Exhibit 99.2
Management’s Discussion and Analysis
This management’s discussion and analysis (“MD&A”) of operations and financial condition for the third quarter of fiscal 2025, dated September 2, 2025, should be read in conjunction with the unaudited interim consolidated financial statements for the period ended July 31, 2025, 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, 2024, 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, 2024, remain substantially unchanged. All currency amounts in this document are in Canadian dollars unless otherwise indicated.
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Cautionary Note Regarding Forward-Looking Statements
|
2 |
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About VersaBank
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3 |
|
Strategy
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4 |
|
Overview of Performance
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7 |
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Selected Financial Highlights
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12 |
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Financial Review – Earnings
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13 |
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Financial Review – Balance Sheet
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19 |
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Off-Balance Sheet Arrangements
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28 |
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Related Party Transactions
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28 |
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Capital Management and Capital Resources
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29 |
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Results of Operating Segments
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31 |
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Summary of Quarterly Results
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36 |
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Non-GAAP and Other Financial Measures
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37 |
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Material Accounting Policies and Use of Estimates and Judgements
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40 |
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Controls and Procedures
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40 |
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Additional Information
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40 |
VersaBank – Q3 2025 MD&A
1
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 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 management’s discussion and analysis 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; inflation; capital market fluctuations; the timely development and introduction of new products in receptive markets; the impact of changes in the laws, changes in trade laws and tariffs; 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 VersaBank’s 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, 2024. Except as required by securities law, VersaBank does not undertake to update any forward-looking statements that is contained in this management’s discussion and analysis or made from time to time by VersaBank or on its behalf.
VersaBank – Q3 2025 MD&A
2
About VersaBank
Digital Banking Operations
VersaBank (“VersaBank” or the “Bank”) is a North American bank (federally chartered in Canada and the United States) with a difference. VersaBank was the world's first fully digital financial institution 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 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 the result of its unique Receivable Purchase Program (“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 US RPP, which has been highly successful in Canada for nearly 15 years, to the underserved multi-trillion-dollar US market.
Digital Meteor, Inc.
Through its wholly owned subsidiary, Digital Meteor Inc. (“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 Digital Deposit Receipts (DDRs). Developed exclusively by VersaBank using the Bank’s own banking and cybersecurity technologies, including VersaVault®, VersaBank’s DDRs are proprietary bank-issued tokenized deposits that provide superior security, stability, and regulatory compliance compared to stablecoins as highly encrypted one-for-one digital representations of actual cash on deposit with the Bank, combining the safety and soundness of traditional banking with the efficiency, cost savings, security, and programmability of blockchain technology, with conventional federal deposit insurance and the legal ability to pay interest. Additionally, with VersaBank’s VersaVault® technology, 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, the Bank addresses the need for regulated custody of digital assets with secure platforms.
Cybersecurity Services
VersaBank also owns Washington, DC-based DRT Cyber Inc. (“DRTC”), 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. 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.
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.
VersaBank – Q3 2025 MD&A
3
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 network to deliver innovative digital banking, financial and related solutions to under-served markets, while maintaining its low-risk profile. The Bank’s use of 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 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 Operations
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 Receivable Purchase Program for the point-of-sale market (previously referred to as its “Point-of-Sale” Financing business), which has driven the majority of its growth in Canada over the past five years, in the underserved US market.
VersaBank's unique Receivable Purchase Program (“RPP”) 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, 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 RPP 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 RPP to the underserved multi-trillion-dollar US market. The Bank has a strong and growing pipeline of prospective RPP partners that it is aggressively pursuing. In January 2025, the Bank entered into its first US RPP partnership and immediately began purchasing cash flow streams from that partner. The Bank expects to continue to steadily add new RPP partners as it grows its business with existing partners.
In Canada, VersaBank is focused on generating continued strong growth in its RPP portfolio by expanding its business with existing RPP Financing Partners, adding new RPP Financing partners, as well as broader economic growth.
VersaBank – Q3 2025 MD&A
4
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 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 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 VersaBank’s proprietary technology 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 Services
VersaBank’s wholly-owned, Washington, DC-based subsidiary, DRT Cyber (“DRTC”), 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. The global cost of cybercrime is projected to reach $10.5 trillion per year in 2025. 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 divest DRTC 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.
VersaBank – Q3 2025 MD&A
5
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, Digital Meteor, VersaBank’s DDRs are tokenized deposits, which are digital representations of traditional bank deposits on a blockchain, offering enhanced efficiency, programmability, and security in financial transactions. DDRs 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 DDRs represent the next step in the evolution of such digital assets and a superior alternative to stablecoins, which can neither be issued by banks nor allowed to pay interest pursuant to the GENIUS Act and are not insured as are tokenized deposits.
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 digital currencies. VersaBank has established itself as a leader in digital asset innovation. Management believes its trusted and secure solutions, along with the potential for DDRs to be an ultra-low-cost source of deposit funding, will play a meaningful role in enabling US 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 DDR, in which VersaBank’s DDR provided a secure representation of federally regulated bank deposits on the Algorand, Ethereum and Stellar blockchains. As a SOC2 Type 1 compliant digital asset with a continuously known value, VersaBank’s DDRs provide a trusted alternative for mainstream financial applications and can be seamlessly converted to and from other digital currencies such as Bitcoin.
Although the intellectual property, software and other assets related to the DDR 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.
VersaBank – Q3 2025 MD&A
6
Overview of Performance
Note Regarding VersaBank’s Third Quarter and Year-to-Date Fiscal 2025 Financial Results: VersaBank’s financial results for the third quarter of fiscal 2025 reflect the planned, outsized non-interest expense in the amount of $4.2 million for the third quarter and $4.4 million for the year-to-date related to the project costs associated with the Bank’s potential plan to realign its corporate structure to that of a standard US bank framework, which remains subject to shareholder, regulatory, and other approvals (the “Proposed Realignment of Corporate Structure”). The Bank expects to incur similar costs associated with the Proposed Realignment of Corporate Structure in the fourth quarter of fiscal 2025, at which time a majority of costs associated with the Proposed Realignment of Corporate Structure are expected to have been incurred. The Proposed Realignment of Corporate Structure is intended to realize additional shareholder value, further mitigate risk and reduce corporate costs. The anticipated benefits to incremental shareholder value are expected to exceed the investment.
VersaBank – Q3 2025 MD&A
7
* See definition in the “Non-GAAP and Other Financial Measures” section below.
Q3 2025 vs Q3 2024
 |
Credit assets increased 18% to $4.78 billion, driven primarily by strong growth in each of the US and Canadian RPP portfolios, which, combined, increased 15%, as well as strong growth from the Multi-Family Residential Loans and Other portfolio (“MROL”), which increased by 30%. Growth was also driven by the acquisition of Stearns Bank Holdingford National Association (“SBH”) on August 30, 2024;
|
|
Total revenue increased 17% to $31.6 million, composed of net interest income of $29.8 million and non-interest income of $1.8 million;
|
|
Net interest margin (“NIM”) on credit assets was 2.55% and NIM was 2.25%, increases of 14 bps and 2 bps, respectively. The increase in NIM on credit assets was primarily due to a reduction in the Bank’s cost of funds, attributable to the renewal of maturing deposits at lower interest rates and the diminishing impact of the atypically inverted yield curve that existed throughout fiscal 2024 and which is now trending towards normalization. The Bank’s NIM remains amongst the highest of the publicly traded Canadian Schedule I banks;
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VersaBank – Q3 2025 MD&A
8
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Provision for credit losses (“PCL”) was $1.2 million compared with a recovery of credit losses of $1,000, with the increase being primarily due to changes in the forward-looking information used by VersaBank in its credit risk models and an increase in credit assets;
|
|
Provision for credit losses as a percentage of average credit assets was 0.10% compared with 0.00%, which remains among the lowest of the publicly traded Canadian Schedule I banks;
|
|
Non-interest expense, excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, was $17.4 million compared with $13.5 million, with the increase due primarily to incremental operating costs associated with the VersaBank USA operations that began on August 30, 2024;
|
|
Non-interest expenses, including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, were $21.6 million compared with $13.5 million;
|
|
Adjusted net income (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was unchanged at $9.7 million (see Non-GAAP and Other Financial Measures);
|
|
Net income (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was $6.6 million compared with $9.7 million, with the decrease being primarily attributable to the higher non-interest expenses due to the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure and incremental operating costs associated with the VersaBank USA operations that began on August 30, 2024;
|
|
Adjusted income or earnings per common share (“Adjusted EPS”) (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) decreased to $0.30 (see Non-GAAP and Other Financial Measures);
|
|
Income or earnings per common share (“EPS”) (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was $0.20 compared with $0.36, reflecting the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, as well as the impact of the 25% increase in the number of shares outstanding resulting from the December 18, 2024 treasury common share offering;
|
|
Adjusted return on average common equity (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was 7.24% compared with 9.63% (see Non-GAAP and Other Financial Measures); |
|
|
Return on average common equity (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was 4.94% compared with 9.63%;
|
|
|
Adjusted efficiency ratio (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was 55% compared with 50% (see Non-GAAP and Other Financial Measures); and,
|
|
|
Efficiency ratio (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was 69% compared with 50%.
|
VersaBank – Q3 2025 MD&A
9
Q3 2025 vs Q2 2025
|
Credit assets increased 6% to $4.78 billion, driven primarily by continued growth in both the Bank’s RPP and MROL portfolios;
|
|
Total revenue increased 5% to $31.6 million from $30.1 million and was composed of net interest income of $29.8 million and non-interest income of $1.8 million;
|
|
NIM on credit assets was 2.55%, a decrease of 4 bps from 2.59%, and overall NIM was 2.25%, a decrease of 4 bps from 2.29%. The Bank’s NIM remains amongst the highest of the publicly traded Canadian Schedule I banks;
|
|
Provision for credit losses was $1.2 million compared to $889,000 last quarter;
|
|
Provision for credit losses as a percentage of average credit assets was 0.10% compared with 0.08%, which remains among the lowest of the publicly traded Canadian Schedule I banks;
|
|
Non-interest expense, excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, were $17.4 million compared with $17.3 million;
|
|
Non-interest expenses including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, were $21.6 million compared with $17.5 million;
|
|
Adjusted net income (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure), increased 11% to $9.7 million from $8.7 million (see Non-GAAP and Other Financial Measures);
|
|
Net income (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was $6.6 million compared with $8.5 million, with the decrease being primarily attributable to the higher non-interest expenses due to the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure;
|
|
Adjusted EPS (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure), increased to $0.30 from $0.28 (see Non-GAAP and Other Financial Measures);
|
|
EPS (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was $0.20 compared with $0.26, with the decrease being primarily attributable to the higher non-interest expenses due to the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, as well as the impact of the December 18, 2024, treasury common share offering;
|
|
Adjusted return on average common equity (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure), was 7.24% compared with 6.78% (see Non-GAAP and Other Financial Measures); |
|
Return on average common equity (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure), was 4.94% compared with 6.67% and, |
|
|
Adjusted efficiency ratio (excluding the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) improved to 55% from 57% (see Non-GAAP and Other Financial Measures); and, |
|
|
Efficiency ratio (including the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure) was 69% compared with 58%. |
VersaBank – Q3 2025 MD&A
10
Q3 YTD 2025 vs Q3 YTD 2024
|
Total revenue increased 6% to $89.5 million from $84.3 million and was composed of net interest income of $83.5 million and non-interest income of $6.0 million;
|
|
NIM on credit assets was 2.50%, a decrease of 8 bps. Overall NIM was 2.17%, a decrease of 21 bps. The decreases were attributable, in part, to wider spreads on renewal of maturing deposits, and in part to higher than typical liquidity in the first half of fiscal 2025. The Bank’s NIM remains amongst the highest of the publicly traded Canadian Schedule I banks;
|
|
Provision for credit losses was $3.1 million compared with a recovery of credit losses of $112,000;
|
|
Provision for credit losses as a percentage of average credit assets was 0.09% compared with 0.00%, which remains among the lowest of the publicly traded Canadian Schedule I banks;
|
|
Non-interest expense, excluding the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure, were $50.4 million compared to $37.7 million;
|
|
Non-interest expenses, including the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure, were $54.9 million compared with $37.7 million, with the increase due primarily to incremental operating costs associated with the VersaBank USA operations that began on August 30, 2024 and the Proposed Realignment of Corporate Structure;
|
|
Adjusted net income (excluding the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure), decreased 23% to $26.5 million from $34.2 million. (see Non-GAAP and Other Financial Measures);
|
|
Net income decreased 32% to $23.3 million from $34.2 million;
|
|
Adjusted EPS (excluding the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure) decreased to $0.85 from $1.29. (see Non-GAAP and Other Financial Measures;
|
|
|
EPS decreased 43% to $0.74 from $1.29, reflecting in part the impact of the 25% increase in the higher number of shares outstanding resulting from the December 18, 2024 treasury common share offering; |
|
Adjusted return on average common equity (excluding the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure) was 7.61% compared with 11.79%;
|
|
|
Adjusted efficiency ratio (excluding the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure) was 56% compared with 45% (see Non-GAAP and Other Financial Measures); and,
|
|
|
Eficiency ratio (including the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure) was 61% compared with 45%.
