VersaBank (VBNK) Q4 2025: US RPP Assets Jump 67% as Cross-Border Expansion Accelerates
VersaBank’s Q4 revealed a step-change in US Receivable Purchase Program (RPP) scale, validating its cross-border strategy and digital banking model. With operating leverage improving and new revenue streams from securitization and deposit tokenization, the bank is positioned for higher efficiency and growth in 2026. The upcoming corporate realignment and cybersecurity divestiture are set to sharpen focus and unlock capital for core lending expansion.
Summary
- US RPP Ramp Validates Model: Rapid funding growth and new partner wins signal inflection in US expansion.
- Operating Leverage Unlocks Efficiency: Core digital banking margins and cost discipline drive profit acceleration.
- Strategic Reshaping Underway: Corporate realignment and cybersecurity exit to streamline focus and capital allocation.
Performance Analysis
VersaBank delivered a record quarter, driven by 20% year-over-year asset growth and a 29% increase in consolidated revenue. Adjusted net income surged 91% after normalizing for $4.3 million in one-time corporate realignment costs, highlighting the bank’s underlying profitability as it transitions to a standard US bank structure. The core Receivable Purchase Program (RPP), a business-to-business point-of-sale loan acquisition platform, continues to anchor growth, representing 78% of total credit assets at quarter-end.
US banking operations emerged as the headline growth driver, with revenue up 67% sequentially and net income up 357%. This was fueled by $200 million in Q4 US RPP fundings and $310 million for the year, with much of the recent partner-driven growth only partially reflected in Q4 results. Canadian digital banking operations also posted double-digit growth, while the cybersecurity and digital media segments remained small contributors. Net interest margin (NIM) on credit assets improved to 265 basis points, supported by yield curve normalization and growth in low-cost insolvency professional deposits.
- US RPP Momentum: New partner wins, including ECN Financial’s SourceOne, drove a step-change in US asset growth and profitability.
- Asset Mix and Margin Tailwind: RPP and CMHC-insured lending contributed to margin expansion, offsetting elevated liquidity drag.
- Efficiency Gains: Operating leverage from scale in both geographies is translating into higher returns and disciplined expense growth.
Liquidity remains elevated at 11% of assets, though management expects deployment to normalize as US partner funding accelerates. Book value per share reached a new high, and capital ratios remain above internal targets, supporting continued growth investment.
Executive Commentary
"The fourth quarter was very strong finish to a transformational fiscal 2025 and clear evidence of the momentum of our digital banking business... Combined with steady continued expansion in our net interest margin, this drove year-over-year revenue growth of 29% to a new all-time high."
David Taylor, President
"Revenue for the U.S. banking operations was $5.2 million, a 67% increase sequentially, primarily due to the ramp up in the US RPP. That drove a 357% increase sequentially in net income as we begin to see the US operation leverage take effect."
John Astman, Chief Financial Officer
Strategic Positioning
1. US RPP Expansion as Core Growth Engine
The US Receivable Purchase Program (RPP) is now the principal growth lever, with funding momentum and new partners validating product-market fit. The addition of ECN Financial’s SourceOne and other partners demonstrates increasing institutional acceptance, with management targeting $1 billion in US RPP fundings for 2026. The RPP model, which acquires point-of-sale consumer and small business loans, is designed for scalable, high-margin asset growth with risk mitigated via cash collateral accounts.
2. Canadian CMHC Lending and Securitization
VersaBank’s Canadian multi-residential lending strategy leverages CMHC insurance and the Canadian Mortgage Bond (CMB) program to drive asset and fee growth with minimal capital intensity. The new initiative to securitize post-construction CMHC-insured loans opens an incremental revenue stream, expected to contribute at least $2 million in 2026 with negligible operating costs, and provides further asset mix diversification.
3. Operational Leverage and Cost Discipline
Cost control and operating leverage are central to VersaBank’s digital-first model, with most US fixed costs already in place and expenses guided flat for 2026 (excluding minor one-time items). The divestiture of the cybersecurity (DRT cyber) business is expected to remove approximately $10 million in annual expenses, freeing up regulatory capital and sharpening management focus on core lending operations.
