VersaBank Q3: Revenue Misses as Margin Compresses, Profit Still Up 53%
VersaBank (TSX: VBNK) reported adjusted earnings of $0.38 per share for its third fiscal quarter, a hair under the $0.39 Yahoo Finance consensus of three analysts, on revenue of $38.8 million against a $40.05 million estimate. Call the earnings line essentially in line and the revenue line a miss of about 3%. The bank gives no EPS or revenue guidance, so the forward number in the release is an operating target instead: at least $3 billion USD of new fundings through its US Structured Receivable Program in fiscal 2027. Profit itself moved sharply higher, with net income up 53% year over year.
The delta
| Metric | Actual (company release) | Consensus (Yahoo Finance) | Verdict |
|---|---|---|---|
| Adjusted (core) EPS | $0.38 | $0.39 (3 analysts) | About 3% below, essentially in line |
| Reported EPS | $0.31 (from $0.20) | n/a, consensus is on the adjusted basis | Up 55% year over year |
| Total revenue | $38.8 million | $40.05 million | Miss, about 3% below |
| Guidance | No EPS or revenue guidance, operating target only | n/a | n/a |
VersaBank closed at C$26.44 on Sept 2, 2026, inside a 52-week range of C$15.60 to C$34.00 (data as of Sept 2, 2026 close). In early trading on Sept 3 the stock went both ways: it fell as low as C$25.25, 4.5% below that close, then reversed to trade around C$27.48 by midday, up about 3.9% (intraday, as of 12:00 p.m. ET).
What actually happened in the quarter
Revenue of $38.8 million was up 23% from $31.6 million a year ago, but up only 1% from the $38.3 million of the prior quarter. Net income of $10.06 million rose 53% year over year from $6.58 million, and 34% from $7.53 million sequentially. Reported EPS came in at $0.31, against $0.20 a year ago and $0.23 last quarter.
The adjusted figures tell a flatter story. Adjusted net income of $12.3 million was 27% above the $9.67 million of a year ago but 1% below the $12.38 million of the prior quarter, and adjusted EPS of $0.38 sits just under the $0.39 of three months ago. What separates the reported $0.31 from the adjusted $0.38 is $3.1 million of non-core expenses the company backed out: $2.5 million of reorganization project costs and a $0.6 million write-off of capitalized software tied to the US branch assets and deposits sold on May 1, 2026.
Across the first nine months of fiscal 2026, revenue reached $113.6 million (up 27%), net income $28.7 million (up 23%) and adjusted EPS $1.15 (up 37%). Credit cost stayed at effectively nothing: the consolidated provision was a recovery of $229 thousand. Total assets closed the quarter at $6.88 billion, 26% higher than a year ago and 7% higher than three months ago, and the company said assets passed $7 billion for the first time after quarter-end. Book value per share rose to $17.45 from $17.15. The full statement is in VersaBank’s third-quarter release.
Where the quarter softened
Net interest margin was 2.19%, down from 2.33% in the prior quarter and 2.25% a year earlier. Margin on credit assets fell further, to 2.44% from 2.71% sequentially and 2.55% a year ago. Cost of funds moved the wrong way quarter over quarter, at 3.16% against 3.09%, though it is still well below the 3.33% of a year ago.
Return on average common equity of 7.14% improved from 5.64% last quarter and 4.94% a year ago. The adjusted version went the other way, at 8.72% against 9.23% sequentially, up only on the year-ago 7.24%. Same pattern as the profit lines: strong reported trend, slightly negative sequential trend once the non-core items come out.
Capital is the number worth sitting with. CET1 fell to 11.47% from 12.32% last quarter and 13.56% a year ago, total capital to 13.32% from 14.74%, and the leverage ratio to 7.64% from 7.94%. A capital ratio measures capital against the assets it supports, so a balance sheet growing 26% year over year and 7% in a single quarter absorbs capital faster than a $10.06 million quarterly profit replaces it. Falling ratios beside fast asset growth are the arithmetic of that. It is the cost of the growth rather than a separate problem, but it does bound how long this pace can run on the capital already in place.