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VersaBank – Q3 2025 MD&A
11
Selected Financial Highlights
|
(unaudited)
|
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars, except per share amounts)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Results of operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
73,987 |
|
|
$ |
71,646 |
|
|
$ |
218,209 |
|
|
$ |
212,181 |
|
|
Net interest income
|
|
|
29,779 |
|
|
|
24,944 |
|
|
|
83,535 |
|
|
|
77,754 |
|
|
Non-interest income
|
|
|
1,804 |
|
|
|
2,052 |
|
|
|
6,014 |
|
|
|
6,594 |
|
|
Total revenue
|
|
|
31,583 |
|
|
|
26,996 |
|
|
|
89,549 |
|
|
|
84,348 |
|
|
Provision for (recovery of) credit losses
|
|
|
1,181 |
|
|
|
(1 |
) |
|
|
3,094 |
|
|
|
(112 |
) |
|
Non-interest expenses
|
|
|
21,649 |
|
|
|
13,534 |
|
|
|
54,864 |
|
|
|
37,743 |
|
|
Digital Banking
|
|
|
19,271 |
|
|
|
11,498 |
|
|
|
46,467 |
|
|
|
31,927 |
|
|
DRTC
|
|
|
2,087 |
|
|
|
1,882 |
|
|
|
7,787 |
|
|
|
6,142 |
|
|
Digital Meteor
|
|
|
634 |
|
|
|
496 |
|
|
|
1,662 |
|
|
|
692 |
|
|
Net income
|
|
|
6,582 |
|
|
|
9,705 |
|
|
|
23,254 |
|
|
|
34,232 |
|
|
Adjusted net income*
|
|
|
9,670 |
|
|
|
9,705 |
|
|
|
26,495 |
|
|
|
34,232 |
|
|
Income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.20 |
|
|
$ |
0.36 |
|
|
$ |
0.74 |
|
|
$ |
1.29 |
|
|
Diluted
|
|
$ |
0.20 |
|
|
$ |
0.36 |
|
|
$ |
0.74 |
|
|
$ |
1.29 |
|
|
Adjusted income per common share basic and diluted*
|
|
$ |
0.30 |
|
|
$ |
0.36 |
|
|
$ |
0.85 |
|
|
$ |
1.29 |
|
|
Dividends paid on preferred shares
|
|
$ |
- |
|
|
$ |
247 |
|
|
$ |
- |
|
|
$ |
741 |
|
|
Dividends paid on common shares
|
|
$ |
807 |
|
|
$ |
650 |
|
|
$ |
2,433 |
|
|
$ |
1,950 |
|
|
Yield*
|
|
|
5.58 |
% |
|
|
6.40 |
% |
|
|
5.66 |
% |
|
|
6.50 |
% |
|
Cost of funds*
|
|
|
3.33 |
% |
|
|
4.17 |
% |
|
|
3.49 |
% |
|
|
4.12 |
% |
|
Net interest margin*
|
|
|
2.25 |
% |
|
|
2.23 |
% |
|
|
2.17 |
% |
|
|
2.38 |
% |
|
Net interest margin on credit assets*
|
|
|
2.55 |
% |
|
|
2.41 |
% |
|
|
2.50 |
% |
|
|
2.58 |
% |
|
Return on average common equity*
|
|
|
4.94 |
% |
|
|
9.63 |
% |
|
|
6.71 |
% |
|
|
11.79 |
% |
|
Adjusted return on average common equity*
|
|
|
7.24 |
% |
|
|
9.63 |
% |
|
|
7.61 |
% |
|
|
11.79 |
% |
|
Book value per common share*
|
|
$ |
16.42 |
|
|
$ |
15.23 |
|
|
$ |
16.42 |
|
|
$ |
15.23 |
|
|
Efficiency ratio*
|
|
|
69 |
% |
|
|
50 |
% |
|
|
61 |
% |
|
|
45 |
% |
|
Adjusted efficiency ratio*
|
|
|
55 |
% |
|
|
50 |
% |
|
|
56 |
% |
|
|
45 |
% |
|
Return on average total assets*
|
|
|
0.50 |
% |
|
|
0.85 |
% |
|
|
0.60 |
% |
|
|
1.03 |
% |
|
Provision (recovery) for credit losses as a % of average credit assets*
|
|
|
0.10 |
% |
|
|
0.00 |
% |
|
|
0.09 |
% |
|
|
0.00 |
% |
| |
|
as at
|
|
|
Balance Sheet Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
460,312 |
|
|
$ |
247,983 |
|
|
$ |
460,312 |
|
|
$ |
247,983 |
|
|
Securities
|
|
|
160,136 |
|
|
|
153,026 |
|
|
|
160,136 |
|
|
|
153,026 |
|
|
Credit assets, net of allowance for credit losses
|
|
|
4,778,316 |
|
|
|
4,049,449 |
|
|
|
4,778,316 |
|
|
|
4,049,449 |
|
|
Average credit assets
|
|
|
4,651,064 |
|
|
|
4,033,954 |
|
|
|
4,507,216 |
|
|
|
3,949,927 |
|
|
Total assets
|
|
|
5,477,489 |
|
|
|
4,516,436 |
|
|
|
5,477,489 |
|
|
|
4,516,436 |
|
|
Deposits
|
|
|
4,627,410 |
|
|
|
3,821,185 |
|
|
|
4,627,410 |
|
|
|
3,821,185 |
|
|
Subordinated notes payable
|
|
|
102,148 |
|
|
|
101,641 |
|
|
|
102,148 |
|
|
|
101,641 |
|
|
Shareholders' equity
|
|
|
528,142 |
|
|
|
408,985 |
|
|
|
528,142 |
|
|
|
408,985 |
|
|
Capital ratios**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets
|
|
$ |
3,740,088 |
|
|
$ |
3,273,524 |
|
|
$ |
3,740,088 |
|
|
$ |
3,273,524 |
|
|
Common Equity Tier 1 capital
|
|
|
507,212 |
|
|
|
384,496 |
|
|
|
507,212 |
|
|
|
384,496 |
|
|
Total regulatory capital
|
|
|
617,079 |
|
|
|
504,112 |
|
|
|
617,079 |
|
|
|
504,112 |
|
|
Common Equity Tier 1 (CET1) ratio
|
|
|
13.56 |
% |
|
|
11.75 |
% |
|
|
13.56 |
% |
|
|
11.75 |
% |
|
Tier 1 capital ratio
|
|
|
13.56 |
% |
|
|
12.16 |
% |
|
|
13.56 |
% |
|
|
12.16 |
% |
|
Total capital ratio
|
|
|
16.50 |
% |
|
|
15.40 |
% |
|
|
16.50 |
% |
|
|
15.40 |
% |
|
Leverage ratio
|
|
|
8.90 |
% |
|
|
8.54 |
% |
|
|
8.90 |
% |
|
|
8.54 |
% |
| * |
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.
|
VersaBank – Q3 2025 MD&A
12
Financial Review – Earnings
Total Revenue
Total revenue, which consists of net interest income and non-interest income, for the quarter ended July 31, 2025 increased 17% to $31.6 million compared with the same period a year ago and increased 5% compared with the second quarter of fiscal 2025. Total revenue for the nine months ended July 31, 2025 increased 6% to $89.5 million compared with the same period last year.
Net Interest Income
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the three months ended:
|
|
|
For the nine months ended:
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
|
July 31
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
|
2025
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable purchase program
|
|
$ |
52,601 |
|
|
$ |
50,584 |
|
|
|
4% |
|
|
$ |
48,775 |
|
|
|
8% |
|
|
$ |
153,640 |
|
|
$ |
141,761 |
|
|
|
8% |
|
|
Multi-family residential loans and other
|
|
|
16,213 |
|
|
|
15,314 |
|
|
|
6% |
|
|
|
17,839 |
|
|
|
(9%) |
|
|
|
48,031 |
|
|
|
56,025 |
|
|
|
(14%) |
|
|
Other
|
|
|
5,173 |
|
|
|
5,078 |
|
|
|
2% |
|
|
|
5,032 |
|
|
|
3% |
|
|
|
16,538 |
|
|
|
14,395 |
|
|
|
15% |
|
|
Interest income
|
|
$ |
73,987 |
|
|
$ |
70,976 |
|
|
|
4% |
|
|
$ |
71,646 |
|
|
|
3% |
|
|
$ |
218,209 |
|
|
$ |
212,181 |
|
|
|
3% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit and other
|
|
$ |
42,856 |
|
|
$ |
41,551 |
|
|
|
3% |
|
|
$ |
45,357 |
|
|
|
(6%) |
|
|
$ |
130,537 |
|
|
$ |
130,097 |
|
|
|
0% |
|
|
Subordinated notes
|
|
|
1,352 |
|
|
|
1,393 |
|
|
|
(3%) |
|
|
|
1,345 |
|
|
|
1% |
|
|
|
4,137 |
|
|
|
4,330 |
|
|
|
(4%) |
|
|
Interest expense
|
|
$ |
44,208 |
|
|
$ |
42,944 |
|
|
|
3% |
|
|
$ |
46,702 |
|
|
|
(5%) |
|
|
$ |
134,674 |
|
|
$ |
134,427 |
|
|
|
0% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$ |
29,779 |
|
|
$ |
28,032 |
|
|
|
6% |
|
|
$ |
24,944 |
|
|
|
19% |
|
|
$ |
83,535 |
|
|
$ |
77,754 |
|
|
|
7% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income
|
|
$ |
1,804 |
|
|
$ |
2,107 |
|
|
|
(14%) |
|
|
$ |
2,052 |
|
|
|
(12%) |
|
|
$ |
6,014 |
|
|
$ |
6,594 |
|
|
|
(9%) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$ |
31,583 |
|
|
$ |
30,139 |
|
|
|
5% |
|
|
$ |
26,996 |
|
|
|
17% |
|
|
$ |
89,549 |
|
|
$ |
84,348 |
|
|
|
6% |
|
Q3 2025 vs Q3 2024
Net interest income increased 19% to $29.8 million due primarily to:
|
Higher interest income attributable to continued RPP portfolio growth and incremental credit assets growth through the acquisition of SBH; 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 fiscal 2024, and which is now trending towards normalization.
|
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.
|
VersaBank – Q3 2025 MD&A
13
Q3 2025 vs Q2 2025
Net interest income increased 6% due primarily to:
|
Higher interest income attributable to growth from both the RPP and MROL portfolios.
|
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 risk-weighted credit assets with a higher return on capital.
|
Q3 YTD 2025 vs Q3 YTD 2024
Net interest income increased 7% to $83.5 million due primarily to:
|
Higher interest income attributable to continued RPP portfolio growth, higher cash and securities balances and incremental contribution associated with the acquisition of SBH.
|
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 risk-weighted credit assets with a higher return on capital.
|
Net Interest Margin
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the three months ended:
|
|
|
For the nine months ended:
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
|
July 31
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
|
2025
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
73,987 |
|
|
$ |
70,976 |
|
|
|
4% |
|
|
$ |
71,646 |
|
|
|
3% |
|
|
$ |
218,209 |
|
|
$ |
212,181 |
|
|
|
3% |
|
|
Interest expense
|
|
|
44,208 |
|
|
|
42,944 |
|
|
|
3% |
|
|
|
46,702 |
|
|
|
(5%) |
|
|
|
134,674 |
|
|
|
134,427 |
|
|
|
0% |
|
|
Net interest income
|
|
|
29,779 |
|
|
|
28,032 |
|
|
|
6% |
|
|
|
24,944 |
|
|
|
19% |
|
|
|
83,535 |
|
|
|
77,754 |
|
|
|
7% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets
|
|
$ |
5,262,311 |
|
|
$ |
5,009,433 |
|
|
|
5% |
|
|
$ |
4,452,378 |
|
|
|
18% |
|
|
$ |
5,157,987 |
|
|
$ |
4,359,023 |
|
|
|
18% |
|
|
Yield*
|
|
|
5.58 |
% |
|
|
5.81 |
% |
|
|
(4%) |
|
|
|
6.40 |
% |
|
|
(13%) |
|
|
|
5.66 |
% |
|
|
6.50 |
% |
|
|
(13%) |
|
|
Cost of funds*
|
|
|
3.33 |
% |
|
|
3.52 |
% |
|
|
(5%) |
|
|
|
4.17 |
% |
|
|
(20%) |
|
|
|
3.49 |
% |
|
|
4.12 |
% |
|
|
(15%) |
|
|
Net interest margin*
|
|
|
2.25 |
% |
|
|
2.29 |
% |
|
|
(2%) |
|
|
|
2.23 |
% |
|
|
1% |
|
|
|
2.17 |
% |
|
|
2.38 |
% |
|
|
(9%) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gross credit assets
|
|
$ |
4,634,349 |
|
|
$ |
4,418,243 |
|
|
|
5% |
|
|
$ |
3,982,164 |
|
|
|
16% |
|
|
$ |
4,489,580 |
|
|
$ |
3,931,191 |
|
|
|
14% |
|
|
Net interest margin on credit assets*
|
|
|
2.55 |
% |
|
|
2.59 |
% |
|
|
(2%) |
|
|
|
2.41 |
% |
|
|
6% |
|
|
|
2.50 |
% |
|
|
2.58 |
% |
|
|
(3%) |
|
|
* See definition in "Non-GAAP and Other Financial Measures" section below.
|
Q3 2025 vs Q3 2024
Net interest margin increased 2 bps due primarily to:
|
Reduction in cost of funds resulting from the renewal of maturing deposits at lower interest rates; and,
|
|
Lower interest expense attributable primarily due to diminished impact of the atypically inverted yield curve that existed throughout fiscal 2024, and which is now trending towards normalization.
|
VersaBank – Q3 2025 MD&A
14
Offset partially by:
|
Continued growth in the RPP 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.
|
Q3 2025 vs Q2 2025
Net interest margin decreased 4 bps due primarily to:
|
Continued growth in the RPP 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.
|
Q3 YTD 2025 vs Q3 YTD 2024
Net interest margin decreased 21 bps due primarily to:
|
Continued growth in the RPP 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 diminished impact of the atypically inverted yield curve that existed throughout fiscal 2024, and which is now trending towards normalization.
|
Non-Interest Income
Non-interest income is composed of revenue generated by DRTC and income derived from miscellaneous transaction fees not directly attributable to credit assets.