4. Deposit Innovation and Tokenization
The launch of Real Bank Deposit Tokens (RBDTs) positions VersaBank at the forefront of regulated digital deposit innovation. RBDTs, which are blockchain-based representations of conventional insured deposits, offer a new low-cost funding channel and potential technology licensing revenue. Early collaboration with stablecoin issuers and readiness for regulatory regimes in both Canada and the US signal a strategic bet on the future of digital banking infrastructure.
5. Corporate Realignment and Capital Allocation
The ongoing realignment to a standard US bank structure is designed to unlock efficiency, transparency, and capital flexibility. Management expects to hold a shareholder vote in April and is progressing toward a streamlined organization that will better support cross-border expansion and long-term scalability.
Key Considerations
VersaBank’s Q4 marks an inflection in both scale and focus, with the US RPP now a proven engine and strategic actions set to unlock further growth and efficiency.
Key Considerations:
- US RPP Scale and Validation: The addition of marquee partners and rapid funding growth underscore product-market fit and set the stage for outsized asset growth in 2026.
- Margin Management Amid Liquidity Deployment: Elevated liquidity has weighed on margins, but ongoing deployment into higher-yielding RPP assets is expected to restore NIM to normalized levels.
- Cost Structure Reset: The cybersecurity business sale and corporate realignment will remove cost drag and free up capital, improving overall efficiency and transparency.
- Deposit Channel Innovation: RBDTs and custody solutions for stablecoin issuers could unlock new, ultra-low-cost funding sources and licensing revenue streams.
Risks
Execution risk remains around the pace of US RPP partner onboarding and the successful sale of the DRT cyber business, both of which are critical to the 2026 efficiency and growth narrative. Regulatory approvals for the corporate realignment and tokenization initiatives could introduce delays or require strategic adjustments. Elevated liquidity, if not rapidly deployed, may continue to pressure margins. Competition in point-of-sale lending and digital deposit solutions is intensifying, requiring ongoing innovation and risk management discipline.
Forward Outlook
For Q1 2026, VersaBank expects:
- Full-quarter contribution from new US RPP partners and recent fundings
- Initial revenue from the new CMHC-insured mortgage securitization program
For full-year 2026, management guided to:
- US RPP fundings of at least $1 billion, with a 60-40 split between conventional and securitized programs
- Flat core expenses, excluding up to $1.5 million in one-time realignment costs
- Stable or modestly higher net interest margin, with upside potential as liquidity is deployed
Management emphasized that operating leverage, cross-border asset growth, and new revenue streams from deposit tokenization will be the primary drivers of improved returns in 2026.
Takeaways
- US Growth Inflection: Q4 marked a decisive ramp in US RPP assets and profitability, validating the cross-border strategy and setting up 2026 for step-change growth.
- Efficiency and Focus: The upcoming cybersecurity divestiture and corporate realignment will sharpen VersaBank’s focus on high-return digital banking and unlock cost savings and capital for lending expansion.
- Watch for Execution on Tokenization: The successful rollout and commercialization of Real Bank Deposit Tokens and stablecoin custody solutions could create new funding and fee streams, but execution and regulatory clarity will be key watchpoints in the year ahead.
Conclusion
VersaBank’s Q4 2025 results confirm a strategic turning point, with the US RPP program now a proven growth engine and operating leverage driving profitability. As the bank executes on its realignment and innovation agenda, investors should focus on the pace of US asset growth, cost structure reset, and early signals from digital deposit initiatives.
Industry Read-Through
VersaBank’s rapid US RPP asset growth and focus on digital-first, B2B lending highlight the continued shift toward scalable, technology-driven models in specialty banking. The move to securitize insured assets and leverage government bond programs mirrors trends in capital-efficient lending across North America. The bank’s foray into blockchain-based deposit tokens and stablecoin custody points to a future where regulated banks compete directly with fintechs for digital assets and payments infrastructure. Other regional and digital banks should closely watch VersaBank’s execution in cross-border lending and digital deposit innovation as regulatory clarity and technology adoption accelerate sector transformation.