The growth engine behind the 2027 target
The US Structured Receivable Program, formerly the RPP, held $793 million USD of assets at quarter-end. VersaBank also announced an agreement with a wholly owned subsidiary of ECN Capital to use the core SRP in the United States, which it expects to add at least $300 million USD a year in fundings, with the two companies saying it could grow well beyond $500 million USD per year. The bank also launched what it calls Real-Time SRP, which lets partners fund individual loans within hours instead of warehousing receivables for 5 to 30 or more days.
The target framing all of it is growth in the US SRP portfolio of at least $3 billion USD, more than C$4 billion, in new fundings on its own balance sheet in fiscal 2027. Founder and President David Taylor said in the release that “as expected, fiscal 2026 has been a breakout year in terms of top-line growth, which is expected to further accelerate next year”, and that “we are increasingly realizing the operating leverage in our cloud-based, branchless, business-to-business model”. The model he describes sits closer in shape to the Canadian fintech stocks we track than to a branch network, which is much of why the financials read differently from a conventional bank’s.
The holding company vote on Sept 16
The $2.5 million of reorganization costs in the quarter belong to the plan to put a new Delaware corporation, Versa Bancorp, above VersaBank and VersaBank USA National Association. The SEC has declared the Form S-4 effective. Shareholders vote at a special meeting on Sept 16, 2026 at 10:30 a.m. ET in London, Ontario, with an Aug 10 record date. Their approval is not the last step: the plan still needs regulatory approvals including Canada’s Minister of Finance and the US Federal Reserve Board. The company expects completion in fiscal 2026 and says most of the costs are now incurred.
The record, and what the stock did after
VersaBank adjusted EPS vs consensus, last 8 quarters. Consensus and prices: Yahoo Finance.
Over the last eight quarters VersaBank has posted three beats and five misses against consensus on adjusted EPS, with an average surprise of −9.5%. The full record, the reaction history and the consensus as it stood going in are in our VersaBank Q3 preview, published the evening before the release.
What VBNK did after each of its last 8 reports: next session, 30 days, 90 days. Prices: Yahoo Finance.
The average next-session move across those reports was −3.3%, higher only three times in eight, averaging +2.0% after a beat and −6.5% after a miss. Thirty days out the average was −0.1% (higher five of eight), ninety days out +2.3% (higher five of eight).
The three most recent quarters show why those averages need handling with care. December 2025 was a 2.9% miss, and the stock rose 3.4% the next day and 22% over 30 days. March 2026 was a 9.6% beat, and the stock fell 8.9% the next day and 12.8% over 30 days. June 2026 was a 3.5% beat followed by a 9.9% next-day gain and 25% over 30 days. The reaction has not tracked the beat/miss sign. Today has so far followed the same pattern in miniature: a revenue miss, an early drop of 4.5%, and then a reversal to a gain.
What to watch next quarter
Yahoo Finance consensus for the next quarter is adjusted EPS of $0.46 on revenue of $41.8 million, with the fiscal 2026 figure at $1.55 and one analyst carrying a $29 price target. Three things bear on whether that revenue number is reachable: the margin trajectory, since a second quarter of NIM compression beside a rising cost of funds is what turned 23% annual revenue growth into 1% sequentially; CET1, down 209 basis points in a year while assets grew 26%; and the Sept 16 vote plus the regulatory approvals that follow it.
For holders, the quarter reads as both halves of one story. Revenue and profit are growing quickly, credit cost is effectively nil, and there is now a concrete fiscal 2027 funding target with a named partner behind it. Margin is also narrowing, adjusted profit was flat sequentially, and the capital cushion is thinner than a year ago. Which half matters more comes down to whether the SRP fundings arrive at the scale management has set out. For how those returns and that capital position sit against the larger institutions, see our Canadian bank stocks ranking.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Company figures are from VersaBank’s Sept 3, 2026 release (Canadian dollars unless stated); consensus figures are Yahoo Finance consensus; share prices from Yahoo Finance.