Non-interest income for the quarter ended July 31, 2025 decreased 12% to $1.8 million from $2.1 million last year and $2.1 million from last quarter. The decrease from the comparative periods was a function primarily of lower client engagements in the current quarter.
Non-interest income for the nine months ended July 31, 2025 was $6.0 million compared with $6.6 million for the same period a year ago. The year-over-year trend was due primarily to the timing of client engagements.
VersaBank – Q3 2025 MD&A
15
Provision for Credit Losses
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the three months ended:
|
|
|
For the nine months ended:
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
| |
|
2025
|
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses by credit asset:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable purchase program
|
|
$ |
981 |
|
|
$ |
1,029 |
|
|
$ |
358 |
|
|
$ |
3,198 |
|
|
$ |
465 |
|
|
Multi-family residential loans and other
|
|
|
200 |
|
|
|
(140 |
) |
|
|
(359 |
) |
|
|
(104 |
) |
|
|
(577 |
) |
|
Total provision for (recovery of) credit losses
|
|
$ |
1,181 |
|
|
$ |
889 |
|
|
$ |
(1 |
) |
|
$ |
3,094 |
|
|
$ |
(112 |
) |
Q3 2025 vs Q3 2024
VersaBank recorded a provision for credit losses in the amount of $1.2 million in the current quarter compared with a recovery of credit losses in the amount of $1,000 last year due primarily to:
|
Changes in the forward-looking information used by the Bank in its credit risk models; and,
|
|
Higher credit asset balances.
|
Q3 2025 vs Q2 2025
VersaBank recorded a provision for credit losses in the amount of $1.2 million in the current quarter compared with a provision for credit losses in the amount of $889,000 in the second quarter of fiscal 2025, due primarily to:
|
Changes in the forward-looking information used by the Bank in its credit risk models; and,
|
|
Higher credit asset balances.
|
Q3 YTD 2025 vs Q3 YTD 2024
VersaBank recorded a provision for credit losses in the amount of $3.1 million compared with a recovery of credit losses in the amount of $112,000 last year due primarily to:
|
Changes in the forward-looking information used by the Bank in its credit risk models; and,
|
|
Higher credit asset balances.
|
VersaBank – Q3 2025 MD&A
16
Non-Interest Expenses
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the three months ended:
|
|
|
For the nine months ended:
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
|
July 31
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
|
2025
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
$ |
10,099 |
|
|
$ |
9,155 |
|
|
|
10% |
|
|
$ |
7,507 |
|
|
|
35% |
|
|
$ |
27,868 |
|
|
$ |
21,454 |
|
|
|
30% |
|
|
General and administrative
|
|
|
9,717 |
|
|
|
6,720 |
|
|
|
45% |
|
|
|
4,833 |
|
|
|
101% |
|
|
|
21,926 |
|
|
|
12,723 |
|
|
|
72% |
|
|
Premises and equipment
|
|
|
1,833 |
|
|
|
1,641 |
|
|
|
12% |
|
|
|
1,194 |
|
|
|
54% |
|
|
|
5,070 |
|
|
|
3,566 |
|
|
|
42% |
|
|
Total non-interest expenses
|
|
$ |
21,649 |
|
|
$ |
17,516 |
|
|
|
24% |
|
|
$ |
13,534 |
|
|
|
60% |
|
|
$ |
54,864 |
|
|
$ |
37,743 |
|
|
|
45% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency Ratio
|
|
|
69 |
% |
|
|
58 |
% |
|
|
19% |
|
|
|
50 |
% |
|
|
38% |
|
|
|
61 |
% |
|
|
45 |
% |
|
|
36% |
|
Q3 2025 vs Q3 2024
Non-interest expenses, including $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, increased 60% to $21.6 million due primarily to:
|
Incremental operating cost associated with VersaBank USA operations that began on August 30, 2024; including costs being incurred ahead of anticipated asset growth and revenue generated by the launch of US RPP through VersaBank USA; and,
|
|
Project costs associated with the Proposed Realignment of Corporate Structure.
|
Q3 2025 vs Q2 2025
Non-interest expenses, including $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, increased 24% due primarily to:
|
Incremental onboarding costs to support the VersaBank USA operations that began on August 30, 2024; including costs being incurred ahead of anticipated asset growth and revenue generated by the launch of US RPP through VersaBank USA; and,
|
|
Project costs associated with the Proposed Realignment of Corporate Structure.
|
Q3 YTD 2025 vs Q3 YTD 2024
Non-interest expenses, including $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure, increased 45% due primarily to:
|
Incremental operating cost associated with VersaBank USA operations that began on August 30, 2024, including costs being incurred ahead of anticipated asset growth and revenue generated by the launch of US RPP through VersaBank USA; and,
|
|
Project costs associated with the Proposed Realignment of Corporate Structure.
|
VersaBank – Q3 2025 MD&A
17
Income Tax Provision
The Bank’s effective tax rate for the current year is estimated to be approximately 27% compared with approximately 27% for fiscal 2024. Any shift in the effective tax rate from the estimated annual tax rate will be primarily attributable to changes in assumptions on non-deductible expenses and other permanent tax differences, as well as changes in earnings allocation between different tax jurisdictions. Provision for income taxes for the current quarter was $2.2 million compared with $3.8 million for the same period a year ago and $3.2 million last quarter. Provision for income taxes for the nine months ended July 31, 2025, was $8.3 million compared with $12.5 million for the same period a year ago.
VersaBank – Q3 2025 MD&A
18
Financial Review – Balance Sheet
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
5,477,489 |
|
|
$ |
5,047,133 |
|
|
|
9% |
|
|
$ |
4,516,436 |
|
|
|
21% |
|
|
Cash and securities
|
|
|
620,448 |
|
|
|
444,993 |
|
|
|
39% |
|
|
|
401,009 |
|
|
|
55% |
|
|
Credit assets, net of allowance for credit losses
|
|
|
4,778,316 |
|
|
|
4,523,812 |
|
|
|
6% |
|
|
|
4,049,449 |
|
|
|
18% |
|
|
Deposits
|
|
|
4,627,410 |
|
|
|
4,205,185 |
|
|
|
10% |
|
|
|
3,821,185 |
|
|
|
21% |
|
Total Assets
Total assets as at July 31, 2025, were $5.48 billion compared with $4.52 billion a year ago and $5.05 billion last quarter. The year-over-year and sequential increases were due primarily to growth in VersaBank’s RPP portfolio.
Cash and securities
Cash and securities, which are held primarily for liquidity purposes, at July 31, 2025, were $620.4 million, or 11% of total assets, compared with $401.0 million, or 9% of total assets a year ago and $445.0 million, or 9% of total assets last quarter. The increase in liquidity asset balances over a year ago reflects the impact of the additional liquidity held at VersaBank USA.
VersaBank – Q3 2025 MD&A
19
As at July 31, 2025, the Bank held securities totaling $160.1 million (October 31, 2024 - $299.3 million), including accrued interest, comprised of US Treasury Bills with a carrying value of $153.7 million, Government of Canada Treasury Bill with a carrying value of $2.2 million and other securities with a carrying value of $4.3 million.
Credit assets
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable purchase program
|
|
$ |
3,720,442 |
|
|
$ |
3,548,931 |
|
|
|
5% |
|
|
$ |
3,228,354 |
|
|
|
15% |
|
|
Multi-family residential loans and other
|
|
|
1,041,076 |
|
|
|
958,249 |
|
|
|
9% |
|
|
|
801,791 |
|
|
|
30% |
|
| |
|
|
4,761,518 |
|
|
|
4,507,180 |
|
|
|
6% |
|
|
|
4,030,145 |
|
|
|
18% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses
|
|
|
(6,037 |
) |
|
|
(4,958 |
) |
|
|
|
|
|
|
(2,401 |
) |
|
|
|
|
|
Accrued interest
|
|
|
22,835 |
|
|
|
21,590 |
|
|
|
|
|
|
|
21,705 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total credit assets, net of allowance for credit losses
|
|
$ |
4,778,316 |
|
|
$ |
4,523,812 |
|
|
|
6% |
|
|
$ |
4,049,449 |
|
|
|
18% |
|
VersaBank organizes its credit asset portfolios into the following two broad asset categories: Receivable Purchase Program (previously referred to as “Receivable Purchase Program/Point-of-Sale Loans & Leases” or “Point-of-Sale Loans & Leases”) and Multi-Family Residential Loans and Other (the amalgamation of what was previously referred to as “Commercial Real Estate Mortgages”, “Commercial Real Estate Loans”, and “Public Sector and Other Financing”). 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 Receivable Purchase Program (“RPP”) 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 RPP partners.
The Multi-Family Residential Loans and Other (“MROL”) category is composed of two sub-segments: Multi-Family Residential Loans, which consists of CMHC-insured (zero-risk weighted) loans and uninsured loans to real estate developers to finance the construction phase of development of multi-family, student residence, condominium and retirement homes properties, as well as term and bridge loans to real estate developers secured by completed aforementioned properties and units. It also includes 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 (approximately 94% as at October 31, 2024) 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.
VersaBank – Q3 2025 MD&A
20
Q3 2025 vs Q3 2024
Credit assets increased 18% to $4.78 billion due primarily to:
|
Higher RPP portfolio balances, which increased 15% year-over-year due primarily to consistent demand for home improvement/HVAC receivable financing in Canada and the US;
|
|
Higher multi-family residential lending balances, primarily in the lower risk-weighted CMHC-insured portfolio; and,
|
|
Incremental lending assets growth through the acquisition of SBH on August 30, 2024.
|
Q3 2025 vs Q2 2025
Credit assets increased 6% due primarily to:
|
Higher RPP portfolio balances, which increased 5% sequentially; and,
|
|
Higher 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 July 31, 2025 was $4.5 million compared with $4.2 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 July 31, 2025, 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 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.
VersaBank – Q3 2025 MD&A
21
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ECL allowance by lending asset:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable purchase program
|
|
$ |
3,981 |
|
|
$ |
3,000 |
|
|
|
33% |
|
|
$ |
565 |
|
|
|
605% |
|
|
Multi-family residential loans and other
|
|
|
2,056 |
|
|
|
1,958 |
|
|
|
5% |
|
|
|
1,836 |
|
|
|
12% |
|
|
Total ECL allowance
|
|
$ |
6,037 |
|
|
$ |
4,958 |
|
|
|
22% |
|
|
$ |
2,401 |
|
|
|
151% |
|
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ECL allowance by stage:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ECL allowance stage 1
|
|
$ |
4,434 |
|
|
$ |
3,760 |
|
|
|
18% |
|
|
$ |
2,002 |
|
|
|
121% |
|
|
ECL allowance stage 2
|
|
|
399 |
|
|
|
1,168 |
|
|
|
(66%) |
|
|
|
399 |
|
|
|
0% |
|
|
ECL allowance stage 3
|
|
|
1,204 |
|
|
|
30 |
|
|
|
3913% |
|
|
|
- |
|
|
|
|
|
|
Total ECL allowance
|
|
$ |
6,037 |
|
|
$ |
4,958 |
|
|
|
22% |
|
|
$ |
2,401 |
|
|
|
151% |
|
Q3 2025 vs Q3 2024
VersaBank’s ECL allowance as at July 31, 2025, was $6.04 million compared with $2.40 million a year ago due primarily to:
|
Changes in the forward-looking information used by the Bank in its credit risk models;
|
|
A recalibration of the calculation in the RPP portfolio in the prior year to align more closely with empirical data and general credit performance; and,
|
|
Higher credit asset balances.
|
Q3 2025 vs Q2 2025
VersaBank’s ECL allowance as at July 31, 2025, was $6.04 million compared with $4.96 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.
|
VersaBank – Q3 2025 MD&A
22
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 2025 include global tariff policies, while stabilizing, still carry uncertainty regarding their size, scope, and timing. Tariffs may pose challenges to both the Canadian and US economies, potentially leading to reduced economic activity. A decline in export demand could dampen investment and hiring, thereby slowing consumption growth. Although the economy is expected to avoid a recession, annual GDP growth will likely decelerate by the end of 2025. As economic momentum slows, we anticipate some rate cuts by the Bank of Canada and the US Federal Reserve. The unemployment rate forecast has been revised upward in response to a more subdued growth outlook. Additionally, upcoming changes to Canadian immigration policy are expected to reduce labor force growth in 2025, which could further influence the unemployment rate. While tariffs may contribute to future inflationary pressures, these effects could be overshadowed by broader recession concerns.
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 July 31, 2025 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.
VersaBank – Q3 2025 MD&A
23
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.
