VersaBank (NASDAQ:VBNK) Releases Earnings Results, Misses Expectations By $0.07 EPS

Key Points

• VersaBank missed quarterly expectations: It reported $0.27 in EPS versus the $0.34 consensus estimate, while revenue of $27.67 million also fell short of analysts’ $28.76 million forecast.
• Underlying growth remained strong: Record credit assets, revenue and net interest income helped drive a 53% increase in net income to CAD 10.1 million, while total assets rose 26% year over year to nearly CAD 6.9 billion.
• Expansion prospects are balanced by near-term costs: Momentum in the U.S. Structured Receivable Program led management to target at least US$3 billion in additional fundings by fiscal 2027, but Q3 included significant non-core expenses and another roughly CAD 4 million in reorganization costs is expected in Q4.

VersaBank (NASDAQ:VBNK - Get Free Report) posted its quarterly earnings data on Thursday. The company reported $0.27 EPS for the quarter, missing the consensus estimate of $0.34 by ($0.07), Zacks reports. VersaBank had a return on equity of 8.32% and a net margin of 9.34%.The company had revenue of $27.67 million during the quarter, compared to analysts' expectations of $28.76 million.

Here are the key takeaways from VersaBank's conference call:

• Positive Sentiment: VersaBank reported record Q3 credit assets, revenue and net interest income, with total assets up 26% year over year to nearly CAD 6.9 billion. Net income increased 53% to CAD 10.1 million, while adjusted net income rose 27% to CAD 12.3 million.
• Positive Sentiment: U.S. Structured Receivable Program momentum accelerated, with CAD 220 million of Q3 fundings and CAD 127 million added since quarter-end. Management raised its ambition for fiscal 2027 to at least US$3 billion of additional U.S. fundings, supported by existing partners and a pipeline of large prospective customers.
• Positive Sentiment: The new AI-enabled Real-Time SRP allows partners to fund individual receivables within hours rather than warehouse and batch loans, reducing financing costs, equity needs and interest-rate risk. Financeit has implemented the offering in Canada, while ECN Capital recently became the first U.S. adopter.
• Negative Sentiment: Q3 results included CAD 3.1 million of non-core expenses, including reorganization costs and a software write-off, plus approximately CAD 2.3 million of transitory costs. Management expects another roughly CAD 4 million of non-core reorganization costs in Q4.
• Neutral Sentiment: Net interest margin declined to 2.19% overall and 2.44% on credit assets, mainly due to elevated liquidity, higher deposit costs and portfolio mix changes; management expects NIM to recover toward approximately 2.3% as liquidity normalizes. The bank also received a one-year extension to divest its cybersecurity business and is targeting completion of the corporate reorganization by the end of October 2026, subject to approvals.

VersaBank Stock Performance

Shares of VBNK stock opened at $20.59 on Friday. The stock has a fifty day simple moving average of $20.34 and a two-hundred day simple moving average of $18.10. The firm has a market capitalization of $665.67 million, a PE ratio of 29.84 and a beta of 1.06. VersaBank has a 52-week low of $11.15 and a 52-week high of $25.05.

VersaBank Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Saturday, October 31st. Shareholders of record on Friday, October 9th will be paid a $0.025 dividend. This represents a $0.10 dividend on an annualized basis and a yield of 0.5%. The ex-dividend date is Friday, October 9th. VersaBank's dividend payout ratio is presently 10.14%.

Hedge Funds Weigh In On VersaBank

A number of hedge funds have recently made changes to their positions in VBNK. Salzhauer Michael raised its stake in VersaBank by 68.4% during the 2nd quarter. Salzhauer Michael now owns 16,843 shares of the company's stock valued at $192,000 after purchasing an additional 6,843 shares during the period. Citadel Advisors LLC purchased a new position in VersaBank in the 3rd quarter worth approximately $198,000. Quadrature Capital Ltd bought a new position in VersaBank in the 4th quarter worth approximately $201,000. First Trust Advisors LP boosted its stake in VersaBank by 33.0% in the 2nd quarter. First Trust Advisors LP now owns 20,753 shares of the company's stock worth $237,000 after purchasing an additional 5,144 shares during the period. Finally, Geode Capital Management LLC purchased a new stake in VersaBank during the 2nd quarter valued at approximately $293,000. Institutional investors own 56.86% of the company's stock.

Analysts Set New Price Targets

VBNK has been the subject of several recent research reports. Roth Capital set a $28.00 price target on VersaBank and gave the company a "buy" rating in a report on Thursday. Zacks Research downgraded VersaBank from a "strong-buy" rating to a "hold" rating in a research note on Tuesday, August 18th. Raymond James Financial set a $20.00 price objective on VersaBank in a research report on Thursday. Finally, Weiss Ratings downgraded VersaBank from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Tuesday, June 9th. Two analysts have rated the stock with a Buy rating and two have given a Hold rating to the company. According to data from MarketBeat.com, the company currently has a consensus rating of "Moderate Buy" and a consensus price target of $24.00.

About VersaBank

VersaBank is a Canadian Schedule I chartered bank that operates as a fully digital institution, offering a range of deposit and lending solutions through its proprietary technology platform. Headquartered in London, Ontario, the bank has chosen to forego a traditional branch network in favor of online and digital distribution, enabling it to serve clients across Canada and the United States with efficiency and lower overhead.

The bank’s primary business activities include the origination and securitization of commercial loans, equipment financing, residential mortgages and construction loans.