarter.
- Management attributed margin pressure to higher than typical GIC rates relative to Government of Canada bond yields, replacement of retail deposits with brokered deposits, greater liquidity, and changes in credit-asset mix.
- CET1 capital ratio declined to 11.47 % from 13.56 % a year earlier, while the total capital ratio declined to 13.32 % from 16.50 %.
- Third-quarter net income included $0.8 million in share-based long-term incentive award expenses and $1.5 million in other transitory costs that the Bank does not expect to recur.
- Completion of the Reorganization remains subject to shareholder and regulatory approval.
What to watch
- Execution against the target to add at least US$3 billion in US SRP fundings in fiscal 2027.
- The pace of Real-Time SRP adoption and its contribution to new and existing partner funding.
- Net interest margin following the shift toward brokered deposits and lower-risk MROL credit assets.
- Capital-ratio trends as credit assets expand.
- The September 16, 2026 shareholder meeting and regulatory approvals required for the Reorganization.
- The Federal Reserve requirement to cease or divest certain impermissible activities, including cybersecurity services housed within DRTC and Digital Boundary Group, by August 30, 2027.
Balance sheet and cash flow
- Cash: $ 490,049
- Securities: 134,178
- Credit assets, net of allowance for credit losses: 6,161,542
- Total assets: $ 6,875,238
- Deposits: 5,909,865
- Subordinated notes payable: 103,793
- Shareholders' equity: 565,565
- Risk-weighted assets: $ 4,717,516
- Common Equity Tier 1 capital: 540,934
- Total regulatory capital: 628,283
Analysis
VersaBank delivered a strong third quarter of fiscal 2026, with total revenue increasing 23% year-over-year to $ 38,809 and 1% sequentially. Net interest income rose to $ 36,773 from $ 29,779 a year earlier, while total assets reached $ 6,875,238, up 26% year-over-year and 7% sequentially. Management attributed the expansion primarily to growth in Digital Banking credit assets, particularly SRP portfolios in the United States and Canada.
Profitability improved materially from the prior year. Net income rose 53% year-over-year to 10,060 and 34% sequentially, while adjusted (Core) net income increased 27% year-over-year to 12,303 but decreased 1% from the preceding quarter. Reported results absorbed $3.1 million of non-core non-interest expenses related to the Reorganization and the write-off of capitalized software costs associated with the branch asset and deposit sale. Results also included $0.8 million of share-based long-term incentive award expenses and $1.5 million of other transitory costs.
The US business was the central growth contributor. Digital Banking USA revenue was $ 9,303 and net income was $3.9 million, compared with $437,000 in the third quarter of last year. US SRP assets reached US$793 million, and the Bank added an ECN Capital subsidiary as a second US SRP program. The new agreement is expected to contribute at least US$300 million in additional US SRP fundings annually. Digital Banking Canada revenue was $ 27,565 and net income was $6.6 million, with profitability affected by $2.5 million of Reorganization project costs.
Margin and capital trends warrant attention alongside asset growth. Net interest margin declined to 2.19 %, from 2.25 % a year earlier and 2.33 % sequentially, while net interest margin on credit assets declined to 2.44 %. Management cited funding costs, the replacement of retail deposits with brokered deposits following the US branch sale, a higher liquidity position, and a shift toward SRP and lower-risk insured MROL assets. CET1 declined to 11.47 %, total capital ratio declined to 13.32 %, and leverage ratio declined to 7.64 % from their respective prior-year levels.
For fiscal 2027, management targets at least US$3 billion in new US SRP fundings on its own balance sheet and expects additional operating leverage as assets and revenue grow. The company also launched Real-Time SRP, which management expects to broaden partner demand and improve financing functionality. The Reorganization is targeted for completion by the end of October of this year, subject to shareholder and regulatory approvals, and is presented as a source of future cost savings and improved access to capital.
Management, verbatim
The third quarter once again saw new records for credit assets, revenue and net interest income, with strong year-over-year growth driven by the continuing strong momentum in our Structured Receivable Program in the United States, as well as steady growth in Canada.
David Taylor, Founder and President, VersaBank
Specifically in the United States, we have set a target for fiscal 2027 to grow our SRP portfolio by at least US$3 billion (more than CAD$4 billion) in new fundings on our own balance sheet, with significant additional upside potential.
David Taylor, Founder and President, VersaBank
As we achieve this expected growth in credit assets and revenue in fiscal 2027, we expect to really see the benefit of the operating leverage.
David Taylor, Founder and President, VersaBank
Not in the filing
stated, not guessed- Gross margin
- Operating income
- GAAP designation for reported financial measures
- Operating cash flow
- Free cash flow
- Share repurchases
- Revenue, gross margin, operating expense, or tax-rate financial guidance
- Prior-quarter comparisons for diluted income per common share, efficiency ratio, adjusted (Core) efficiency ratio, cash, securities, deposits, subordinated notes payable, shareholders' equity, and risk-weighted assets
- Year-over-year and sequential revenue changes for individual reported segments
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.