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 July 31, 2025:
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Reported
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
| |
|
ECL
|
|
|
Upside
|
|
|
Baseline
|
|
|
Downside
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for expected credit losses
|
|
$ |
6,037 |
|
|
$ |
5,470 |
|
|
$ |
5,927 |
|
|
$ |
6,770 |
|
|
Provision (recovery) from reported ECL
|
|
|
|
|
|
|
(567 |
) |
|
|
(110 |
) |
|
|
733 |
|
|
Variance from reported ECL (%)
|
|
|
|
|
|
|
(9% |
) |
|
|
(2% |
) |
|
|
12 |
% |
The uncertainty associated with the directionality, velocity and magnitude of both interest rates and inflation as well as the general uncertainty associated with the broader Canadian and US economies 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 coming quarters.
VersaBank – Q3 2025 MD&A
24
Considering the analysis set out above and based on management’s review of the credit assets and credit data comprising VersaBank’s portfolios, 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 losses.
Deposits
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Licensed insolvency trustee firms
|
|
$ |
822,650 |
|
|
$ |
822,260 |
|
|
|
0% |
|
|
$ |
706,918 |
|
|
|
16% |
|
|
Deposit brokers
|
|
|
3,804,760 |
|
|
|
3,382,925 |
|
|
|
12% |
|
|
|
3,114,267 |
|
|
|
22% |
|
|
Total deposits
|
|
$ |
4,627,410 |
|
|
$ |
4,205,185 |
|
|
|
10% |
|
|
$ |
3,821,185 |
|
|
|
21% |
|
VersaBank has established three core low-cost deposit funding channels: Deposit brokers (previously referred to as “Personal Deposits”) in Canada and the US, Licensed Insolvency Trustee firms (previously referred to as “Commercial Deposits”) in Canada, and cash reserves retained from VersaBank’s RPP partners, which are classified as other liabilities.
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.
Q3 2025 vs Q3 2024
Deposits increased 21% to $4.6 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.
|
Q3 2025 vs Q2 2025
Deposits increased 10% due primarily to:
|
Higher deposits from brokers attributable to VersaBank increasing activity in its broker market network to fund balance sheet growth.
|
VersaBank – Q3 2025 MD&A
25
Subordinated Notes Payable
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
July 31
|
|
| |
|
2025
|
|
|
2025
|
|
|
2024
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
$ |
102,148 |
|
|
$ |
101,844 |
|
|
$ |
101,641 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
102,148 |
|
|
$ |
101,844 |
|
|
$ |
101,641 |
|
Subordinated notes payable, net of issue costs, were $102.1 million as at July 31, 2025, compared with $101.6 million a year ago and $101.8 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 $528.1 million as at July 31, 2025, compared with $409.0 million a year ago and $528.3 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 $114.2 million corresponding to the common share offering and tax effected issue costs in the amount of CAD $1.8 million.
At July 31, 2025, there were 32,167,644 common shares outstanding compared with 25,964,424 common shares outstanding a year ago and 32,518,786 common shares outstanding last quarter.
No common shares were issued in connection with the exercise of stock options during the current quarter, in the same period year ago and in the sequential quarter.
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 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.
VersaBank – Q3 2025 MD&A
26
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 July 31, 2025, the Bank purchased and cancelled 351,142 common shares for $5.4 million, reducing the Bank’s common share capital value by $3.8 million and retained earnings by $1.7 million.
For the nine-month period ended July 31, 2025, the Bank purchased and cancelled 351,142 common shares for $5.4 million, reducing the Bank’s common share capital value by $3.8 million and retained earnings by $1.7 million.
Q3 2025 vs Q3 2024 vs Q2 2025
Shareholders’ equity increased 29% compared with a year ago and decreased marginally compared with last quarter. The year-over-year increase was due primarily to the December 18, 2024 treasury common share offering and higher retained earnings attributable to net income earned over the current quarter, offset partially by the purchase and cancellation of common shares under the NCIB in the current quarter and payment of common share dividends in the same period. The year-over-year variance also reflects the redemption of the Non-Cumulative Series 1 preferred shares on October 31, 2024.
VersaBank’s book value per common share as at July 31, 2025 was $16.42 compared with $15.23 a year ago and $16.25 last quarter. The year-over-year and sequential increases were due primarily the December 18, 2024 treasury common share offering and to higher retained earnings attributable to net income earned in the current quarter offset partially by the purchase and cancellation of common shares under the NCIB 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.
VersaBank – Q3 2025 MD&A
27
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 $72,000 for the same period a year ago and $nil last quarter, relating to the estimated fair value of stock options granted. The recognized compensation expense for the nine-month period ended July 31, 2025, totaled $75,000 compared with $276,000 for the same period a year ago. See note 9 to the unaudited interim consolidated financial statements for additional information relating to stock options.
Updated Share Information
As at September 2, 2025, there were no changes since July 31, 2025 in the number of common shares and common share options outstanding.
Off-Balance Sheet Arrangements
As at July 31, 2025, 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.
VersaBank – Q3 2025 MD&A
28
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
| |
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 capital
|
|
$ |
507,212 |
|
|
$ |
507,222 |
|
|
|
0% |
|
|
$ |
384,496 |
|
|
|
32% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Tier 1 capital
|
|
$ |
507,212 |
|
|
$ |
507,222 |
|
|
|
0% |
|
|
$ |
398,143 |
|
|
|
27% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Tier 2 capital
|
|
$ |
109,867 |
|
|
$ |
108,548 |
|
|
|
1% |
|
|
$ |
105,969 |
|
|
|
4% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total regulatory capital
|
|
$ |
617,079 |
|
|
$ |
615,770 |
|
|
|
0% |
|
|
$ |
504,112 |
|
|
|
22% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets
|
|
$ |
3,740,088 |
|
|
$ |
3,551,398 |
|
|
|
5% |
|
|
$ |
3,273,524 |
|
|
|
14% |
|
|
Capital ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CET1 capital ratio
|
|
|
13.56 |
% |
|
|
14.28 |
% |
|
|
(5%) |
|
|
|
11.75 |
% |
|
|
15% |
|
|
Tier 1 capital ratio
|
|
|
13.56 |
% |
|
|
14.28 |
% |
|
|
(5%) |
|
|
|
12.16 |
% |
|
|
12% |
|
|
Total capital ratio
|
|
|
16.50 |
% |
|
|
17.34 |
% |
|
|
(5%) |
|
|
|
15.40 |
% |
|
|
7% |
|
|
Leverage ratio
|
|
|
8.90 |
% |
|
|
9.61 |
% |
|
|
(7%) |
|
|
|
8.54 |
% |
|
|
4% |
|
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, the redemption of the Non-Cumulative Series 1 preferred shares on October 31, 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 July 31, 2025, 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, 2024.
VersaBank – Q3 2025 MD&A
29
Liquidity
The unaudited Consolidated Statement of Cash Flows for the nine months ended July 31, 2025, shows cash used in operations in the amount of $4.9 million compared with cash provided by operations in the amount of $119.4 million for the same period last year. The current period reflects outflows to fund credit assets exceeding deposits raised and cash from operations. The comparative period reflects cash inflows from deposits raised and cash from operations exceeding outflows to fund credit assets. 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 July 31, 2025, the duration difference between assets and liabilities was (1.7) months compared with (1.6) months as at October 31, 2024. As at July 31, 2025, VersaBank’s assets would reprice faster than its liabilities in the event of a future change in interest rates.
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
July 31, 2025
|
|
|
October 31, 2024
|
|
| |
|
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
|
|
$ |
6,244 |
|
|
$ |
(6,481 |
) |
|
$ |
5,223 |
|
|
$ |
(5,430 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duration difference between assets and liabilities (months)
|
|
|
(1.7 |
) |
|
|
|
|
|
|
(1.6 |
) |
|
|
|
|
Contractual Obligations
As at July 31, 2025, VersaBank had an outstanding contract established for asset liability management purposes to swap between fixed and floating interest rates with a notional amount totalling $20.6 million which qualified for hedge accounting. 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, 2024.
VersaBank – Q3 2025 MD&A
30
Results of Operating Segments
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the three months ended
|
|
July 31, 2025
|
|
| |
|
Digital Banking
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
| |
|
Canada
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Net interest income
|
|
$ |
26,656 |
|
|
$ |
3,123 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
29,779 |
|
|
Non-interest income
|
|
|
(37 |
) |
|
|
(7 |
) |
|
|
622 |
|
|
|
1,569 |
|
|
|
(343 |
) |
|
|
1,804 |
|
|
Total revenue
|
|
|
26,619 |
|
|
|
3,116 |
|
|
|
622 |
|
|
|
1,569 |
|
|
|
(343 |
) |
|
|
31,583 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses
|
|
|
1,201 |
|
|
|
(20 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,181 |
|
| |
|
|
25,418 |
|
|
|
3,136 |
|
|
|
622 |
|
|
|
1,569 |
|
|
|
(343 |
) |
|
|
30,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
7,214 |
|
|
|
1,174 |
|
|
|
214 |
|
|
|
1,497 |
|
|
|
- |
|
|
|
10,099 |
|
|
General and administrative
|
|
|
8,636 |
|
|
|
1,163 |
|
|
|
47 |
|
|
|
214 |
|
|
|
(343 |
) |
|
|
9,717 |
|
|
Premises and equipment
|
|
|
898 |
|
|
|
186 |
|
|
|
373 |
|
|
|
376 |
|
|
|
- |
|
|
|
1,833 |
|
| |
|
|
16,748 |
|
|
|
2,523 |
|
|
|
634 |
|
|
|
2,087 |
|
|
|
(343 |
) |
|
|
21,649 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
8,670 |
|
|
|
613 |
|
|
|
(12 |
) |
|
|
(518 |
) |
|
|
- |
|
|
|
8,753 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
2,150 |
|
|
|
176 |
|
|
|
(35 |
) |
|
|
(120 |
) |
|
|
- |
|
|
|
2,171 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
6,520 |
|
|
$ |
437 |
|
|
$ |
23 |
|
|
$ |
(398 |
) |
|
$ |
- |
|
|
$ |
6,582 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
5,124,771 |
|
|
$ |
348,389 |
|
|
$ |
11,543 |
|
|
$ |
25,015 |
|
|
$ |
(32,229 |
) |
|
$ |
5,477,489 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$ |
4,790,738 |
|
|
$ |
155,228 |
|
|
$ |
9,491 |
|
|
$ |
19,410 |
|
|
$ |
(25,520 |
) |
|
$ |
4,949,347 |
|
|
for the three months ended
|
|
April 30, 2025
|
|
| |
|
Digital Banking
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
| |
|
Canada
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Net interest income
|
|
$ |
25,525 |
|
|
$ |
2,507 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
28,032 |
|
|
Non-interest income
|
|
|
122 |
|
|
|
(18 |
) |
|
|
569 |
|
|
|
1,789 |
|
|
|
(355 |
) |
|
|
2,107 |
|
|
Total revenue
|
|
|
25,647 |
|
|
|
2,489 |
|
|
|
569 |
|
|
|
1,789 |
|
|
|
(355 |
) |
|
|
30,139 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses
|
|
|
954 |
|
|
|
(65 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
889 |
|
| |
|
|
24,693 |
|
|
|
2,554 |
|
|
|
569 |
|
|
|
1,789 |
|
|
|
(355 |
) |
|
|
29,250 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
5,836 |
|
|
|
1,464 |
|
|
|
253 |
|
|
|
1,602 |
|
|
|
- |
|
|
|
9,155 |
|
|
General and administrative
|
|
|
5,267 |
|
|
|
800 |
|
|
|
343 |
|
|
|
665 |
|
|
|
(355 |
) |
|
|
6,720 |
|
|
Premises and equipment
|
|
|
947 |
|
|
|
104 |
|
|
|
123 |
|
|
|
467 |
|
|
|
- |
|
|
|
1,641 |
|
| |
|
|
12,050 |
|
|
|
2,368 |
|
|
|
719 |
|
|
|
2,734 |
|
|
|
(355 |
) |
|
|
17,516 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
12,643 |
|
|
|
186 |
|
|
|
(150 |
) |
|
|
(945 |
) |
|
|
- |
|
|
|
11,734 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
3,443 |
|
|
|
53 |
|
|
|
2 |
|
|
|
(293 |
) |
|
|
- |
|
|
|
3,205 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
9,200 |
|
|
$ |
133 |
|
|
$ |
(152 |
) |
|
$ |
(652 |
) |
|
$ |
- |
|
|
$ |
8,529 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
4,761,444 |
|
|
$ |
281,153 |
|
|
$ |
11,086 |
|
|
$ |
25,224 |
|
|
$ |
(31,774 |
) |
|
$ |
5,047,133 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$ |
4,386,758 |
|
|
$ |
144,517 |
|
|
$ |
9,029 |
|
|
$ |
19,708 |
|
|
$ |
(41,185 |
) |
|
$ |
4,518,827 |
|
VersaBank – Q3 2025 MD&A
31
|
for the three months ended
|
|
July 31, 2024
|
|
| |
|
Digital Banking
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
| |
|
Canada
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Net interest income
|
|
$ |
24,944 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
24,944 |
|
|
Non-interest income
|
|
|
175 |
|
|
|
- |
|
|
|
816 |
|
|
|
1,403 |
|
|
|
(342 |
) |
|
|
2,052 |
|
|
Total revenue
|
|
|
25,119 |
|
|
|
- |
|
|
|
816 |
|
|
|
1,403 |
|
|
|
(342 |
) |
|
|
26,996 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
| |
|
|
25,120 |
|
|
|
- |
|
|
|
816 |
|
|
|
1,403 |
|
|
|
(342 |
) |
|
|
26,997 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
5,945 |
|
|
|
- |
|
|
|
291 |
|
|
|
1,271 |
|
|
|
- |
|
|
|
7,507 |
|
|
General and administrative
|
|
|
4,729 |
|
|
|
- |
|
|
|
135 |
|
|
|
311 |
|
|
|
(342 |
) |
|
|
4,833 |
|
|
Premises and equipment
|
|
|
824 |
|
|
|
- |
|
|
|
70 |
|
|
|
300 |
|
|
|
- |
|
|
|
1,194 |
|
| |
|
|
11,498 |
|
|
|
- |
|
|
|
496 |
|
|
|
1,882 |
|
|
|
(342 |
) |
|
|
13,534 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
13,622 |
|
|
|
- |
|
|
|
320 |
|
|
|
(479 |
) |
|
|
- |
|
|
|
13,463 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
3,811 |
|
|
|
- |
|
|
|
17 |
|
|
|
(70 |
) |
|
|
- |
|
|
|
3,758 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
9,811 |
|
|
$ |
- |
|
|
$ |
303 |
|
|
$ |
(409 |
) |
|
$ |
- |
|
|
$ |
9,705 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
4,507,158 |
|
|
$ |
- |
|
|
$ |
3,181 |
|
|
$ |
25,152 |
|
|
$ |
(19,055 |
) |
|
$ |
4,516,436 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$ |
4,102,239 |
|
|
$ |
- |
|
|
$ |
1,215 |
|
|
$ |
28,256 |
|
|
$ |
(24,259 |
) |
|
$ |
4,107,451 |
|
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the nine months ended
|
|
July 31, 2025
|
|
|
July 31, 2024
|
|
| |
|
Digital Banking
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
| |
|
Canada
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Canada
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Net interest income
|
|
$ |
75,866 |
|
|
$ |
7,669 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
83,535 |
|
|
$ |
77,754 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
77,754 |
|
|
Non-interest income
|
|
|
210 |
|
|
|
(24 |
) |
|
|
1,533 |
|
|
|
5,347 |
|
|
|
(1,052 |
) |
|
|
6,014 |
|
|
|
557 |
|
|
|
898 |
|
|
|
6,157 |
|
|
|
(1,018 |
) |
|
|
6,594 |
|
|
Total revenue
|
|
|
76,076 |
|
|
|
7,645 |
|
|
|
1,533 |
|
|
|
5,347 |
|
|
|
(1,052 |
) |
|
|
89,549 |
|
|
|
78,311 |
|
|
|
898 |
|
|
|
6,157 |
|
|
|
(1,018 |
) |
|
|
84,348 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses
|
|
|
3,188 |
|
|
|
(94 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,094 |
|
|
|
(112 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(112 |
) |
| |
|
|
72,888 |
|
|
|
7,739 |
|
|
|
1,533 |
|
|
|
5,347 |
|
|
|
(1,052 |
) |
|
|
86,455 |
|
|
|
78,423 |
|
|
|
898 |
|
|
|
6,157 |
|
|
|
(1,018 |
) |
|
|
84,460 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
18,339 |
|
|
|
3,802 |
|
|
|
684 |
|
|
|
5,043 |
|
|
|
- |
|
|
|
27,868 |
|
|
|
17,040 |
|
|
|
392 |
|
|
|
4,022 |
|
|
|
- |
|
|
|
21,454 |
|
|
General and administrative
|
|
|
18,619 |
|
|
|
2,560 |
|
|
|
434 |
|
|
|
1,365 |
|
|
|
(1,052 |
) |
|
|
21,926 |
|
|
|
12,450 |
|
|
|
207 |
|
|
|
1,084 |
|
|
|
(1,018 |
) |
|
|
12,723 |
|
|
Premises and equipment
|
|
|
2,748 |
|
|
|
399 |
|
|
|
544 |
|
|
|
1,379 |
|
|
|
- |
|
|
|
5,070 |
|
|
|
2,437 |
|
|
|
93 |
|
|
|
1,036 |
|
|
|
- |
|
|
|
3,566 |
|
| |
|
|
39,706 |
|
|
|
6,761 |
|
|
|
1,662 |
|
|
|
7,787 |
|
|
|
(1,052 |
) |
|
|
54,864 |
|
|
|
31,927 |
|
|
|
692 |
|
|
|
6,142 |
|
|
|
(1,018 |
) |
|
|
37,743 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
33,182 |
|
|
|
978 |
|
|
|
(129 |
) |
|
|
(2,440 |
) |
|
|
- |
|
|
|
31,591 |
|
|
|
46,496 |
|
|
|
206 |
|
|
|
15 |
|
|
|
- |
|
|
|
46,717 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
8,698 |
|
|
|
305 |
|
|
|
(33 |
) |
|
|
(633 |
) |
|
|
- |
|
|
|
8,337 |
|
|
|
12,431 |
|
|
|
50 |
|
|
|
4 |
|
|
|
- |
|
|
|
12,485 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
24,484 |
|
|
$ |
673 |
|
|
$ |
(96 |
) |
|
$ |
(1,807 |
) |
|
$ |
- |
|
|
$ |
23,254 |
|
|
$ |
34,065 |
|
|
$ |
156 |
|
|
$ |
11 |
|
|
$ |
- |
|
|
$ |
34,232 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
5,124,771 |
|
|
$ |
348,389 |
|
|
$ |
11,543 |
|
|
$ |
25,015 |
|
|
$ |
(32,229 |
) |
|
$ |
5,477,489 |
|
|
$ |
4,507,158 |
|
|
$ |
3,181 |
|
|
$ |
25,152 |
|
|
$ |
(19,055 |
) |
|
$ |
4,516,436 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$ |
4,790,738 |
|
|
$ |
155,228 |
|
|
$ |
9,491 |
|
|
$ |
19,410 |
|
|
$ |
(25,520 |
) |
|
$ |
4,949,347 |
|
|
$ |
4,102,239 |
|
|
$ |
1,215 |
|
|
$ |
28,256 |
|
|
$ |
(24,259 |
) |
|
$ |
4,107,451 |
|
VersaBank – Q3 2025 MD&A
32
Digital Banking Canada
Note: The financial results for Digital Banking Canada contain certain non-interest expenses for general corporate administrative costs.
Q3 2025 vs Q3 2024
Net income decreased $3.3 million, or 34%, to $6.5 million due primarily to the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure and general corporate administrative costs, as well as higher provision for credit losses, offset partially by higher net interest income.
Q3 2025 vs Q2 2025
Net income decreased $2.7 million, or 29%, due primarily to the $4.2 million in project costs associated with the Proposed Realignment of Corporate Structure, higher general corporate administrative costs, higher provision for credit losses and higher non-interest expenses, offset partially by higher net interest income.
Q3 YTD 2025 vs Q3 YTD 2024
Net income decreased $9.6 million, or 28%, to $24.5 million due primarily to the $4.4 million in project costs associated with the Proposed Realignment of Corporate Structure and general corporate administrative costs, as well as higher provision for credit losses, offset partially by higher net interest income.
VersaBank – Q3 2025 MD&A
33
Digital Banking USA
Q3 2025 vs Q3 2024
Digital Banking USA began on August 30, 2024 following the acquisition of SBH.
Q3 2025 vs Q2 2025
Net income increased 229% due primarily to higher net interest income, offset partially by higher non-interest expenses reflecting the onboarding of staff and relating operating expense to support the expansion of VersaBank USA.
Q3 YTD 2025 vs Q3 YTD 2024
Digital Banking USA began on August 30, 2024 following the acquisition of SBH.
DRTC (Cybersecurity Services)
Q3 2025 vs Q3 2024
DRTC net loss was $398,000 compared to a net loss of $409,000 last year. The decreased loss was due primarily to higher revenue driven by higher client engagements in the current quarter, offset partially by higher operating expenses related to the onboarding support cost for new cybersecurity offerings beginning in fiscal 2025.
Q3 2025 vs Q2 2025
DRTC net loss was $398,000 compared to a net loss of $652,000 last quarter. The decrease was due primarily lower operating expenses related to the onboarding support cost for new cybersecurity offerings beginning in fiscal 2025, offset partially by lower revenue driven by lower client engagements in the current quarter.
Q3 YTD 2025 vs Q3 YTD 2024
DRTC net loss was $1.8 million compared to a net income of $11,000 last year. The decrease was due primarily to lower revenue driven by lower client engagements in the current period and higher operating expenses related to the onboarding support cost for new cybersecurity offerings beginning in fiscal 2025.
VersaBank – Q3 2025 MD&A
34
Digital Meteor Inc.
Q3 2025 vs Q3 2024
Digital Meteor Inc. net income was $23,000 compared to a net income of $303,000 last year. The trend in earnings was due primarily to lower revenue driven by lower client engagements in the current period and higher operating expenses.
Q3 2025 vs Q2 2025
Digital Meteor Inc. net income was $23,000 compared to a net loss of $152,000 last quarter. The trend in earnings was due primarily to lower operating expenses and higher revenue driven by higher client engagements in the current quarter.
Q3 YTD 2025 vs Q3 YTD 2024
Digital Meteor Inc. net loss was $96,000 compared to a net income of $156,000 last year. The trend in earnings was due primarily to higher operating expenses related to the onboarding support cost for new cybersecurity offerings beginning in fiscal 2025, offset by higher revenue driven by higher client engagements in the current year to date.
VersaBank – Q3 2025 MD&A
35
Summary of Quarterly Results
|
(thousands of Canadian dollars,
except per share amounts)
|
|
2025
|
|
|
2024
|
|
|
2023
|
|
| |
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Q4
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
73,987 |
|
|
$ |
70,976 |
|
|
$ |
73,246 |
|
|
$ |
73,238 |
|
|
$ |
71,646 |
|
|
$ |
71,243 |
|
|
$ |
69,292 |
|
|
$ |
66,089 |
|
|
Yield on assets (%)
|
|
|
5.58 |
% |
|
|
5.81 |
% |
|
|
5.92 |
% |
|
|
6.23 |
% |
|
|
6.40 |
% |
|
|
6.66 |
% |
|
|
6.47 |
% |
|
|
6.40 |
% |
|
Interest expense
|
|
|
44,208 |
|
|
|
42,944 |
|
|
|
47,522 |
|
|
|
48,337 |
|
|
|
46,702 |
|
|
|
45,001 |
|
|
|
42,724 |
|
|
|
39,850 |
|
|
Cost of funds (%)
|
|
|
3.33 |
% |
|
|
3.52 |
% |
|
|
3.84 |
% |
|
|
4.11 |
% |
|
|
4.17 |
% |
|
|
4.21 |
% |
|
|
3.99 |
% |
|
|
3.86 |
% |
|
Net interest income
|
|
|
29,779 |
|
|
|
28,032 |
|
|
|
25,724 |
|
|
|
24,901 |
|
|
|
24,944 |
|
|
|
26,242 |
|
|
|
26,568 |
|
|
|
26,239 |
|
|
Net interest margin (%)
|
|
|
2.25 |
% |
|
|
2.29 |
% |
|
|
2.08 |
% |
|
|
2.12 |
% |
|
|
2.23 |
% |
|
|
2.45 |
% |
|
|
2.48 |
% |
|
|
2.54 |
% |
|
Net interest margin on credit assets (%)
|
|
|
2.55 |
% |
|
|
2.59 |
% |
|
|
2.36 |
% |
|
|
2.34 |
% |
|
|
2.41 |
% |
|
|
2.52 |
% |
|
|
2.63 |
% |
|
|
2.69 |
% |
|
Non-interest income
|
|
|
1,804 |
|
|
|
2,107 |
|
|
|
2,103 |
|
|
|
2,384 |
|
|
|
2,052 |
|
|
|
2,259 |
|
|
|
2,283 |
|
|
|
2,934 |
|
|
Total revenue
|
|
|
31,583 |
|
|
|
30,139 |
|
|
|
27,827 |
|
|
|
27,285 |
|
|
|
26,996 |
|
|
|
28,501 |
|
|
|
28,851 |
|
|
|
29,173 |
|
|
Provision for (recovery of) credit losses
|
|
|
1,181 |
|
|
|
889 |
|
|
|
1,024 |
|
|
|
(156 |
) |
|
|
(1 |
) |
|
|
16 |
|
|
|
(127 |
) |
|
|
(184 |
) |
|
Non-interest expenses
|
|
|
21,649 |
|
|
|
17,516 |
|
|
|
15,699 |
|
|
|
19,365 |
|
|
|
13,534 |
|
|
|
12,185 |
|
|
|
12,024 |
|
|
|
12,441 |
|
|
Efficiency ratio
|
|
|
69 |
% |
|
|
58 |
% |
|
|
56 |
% |
|
|
71 |
% |
|
|
50 |
% |
|
|
43 |
% |
|
|
42 |
% |
|
|
43 |
% |
|
Adjusted efficiency ratio
|
|
|
55 |
% |
|
|
57 |
% |
|
|
56 |
% |
|
|
71 |
% |
|
|
50 |
% |
|
|
43 |
% |
|
|
42 |
% |
|
|
43 |
% |
|
Tax provision
|
|
|
2,171 |
|
|
|
3,205 |
|
|
|
2,961 |
|
|
|
2,560 |
|
|
|
3,758 |
|
|
|
4,472 |
|
|
|
4,255 |
|
|
|
4,437 |
|
|
Net income
|
|
$ |
6,582 |
|
|
$ |
8,529 |
|
|
$ |
8,143 |
|
|
$ |
5,516 |
|
|
$ |
9,705 |
|
|
$ |
11,828 |
|
|
$ |
12,699 |
|
|
$ |
12,479 |
|
|
Adjusted net income
|
|
$ |
9,670 |
|
|
$ |
8,682 |
|
|
$ |
8,143 |
|
|
$ |
5,516 |
|
|
$ |
9,705 |
|
|
$ |
11,828 |
|
|
$ |
12,699 |
|
|
$ |
12,479 |
|
|
Income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.20 |
|
|
$ |
0.26 |
|
|
$ |
0.28 |
|
|
$ |
0.20 |
|
|
$ |
0.36 |
|
|
$ |
0.45 |
|
|
$ |
0.48 |
|
|
$ |
0.47 |
|
|
Diluted
|
|
$ |
0.20 |
|
|
$ |
0.26 |
|
|
$ |
0.28 |
|
|
$ |
0.20 |
|
|
$ |
0.36 |
|
|
$ |
0.45 |
|
|
$ |
0.48 |
|
|
$ |
0.47 |
|
|
Adjusted income per common share basic and diluted
|
|
$ |
0.30 |
|
|
$ |
0.27 |
|
|
$ |
0.28 |
|
|
$ |
0.20 |
|
|
$ |
0.36 |
|
|
$ |
0.45 |
|
|
$ |
0.48 |
|
|
$ |
0.47 |
|
|
Return on average common equity
|
|
|
4.94 |
% |
|
|
6.67 |
% |
|
|
7.02 |
% |
|
|
5.28 |
% |
|
|
9.63 |
% |
|
|
12.36 |
% |
|
|
13.41 |
% |
|
|
13.58 |
% |
|
Adjusted return on average common equity
|
|
|
7.24 |
% |
|
|
6.78 |
% |
|
|
7.02 |
% |
|
|
5.28 |
% |
|
|
9.63 |
% |
|
|
12.36 |
% |
|
|
13.41 |
% |
|
|
13.58 |
% |
|
Return on average total assets
|
|
|
0.50 |
% |
|
|
0.70 |
% |
|
|
0.66 |
% |
|
|
0.45 |
% |
|
|
0.85 |
% |
|
|
1.08 |
% |
|
|
1.16 |
% |
|
|
1.19 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 RPP portfolio as well as growth from the MROL portfolio;
|
|
Lower NIM attributable primarily to lower yields earned on the Bank’s credit assets, offset partially by lower cost of funds;
|
|
Higher provision for credit losses attributable primarily to changes in the forward-looking information used by the Bank in its credit risk models; and,
|
|
Higher non-interest expense attributable primarily to: (i) incremental onboarding costs to support the VersaBank USA operations that began on August 30, 2024, (ii) higher general operating costs consistent with increased business activities, and (iii) project costs associated with the Proposed Realignment of Corporate Structure.
|
VersaBank – Q3 2025 MD&A
36
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.
| |
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Return on average common equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
6,582 |
|
|
$ |
9,705 |
|
|
$ |
23,254 |
|
|
$ |
34,232 |
|
|
Preferred share dividends
|
|
|
- |
|
|
|
(247 |
) |
|
|
- |
|
|
|
(741 |
) |
|
Net income less preferred share dividends
|
|
|
6,582 |
|
|
|
9,458 |
|
|
|
23,254 |
|
|
|
33,491 |
|
|
Annualized net income less preferred share dividends
|
|
|
26,113 |
|
|
|
37,626 |
|
|
|
31,091 |
|
|
|
44,736 |
|
|
Average common equity
|
|
$ |
528,224 |
|
|
$ |
390,898 |
|
|
$ |
463,673 |
|
|
$ |
379,425 |
|
|
Return on average common equity
|
|
|
4.94 |
% |
|
|
9.63 |
% |
|
|
6.71 |
% |
|
|
11.79 |
% |
Adjusted Return on Average Common Equity is defined as annualized net income less amounts relating to the Proposed Realignment of Corporate Structure 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 Proposed Realignment of Corporate Structure and related tax effect and amounts relating to preferred shares recorded in equity.
| |
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Adjusted return on average common equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
6,582 |
|
|
$ |
9,705 |
|
|
$ |
23,254 |
|
|
$ |
34,232 |
|
|
Adjustment to non-interest expenses
|
|
|
4,230 |
|
|
|
- |
|
|
|
4,440 |
|
|
|
- |
|
|
Adjustment to income tax provision
|
|
|
(1,142 |
) |
|
|
- |
|
|
|
(1,199 |
) |
|
|
- |
|
|
Preferred share dividends
|
|
|
- |
|
|
|
(247 |
) |
|
|
- |
|
|
|
(741 |
) |
|
Adjusted net income less preferred share dividends
|
|
|
9,670 |
|
|
|
9,458 |
|
|
|
26,495 |
|
|
|
33,491 |
|
|
Annualized adjusted net income less preferred share dividends
|
|
|
38,365 |
|
|
|
37,626 |
|
|
|
35,424 |
|
|
|
44,736 |
|
|
Adjusted average common equity
|
|
$ |
529,768 |
|
|
$ |
390,898 |
|
|
$ |
465,217 |
|
|
$ |
379,425 |
|
|
Adjusted return on average common equity
|
|
|
7.24 |
% |
|
|
9.63 |
% |
|
|
7.61 |
% |
|
|
11.79 |
% |
VersaBank – Q3 2025 MD&A
37
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.
| |
|
as at
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars, except shares outstanding and per share amounts)
|
|
2025
|
|
|
2024
|
|
|
Book value per common share
|
|
|
|
|
|
|
|
|
|
Common equity
|
|
$ |
528,142 |
|
|
$ |
395,338 |
|
|
Shares outstanding
|
|
|
32,167,644 |
|
|
|
25,964,424 |
|
|
Book value per common share
|
|
$ |
16.42 |
|
|
$ |
15.23 |
|
Return on Average Total Assets is defined as annualized net income less amounts relating to preferred share dividends, divided by average total assets.
| |
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Return on average total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
6,582 |
|
|
$ |
9,705 |
|
|
$ |
23,254 |
|
|
$ |
34,232 |
|
|
Preferred share dividends
|
|
|
- |
|
|
|
(247 |
) |
|
|
- |
|
|
|
(741 |
) |
|
Net income less preferred share dividends
|
|
|
6,582 |
|
|
|
9,458 |
|
|
|
23,254 |
|
|
|
33,491 |
|
|
Annualized net income less preferred share dividends
|
|
|
26,113 |
|
|
|
37,626 |
|
|
|
31,091 |
|
|
|
44,736 |
|
|
Average Assets
|
|
$ |
5,262,311 |
|
|
$ |
4,452,378 |
|
|
$ |
5,157,987 |
|
|
$ |
4,359,023 |
|
|
Return on average total assets
|
|
|
0.50 |
% |
|
|
0.85 |
% |
|
|
0.60 |
% |
|
|
1.03 |
% |
Adjusted Net Income is defined as net income less amounts relating to the Proposed Realignment of Corporate Structure 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.
| |
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Adjusted net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
6,582 |
|
|
$ |
9,705 |
|
|
$ |
23,254 |
|
|
$ |
34,232 |
|
|
Adjustment to non-interest expenses
|
|
|
4,230 |
|
|
|
- |
|
|
|
4,440 |
|
|
|
- |
|
|
Adjustment to income tax provision
|
|
|
(1,142 |
) |
|
|
- |
|
|
|
(1,199 |
) |
|
|
- |
|
|
Adjusted net income
|
|
$ |
9,670 |
|
|
$ |
9,705 |
|
|
$ |
26,495 |
|
|
$ |
34,232 |
|
Adjusted EPS is defined as annualized net income less amounts relating to the Proposed Realignment of Corporate Structure 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.
| |
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars, except shares outstanding and per share amounts)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Adjusted income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
6,582 |
|
|
$ |
9,705 |
|
|
$ |
23,254 |
|
|
$ |
34,232 |
|
|
Adjustment to non-interest expenses
|
|
|
4,230 |
|
|
|
- |
|
|
|
4,440 |
|
|
|
- |
|
|
Adjustment to income tax provision
|
|
|
(1,142 |
) |
|
|
- |
|
|
|
(1,199 |
) |
|
|
- |
|
|
Preferred share dividends
|
|
|
- |
|
|
|
(247 |
) |
|
|
- |
|
|
|
(741 |
) |
|
Adjusted net income
|
|
|
9,670 |
|
|
|
9,458 |
|
|
|
26,495 |
|
|
|
33,491 |
|
|
Weighted average number of common shares outstanding
|
|
|
32,368,728 |
|
|
|
25,964,424 |
|
|
|
31,302,938 |
|
|
|
25,964,424 |
|
|
Adjusted income per common share
|
|
$ |
0.30 |
|
|
$ |
0.36 |
|
|
$ |
0.85 |
|
|
$ |
1.29 |
|
VersaBank – Q3 2025 MD&A
38
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 to project costs associated with the Bank's potential plan to realign its corporate structure to that of a standard US bank framework, 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.
| |
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Adjusted efficiency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses
|
|
$ |
21,649 |
|
|
$ |
13,534 |
|
|
$ |
54,864 |
|
|
$ |
37,743 |
|
|
Adjustment to non-interest expenses
|
|
|
(4,230 |
) |
|
|
- |
|
|
|
(4,440 |
) |
|
|
- |
|
|
Adjusted non-interest expenses
|
|
|
17,419 |
|
|
|
13,534 |
|
|
|
50,424 |
|
|
|
37,743 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
31,583 |
|
|
|
26,996 |
|
|
|
89,549 |
|
|
|
84,348 |
|
|
Adjusted efficiency ratio
|
|
|
55 |
% |
|
|
50 |
% |
|
|
56 |
% |
|
|
45 |
% |
VersaBank – Q3 2025 MD&A
39
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 2024 Audited Consolidated Financial Statements. There have been no material changes in accounting policies since October 31, 2024.
Controls and Procedures
During the quarter ended July 31, 2025, 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, 2024, 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.
VersaBank – Q3 2025 MD&A
40
Exhibit 99.3
For Immediate Release: September 4, 2025
Attention: Business Editors
VERSABANK THIRD QUARTER RESULTS CONTINUE TO DEMONSTRATE STRENGTH OF BUSINESS MODEL AS US RPP PORTFOLIO RAMPS UP
– Expansion of RPP Program to Add Securitization Expected to Generate Additional Asset and Earnings Growth in Both US and Canada –
– Two New RPP Partners Added in Canada, Including First RPP Securitization Partner –
– VersaBank USA Tokenized Deposit Pilot Program in the United States Underway –
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 third quarter 2025 (“Q3 2025”) unaudited Interim Consolidated Financial Statements for the period ended July 31, 2025 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 third quarter ended July 31, 2025. All figures are in Canadian dollars unless otherwise stated.
Note Regarding VersaBank’s Third Quarter and Year-to-Date Fiscal 2025 Financial Results: VersaBank’s financial results for the third quarter and year-to-date fiscal 2025 reflect the planned, outsized non-interest expense in the amount of $4.2 million for the third quarter and $4.4 million for the year-to-date related to the project costs associated with the Bank’s plan to realign its corporate structure to that of a standard US bank framework, which remains subject to shareholder, regulatory, and other approvals (the “Proposed Realignment of Corporate Structure”). The Bank expects to incur similar costs associated with the Proposed Realignment of Corporate Structure in the fourth quarter of fiscal 2025, at which time a majority of costs associated with the Proposed Realignment of Corporate Structure are expected to have been incurred. The Proposed Realignment of Corporate Structure is intended to realize additional shareholder value, further mitigate risk and reduce corporate costs. The anticipated benefits to incremental shareholder value are expected to exceed the investment.
CONSOLIDATED FINANCIAL SUMMARY
|
(unaudited)
|
|
As at or for the three months ended
|
|
|
As at or for the nine months ended
|
|
| |
|
July 31
|
|
|
April 30
|
|
|
|
|
|
|
July 31
|
|
|
|
|
|
|
July 31
|
|
|
July 31
|
|
|
|
|
|
|
(thousands of Canadian dollars, except per share amounts)
|
|
2025
|
|
|
2025
|
|
|
Change
|
|
|
2024
|
|
|
Change
|
|
|
2025
|
|
|
2024
|
|
|
Change
|
|
|
Financial results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$ |
31,583 |
|
|
$ |
30,139 |
|
|
|
5 |
% |
|
$ |
26,996 |
|
|
|
17 |
% |
|
$ |
89,549 |
|
|
$ |
84,348 |
|
|
|
6 |
% |
|
Cost of funds*
|
|
|
3.33 |
% |
|
|
3.52 |
% |
|
|
(5% |
) |
|
|
4.17 |
% |
|
|
(20% |
) |
|
|
3.49 |
% |
|
|
4.12 |
% |
|
|
(15% |
) |
|
Net interest margin*
|
|
|
2.25 |
% |
|
|
2.29 |
% |
|
|
(2% |
) |
|
|
2.23 |
% |
|
|
1 |
% |
|
|
2.17 |
% |
|
|
2.38 |
% |
|
|
(9% |
) |
|
Net interest margin on credit assets*
|
|
|
2.55 |
% |
|
|
2.59 |
% |
|
|
(2% |
) |
|
|
2.41 |
% |
|
|
6 |
% |
|
|
2.50 |
% |
|
|
2.58 |
% |
|
|
(3% |
) |
|
Return on average common equity*
|
|
|
4.94 |
% |
|
|
6.67 |
% |
|
|
(26% |
) |
|
|
9.63 |
% |
|
|
(49% |
) |
|
|
6.71 |
% |
|
|
11.79 |
% |
|
|
(43% |
) |
|
Adjusted return on average common equity*
|
|
|
7.24 |
% |
|
|
6.78 |
% |
|
|
7 |
% |
|
|
9.63 |
% |
|
|
(25% |
) |
|
|
7.61 |
% |
|
|
11.79 |
% |
|
|
(35% |
) |
|
Net income
|
|
|
6,582 |
|
|
|
8,529 |
|
|
|
(23% |
) |
|
|
9,705 |
|
|
|
(32% |
) |
|
|
23,254 |
|
|
|
34,232 |
|
|
|
(32% |
) |
|
Adjusted net income*
|
|
|
9,670 |
|
|
|
8,682 |
|
|
|
11 |
% |
|
|
9,705 |
|
|
|
0 |
% |
|
|
26,495 |
|
|
|
34,232 |
|
|
|
(23% |
) |
|
Income per common share basic and diluted
|
|
|
0.20 |
|
|
|
0.26 |
|
|
|
(23% |
) |
|
|
0.36 |
|
|
|
(44% |
) |
|
|
0.74 |
|
|
|
1.29 |
|
|
|
(43% |
) |
|
Adjusted income per common share basic and diluted*
|
|
|
0.30 |
|
|
|
0.28 |
|
|
|
7 |
% |
|
|
0.36 |
|
|
|
(17% |
) |
|
|
0.85 |
|
|
|
1.29 |
|
|
|
(34% |
) |
|
Balance sheet and capital ratios**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
5,477,489 |
|
|
$ |
5,047,133 |
|
|
|
9 |
% |
|
$ |
4,516,436 |
|
|
|
21 |
% |
|
$ |
5,477,489 |
|
|
$ |
4,516,436 |
|
|
|
21 |
% |
|
Book value per common share*
|
|
|
16.42 |
|
|
|
16.25 |
|
|
|
1 |
% |
|
|
15.23 |
|
|
|
8 |
% |
|
|
16.42 |
|
|
|
15.23 |
|
|
|
8 |
% |
|
Common Equity Tier 1 (CET1) capital ratio
|
|
|
13.56 |
% |
|
|
14.28 |
% |
|
|
(5% |
) |
|
|
11.75 |
% |
|
|
15 |
% |
|
|
13.56 |
% |
|
|
11.75 |
% |
|
|
15 |
% |
|
Total capital ratio
|
|
|
16.50 |
% |
|
|
17.34 |
% |
|
|
(5% |
) |
|
|
15.40 |
% |
|
|
7 |
% |
|
|
16.50 |
% |
|
|
15.40 |
% |
|
|
7 |
% |
|
Leverage ratio
|
|
|
8.90 |
% |
|
|
9.61 |
% |
|
|
(7% |
) |
|
|
8.54 |
% |
|
|
4 |
% |
|
|
8.90 |
% |
|
|
8.54 |
% |
|
|
4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See definitions under ‘Non-GAAP and Other Financial Measures' in the Q3 2025 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
|
(thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the three months ended
|
|
July 31, 2025
|
|
| |
|
Digital Banking
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
| |
|
Canada
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Net interest income
|
|
$ |
26,656 |
|
|
$ |
3,123 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
29,779 |
|
|
Non-interest income
|
|
|
(37 |
) |
|
|
(7 |
) |
|
|
622 |
|
|
|
1,569 |
|
|
|
(343 |
) |
|
|
1,804 |
|
|
Total revenue
|
|
|
26,619 |
|
|
|
3,116 |
|
|
|
622 |
|
|
|
1,569 |
|
|
|
(343 |
) |
|
|
31,583 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses
|
|
|
1,201 |
|
|
|
(20 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,181 |
|
| |
|
|
25,418 |
|
|
|
3,136 |
|
|
|
622 |
|
|
|
1,569 |
|
|
|
(343 |
) |
|
|
30,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
7,214 |
|
|
|
1,174 |
|
|
|
214 |
|
|
|
1,497 |
|
|
|
- |
|
|
|
10,099 |
|
|
General and administrative
|
|
|
8,636 |
|
|
|
1,163 |
|
|
|
47 |
|
|
|
214 |
|
|
|
(343 |
) |
|
|
9,717 |
|
|
Premises and equipment
|
|
|
898 |
|
|
|
186 |
|
|
|
373 |
|
|
|
376 |
|
|
|
- |
|
|
|
1,833 |
|
| |
|
|
16,748 |
|
|
|
2,523 |
|
|
|
634 |
|
|
|
2,087 |
|
|
|
(343 |
) |
|
|
21,649 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
8,670 |
|
|
|
613 |
|
|
|
(12 |
) |
|
|
(518 |
) |
|
|
- |
|
|
|
8,753 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
2,150 |
|
|
|
176 |
|
|
|
(35 |
) |
|
|
(120 |
) |
|
|
- |
|
|
|
2,171 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
6,520 |
|
|
$ |
437 |
|
|
$ |
23 |
|
|
$ |
(398 |
) |
|
$ |
- |
|
|
$ |
6,582 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
5,124,771 |
|
|
$ |
348,389 |
|
|
$ |
11,543 |
|
|
$ |
25,015 |
|
|
$ |
(32,229 |
) |
|
$ |
5,477,489 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$ |
4,790,738 |
|
|
$ |
155,228 |
|
|
$ |
9,491 |
|
|
$ |
19,410 |
|
|
$ |
(25,520 |
) |
|
$ |
4,949,347 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the three months ended
|
|
April 30, 2025
|
|
| |
|
Digital Banking
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
| |
|
Canada
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Net interest income
|
|
$ |
25,525 |
|
|
$ |
2,507 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
28,032 |
|
|
Non-interest income
|
|
|
122 |
|
|
|
(18 |
) |
|
|
569 |
|
|
|
1,789 |
|
|
|
(355 |
) |
|
|
2,107 |
|
|
Total revenue
|
|
|
25,647 |
|
|
|
2,489 |
|
|
|
569 |
|
|
|
1,789 |
|
|
|
(355 |
) |
|
|
30,139 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses
|
|
|
954 |
|
|
|
(65 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
889 |
|
| |
|
|
24,693 |
|
|
|
2,554 |
|
|
|
569 |
|
|
|
1,789 |
|
|
|
(355 |
) |
|
|
29,250 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
5,836 |
|
|
|
1,464 |
|
|
|
253 |
|
|
|
1,602 |
|
|
|
- |
|
|
|
9,155 |
|
|
General and administrative
|
|
|
5,267 |
|
|
|
800 |
|
|
|
343 |
|
|
|
665 |
|
|
|
(355 |
) |
|
|
6,720 |
|
|
Premises and equipment
|
|
|
947 |
|
|
|
104 |
|
|
|
123 |
|
|
|
467 |
|
|
|
- |
|
|
|
1,641 |
|
| |
|
|
12,050 |
|
|
|
2,368 |
|
|
|
719 |
|
|
|
2,734 |
|
|
|
(355 |
) |
|
|
17,516 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
12,643 |
|
|
|
186 |
|
|
|
(150 |
) |
|
|
(945 |
) |
|
|
- |
|
|
|
11,734 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
3,443 |
|
|
|
53 |
|
|
|
2 |
|
|
|
(293 |
) |
|
|
- |
|
|
|
3,205 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
9,200 |
|
|
$ |
133 |
|
|
$ |
(152 |
) |
|
$ |
(652 |
) |
|
$ |
- |
|
|
$ |
8,529 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
4,761,444 |
|
|
$ |
281,153 |
|
|
$ |
11,086 |
|
|
$ |
25,224 |
|
|
$ |
(31,774 |
) |
|
$ |
5,047,133 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$ |
4,386,758 |
|
|
$ |
144,517 |
|
|
$ |
9,029 |
|
|
$ |
19,708 |
|
|
$ |
(41,185 |
) |
|
$ |
4,518,827 |
|
|
for the three months ended
|
|
July 31, 2024
|
|
| |
|
Digital Banking
|
|
|
Digital Banking
|
|
|
Digital Meteor
|
|
|
DRTC
|
|
|
Eliminations/
|
|
|
Consolidated
|
|
| |
|
Canada
|
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
Net interest income
|
|
$ |
24,944 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
24,944 |
|
|
Non-interest income
|
|
|
175 |
|
|
|
- |
|
|
|
816 |
|
|
|
1,403 |
|
|
|
(342 |
) |
|
|
2,052 |
|
|
Total revenue
|
|
|
25,119 |
|
|
|
- |
|
|
|
816 |
|
|
|
1,403 |
|
|
|
(342 |
) |
|
|
26,996 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery of) credit losses
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
| |
|
|
25,120 |
|
|
|
- |
|
|
|
816 |
|
|
|
1,403 |
|
|
|
(342 |
) |
|
|
26,997 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
|
5,945 |
|
|
|
- |
|
|
|
291 |
|
|
|
1,271 |
|
|
|
- |
|
|
|
7,507 |
|
|
General and administrative
|
|
|
4,729 |
|
|
|
- |
|
|
|
135 |
|
|
|
311 |
|
|
|
(342 |
) |
|
|
4,833 |
|
|
Premises and equipment
|
|
|
824 |
|
|
|
- |
|
|
|
70 |
|
|
|
300 |
|
|
|
- |
|
|
|
1,194 |
|
| |
|
|
11,498 |
|
|
|
- |
|
|
|
496 |
|
|
|
1,882 |
|
|
|
(342 |
) |
|
|
13,534 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
13,622 |
|
|
|
- |
|
|
|
320 |
|
|
|
(479 |
) |
|
|
- |
|
|
|
13,463 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
3,811 |
|
|
|
- |
|
|
|
17 |
|
|
|
(70 |
) |
|
|
- |
|
|
|
3,758 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
9,811 |
|
|
$ |
- |
|
|
$ |
303 |
|
|
$ |
(409 |
) |
|
$ |
- |
|
|
$ |
9,705 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
4,507,158 |
|
|
$ |
- |
|
|
$ |
3,181 |
|
|
$ |
25,152 |
|
|
$ |
(19,055 |
) |
|
$ |
4,516,436 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$ |
4,102,239 |
|
|
$ |
- |
|
|
$ |
1,215 |
|
|
$ |
28,256 |
|
|
$ |
(24,259 |
) |
|
$ |
4,107,451 |
|
MANAGEMENT COMMENTARY
“Our third quarter financial results reflect the ramp up of our Receivable Purchase Program in the United States, alongside better than expected growth in credit assets in Canada, as well as net interest margins consistent with the improved levels we saw in the second quarter, all of which combined to drive revenue to another new record with a very healthy sequential increase in adjusted net income," said Davd Taylor, Founder and President, VersaBank. "Importantly, the financial results for our Canadian Digital Banking operations, excluding the corporate expenses currently included therein, continue to demonstrate the industry leading efficiency and profitability potential of our US Digital Banking operations at scale. We are steadily advancing our plan to realign our corporate structure to that of a standard US bank framework, which we believe will not only create additional shareholder value in and of itself but also more clearly demonstrate the true underlying efficiency of our digital banking operations."
"To accelerate growth of our Receivable Purchase Program in the United States, we recently expanded our offering by adding a securitized financing option to more quickly establish and build relationships with our RPP target market, providing a "one-stop shop" to these partners for attractive, readily available financing. Our expanded offering will support our US RPP portfolio target of US$290 million by fiscal year end, while providing additional growth in Canada.”
“Additionally in Canada, we are benefitting from several favourable trends that have improved our outlook for this component of our business. Consumer spending in the sectors on which we focus remains resilient as we focus both growing our business with existing clients while also adding new clients, as evidenced by our announcement of two new partners this week, including our first RPP Securitization partner in that country.”
“Looking further ahead, we believe our proprietary Digital Deposit Receipt (“DDR”) tokenized deposits represent a significant future opportunity as a superior alternative to stablecoins based on their one-for-one representation of actual cash on deposit with our Bank, the legal ability to pay interest, and conventional deposit insurance. Our DDRs are not only a significant opportunity to generate very low-cost deposits to fund our US growth but also the ideal, market-ready solution for US banks, payment providers and other financial businesses to quickly, seamlessly and cost-effectively enter this critical next stage of the digital commerce evolution.”
HIGHLIGHTS FOR THE THIRD QUARTER OF FISCAL 2025
Consolidated (Canadian and US Digital Banking Operations, Digital Meteor and DRTC)
| |
●
|
Total assets increased 21% year-over-year and 9% sequentially to a record $5.5 billion, with the increase driven primarily by growth of the Digital Banking operations’ credit portfolios, in particular, the Receivable Purchase Program (“RPP”) portfolio, in both the US and Canada;
|
| |
●
|
Consolidated total revenue increased 17% year-over-year and increased 5% sequentially to a record $31.6 million, with the year-over-year and sequential increase primarily due to the continued growth in credit assets, which were up 18% year-over-year and 6% sequentially;
|
| |
●
|
Consolidated net income was $6.6 million compared with $9.7 million for the third quarter of last year and $8.5 million for the second quarter of 2025. Consolidated net income for the third quarter of fiscal 2025 included the planned $4.2 million (before tax) of non-interest expenses related to the costs associated with the Proposed Realignment of Corporate Structure;
|
| |
●
|
Consolidated adjusted net income, which excludes the costs associated with the Proposed Realignment of Corporate Structure, was $9.7 million, unchanged on a year-over-year basis and up 11% sequentially; |
| |
●
|
Consolidated income per common share was $0.20 compared with $0.36 for the third quarter of last year and $0.26 for the second quarter of 2025. In addition to the impact of the Proposed Realignment of Corporate Structure, the decrease compared to the third quarter of fiscal 2024 was due to the 25% higher number of shares outstanding due to the treasury common share offering in December 2024;
|
| |
●
|
Consolidated adjusted income per common share, which excludes the costs associated with the Proposed Realignment of Corporate Structure, was $0.30;
|
| |
●
|
As at July 31, 2025, the Bank has purchased and cancelled 351,142 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);
|
| |
●
|
During the current quarter, the Bank announced its intention, subject to shareholder, regulatory and other approvals, to realign its corporate structure with the standard framework of a US bank, pursuant to which existing shares of the Bank (the current parent) would be exchanged for shares of VersaHoldings US Corp. (the new parent), the existing US-domiciled entity, which currently holds the Bank’s US subsidiaries. The Proposed Realignment of Corporate Structure is intended to realize additional shareholder value, further mitigate risk and reduce corporate costs; |
| |
●
|
Subsequent to quarter end, the Bank’s wholly owned subsidiary, VersaBank USA, launched an internal pilot program in the United States for its USDVBs, the US-dollar version of its proprietary Digital Deposit Receipts ("DDRs"). Upon completion of the pilot program, VersaBank USA will seek the Office of the Comptroller of the Currency’s (OCC’s) “non-objection” prior to launching commercially.
|
Digital Banking (Combined Canada and US)
| |
●
|
Total Digital Banking operations (combined Canada and US) credit assets increased 18% year-over-year and 6% sequentially to a record $4.78 billion, driven primarily by continued growth in the Bank’s RPP portfolio, which increased 15% year-over-year and 5% sequentially;
|
| |
●
|
Total Digital Banking operations total revenue increased 18% year-over-year and increased 6% sequentially to a record $29.7 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 14 bps, or 6%, year-over-year, and decreased 4 bps, or 2% sequentially, to 2.55%. 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 throughout fiscal 2024 and which is no longer inverted. The sequential decrease reflects the impact for elevated liquidity held to support a capital infusion in VersaBank USA and lower yield attributable to the increase in the RPP, which is composed of lower risk-weighted, lower yielding assets, partially offset by lower cost of funds;
|
| |
●
|
Total Digital Banking operations overall net interest margin increased 2 bps, or 1%, year-over-year and decreased 4 bps, or 2%, sequentially to 2.25%, due to higher than typical liquidity. 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 0.10%, compared with a 12-quarter average of 0.03%, which remains among the lowest of the publicly traded Canadian Schedule I (federally licensed) banks;
|
| |
●
|
Total Digital Banking operations net income was $7.0 million compared with $9.8 million for the third quarter of last year and $9.3 million for the second quarter of 2025. Net income for the third quarter of fiscal 2025 included $4.2 million (before tax) of non-interest expenses related to the costs associated with the Bank’s Proposed Realignment of Corporate Structure;
|
| |
●
|
Total Digital Banking operations income per common share was $0.21 compared with $0.36 for the third quarter of last year and $0.28 for the second quarter of 2025. In addition to the impact of the Proposed Realignment of Corporate Structure, the decrease compared to the third quarter of fiscal 2024 was due to the 25% higher number of shares outstanding due to the treasury common share offering in December 2024;
|
| |
●
|
Subsequent to quarter end, the Bank expanded the Receivable Purchase Program with launch of securitized financing solution, which is expected to generate additional asset and earnings growth in both the US and Canada.
|
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 $6.5 million compared with $9.8 million for the third quarter of last year and $9.2 million for the second quarter of 2025. Net income for the third quarter of fiscal 2025 included $4.2 million (before tax) of non-interest expenses related to the costs associated with the Bank’s Proposed Realignment of Corporate Structure;
|
| |
●
|
Canadian Digital Banking operations net income per common share was $0.20 compared with $0.36 for the third quarter of last year and $0.28 for the second quarter of 2025. In addition to the impact of the Proposed Realignment of Corporate Structure, the decrease compared to the third quarter of fiscal 2024 was due to the 25% higher number of shares outstanding due to the treasury common share offering in December 2024; and,
|
| |
●
|
Subsequent to quarter end, added two new receivable purchase program partners in Canada for the RPP, including the Bank’s first partner under the recent expansion of its RPP to include a securitized financing offering. The Bank has completed the first funding transaction for its RPP Securitization partner and expects funding for the other new partner to commence in the near term. |
Digital Banking US
| |
●
|
US Digital Banking operations net income was $437,000 compared with $133,000 for the second quarter of 2025. There are no third quarter 2024 comparable figures for the US Digital Banking operations as that segment did not exist until the fourth quarter of 2024. The sequential increase was primarily attributable to the strong growth in the RPP 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 RPP portfolio.
|
Digital Meteor Inc.
| |
●
|
Digital Meteor’s net income was $23,000 compared with net income of $303,000 for the third quarter of last year and a net loss of $152,000 for the second quarter of 2025.
|
DRTC’s Cybersecurity Services Operations
| |
●
|
DRTC’s net loss was $398,000 compared with a net loss of $409,000 for the third quarter of last year and a net loss of $652,000 for the second quarter of 2025.
|
FINANCIAL SUMMARY
|
(unaudited)
|
|
for the three months ended
|
|
|
for the nine months ended
|
|
| |
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
July 31
|
|
|
(thousands of Canadian dollars, except per share amounts)
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024
|
|
|
Results of operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
73,987 |
|
|
$ |
71,646 |
|
|
$ |
218,209 |
|
|
$ |
212,181 |
|
|
Net interest income
|
|
|
29,779 |
|
|
|
24,944 |
|
|
|
83,535 |
|
|
|
77,754 |
|
|
Non-interest income
|
|
|
1,804 |
|
|
|
2,052 |
|
|
|
6,014 |
|
|
|
6,594 |
|
|
Total revenue
|
|
|
31,583 |
|
|
|
26,996 |
|
|
|
89,549 |
|
|
|
84,348 |
|
|
Provision for (recovery of) credit losses
|
|
|
1,181 |
|
|
|
(1 |
) |
|
|
3,094 |
|
|
|
(112 |
) |
|
Non-interest expenses
|
|
|
21,649 |
|
|
|
13,534 |
|
|
|
54,864 |
|
|
|
37,743 |
|
|
Digital Banking
|
|
|
19,271 |
|
|
|
11,498 |
|
|
|
46,467 |
|
|
|
31,927 |
|
|
DRTC
|
|
|
2,087 |
|
|
|
1,882 |
|
|
|
7,787 |
|
|
|
6,142 |
|
|
Digital Meteor
|
|
|
634 |
|
|
|
496 |
|
|
|
1,662 |
|
|
|
692 |
|
|
Net income
|
|
|
6,582 |
|
|
|
9,705 |
|
|
|
23,254 |
|
|
|
34,232 |
|
|
Adjusted net income*
|
|
|
9,670 |
|
|
|
9,705 |
|
|
|
26,495 |
|
|
|
34,232 |
|
|
Income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.20 |
|
|
$ |
0.36 |
|
|
$ |
0.74 |
|
|
$ |
1.29 |
|
|
Diluted
|
|
$ |
0.20 |
|
|
$ |
0.36 |
|
|
$ |
0.74 |
|
|
$ |
1.29 |
|
|
Adjusted income per common share basic and diluted*
|
|
$ |
0.30 |
|
|
$ |
0.36 |
|
|
$ |
0.85 |
|
|
$ |
1.29 |
|
|
Dividends paid on preferred shares
|
|
$ |
- |
|
|
$ |
247 |
|
|
$ |
- |
|
|
$ |
741 |
|
|
Dividends paid on common shares
|
|
$ |
807 |
|
|
$ |
650 |
|
|
$ |
2,433 |
|
|
$ |
1,950 |
|
|
Yield*
|
|
|
5.58 |
% |
|
|
6.40 |
% |
|
|
5.66 |
% |
|
|
6.50 |
% |
|
Cost of funds*
|
|
|
3.33 |
% |
|
|
4.17 |
% |
|
|
3.49 |
% |
|
|
4.12 |
% |
|
Net interest margin*
|
|
|
2.25 |
% |
|
|
2.23 |
% |
|
|
2.17 |
% |
|
|
2.38 |
% |
|
Net interest margin on credit assets*
|
|
|
2.55 |
% |
|
|
2.41 |
% |
|
|
2.50 |
% |
|
|
2.58 |
% |
|
Return on average common equity*
|
|
|
4.94 |
% |
|
|
9.63 |
% |
|
|
6.71 |
% |
|
|
11.79 |
% |
|
Adjusted return on average common equity*
|
|
|
7.24 |
% |
|
|
9.63 |
% |
|
|
7.61 |
% |
|
|
11.79 |
% |
|
Book value per common share*
|
|
$ |
16.42 |
|
|
$ |
15.23 |
|
|
$ |
16.42 |
|
|
$ |
15.23 |
|
|
Efficiency ratio*
|
|
|
69 |
% |
|
|
50 |
% |
|
|
61 |
% |
|
|
45 |
% |
|
Adjusted efficiency ratio*
|
|
|
55 |
% |
|
|
50 |
% |
|
|
56 |
% |
|
|
45 |
% |
|
Return on average total assets*
|
|
|
0.50 |
% |
|
|
0.85 |
% |
|
|
0.60 |
% |
|
|
1.03 |
% |
|
Provision (recovery) for credit losses as a % of average credit assets*
|
|
|
0.10 |
% |
|
|
0.00 |
% |
|
|
0.09 |
% |
|
|
0.00 |
% |
| |
|
as at
|
|
|
Balance Sheet Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
460,312 |
|
|
$ |
247,983 |
|
|
$ |
460,312 |
|
|
$ |
247,983 |
|
|
Securities
|
|
|
160,136 |
|
|
|
153,026 |
|
|
|
160,136 |
|
|
|
153,026 |
|
|
Credit assets, net of allowance for credit losses
|
|
|
4,778,316 |
|
|
|
4,049,449 |
|
|
|
4,778,316 |
|
|
|
4,049,449 |
|
|
Average credit assets
|
|
|
4,651,064 |
|
|
|
4,033,954 |
|
|
|
4,507,216 |
|
|
|
3,949,927 |
|
|
Total assets
|
|
|
5,477,489 |
|
|
|
4,516,436 |
|
|
|
5,477,489 |
|
|
|
4,516,436 |
|
|
Deposits
|
|
|
4,627,410 |
|
|
|
3,821,185 |
|
|
|
4,627,410 |
|
|
|
3,821,185 |
|
|
Subordinated notes payable
|
|
|
102,148 |
|
|
|
101,641 |
|
|
|
102,148 |
|
|
|
101,641 |
|
|
Shareholders' equity
|
|
|
528,142 |
|
|
|
408,985 |
|
|
|
528,142 |
|
|
|
408,985 |
|
|
Capital ratios**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted assets
|
|
$ |
3,740,088 |
|
|
$ |
3,273,524 |
|
|
$ |
3,740,088 |
|
|
$ |
3,273,524 |
|
|
Common Equity Tier 1 capital
|
|
|
507,212 |
|
|
|
384,496 |
|
|
|
507,212 |
|
|
|
384,496 |
|
|
Total regulatory capital
|
|
|
617,079 |
|
|
|
504,112 |
|
|
|
617,079 |
|
|
|
504,112 |
|
|
Common Equity Tier 1 (CET1) ratio
|
|
|
13.56 |
% |
|
|
11.75 |
% |
|
|
13.56 |
% |
|
|
11.75 |
% |
|
Tier 1 capital ratio
|
|
|
13.56 |
% |
|
|
12.16 |
% |
|
|
13.56 |
% |
|
|
12.16 |
% |
|
Total capital ratio
|
|
|
16.50 |
% |
|
|
15.40 |
% |
|
|
16.50 |
% |
|
|
15.40 |
% |
|
Leverage ratio
|
|
|
8.90 |
% |
|
|
8.54 |
% |
|
|
8.90 |
% |
|
|
8.54 |
% |
|
* See definitions under ‘Non-GAAP and Other Financial Measures' in the Q3 2025 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 & nine months ended July 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.
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 Washington, DC-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, Digital Meteor, Inc. (“Digital Meteor”), 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 Digital Deposit Receipts (DDRs).
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 Proposed Realignment of Corporate Structure; the expected realization of additional shareholder value, the simplification of the regulatory structure and the reduction of costs as a result of the Proposed Realignment of Corporate Structure; the key elements of the Proposed Realignment of Corporate Structure; 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, 2024. 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.
Conference Call
VersaBank will be hosting a conference call and webcast today, Thursday, September 4, 2025, at 9:00 a.m. (ET) to discuss its third quarter results, featuring a presentation by David Taylor, President & CEO and John Asma, 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/4mwRvKC 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/rydB4g629Xb 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/rydB4g629Xb and on the Bank's web site at: https://www.versabank.com/investor-relations/events-presentations/. Replay of the teleconference will be available until October 4, 2025 by calling 289-819-1450 or 1-888-660-6345 (toll free) and the passcode is: 67670#
FOR FURTHER INFORMATION, PLEASE CONTACT:
|
LodeRock Advisors
Lawrence Chamberlain
(416) 519-4196
lawrence.chamberlain@loderockadvisors.com
|
Visit our website at: www.versabank.com
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