VersaBank expands receivable purchase program with securitized financing

LONDON, ON - VersaBank (TSX:VBNK) (NASDAQ:VBNK), a $344 million market cap digital banking company with a P/E ratio of 13.2, announced Thursday it has expanded its Receivable Purchase Program (RPP) in both the United States and Canada through the launch of a securitized financing solution for point-of-sale and other financing companies. According to InvestingPro data, the company generated revenue of $80.16 million in the last twelve months.

The North American digital banking company said its RPP Securitized Financing strategy will include investment in senior-level tranches of target securitized credit assets and establish its own platform offering securitization of assets originated by financing partners. While InvestingPro analysis shows the company has been profitable over the last twelve months, it faces challenges with cash burn and weak gross profit margins. The bank expects to begin adding RPP Securitized assets in the coming weeks.

According to the company’s press release, the new offering uses the same proprietary Asset Management System technology as its core RPP solution and maintains the same model requiring cash holdbacks from financing partners to ensure expected cash flows.

To support the growth of this new financing option in the United States, VersaBank has appointed Timothy Comiskey to the newly created position of Managing Director, Origination, Structuring & Securitization. Comiskey brings over three decades of experience, including recent roles at Nasdaq and GCSA Capital Partners.

"Our securitized financings have the benefit of being favourably risk-weighted — as low as 20 percent or one-fifth that of our standard RPP financings," said David Taylor, President of VersaBank, in the announcement.

The company stated this expansion aims to capitalize on current demand from larger financing companies for lower-cost securitized financing in the current interest rate environment, while providing a "one-stop shop" for partners seeking financing options.

VersaBank is a federally chartered bank in both Canada and the US that operates on a branchless, digital business-to-business model. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued. Discover more insights about VersaBank and other financial institutions in InvestingPro’s comprehensive research reports, available for over 1,400 US-listed companies.

In other recent news, VersaBank’s fiscal second-quarter 2025 results aligned with market expectations, prompting analysts at Raymond James to lower the stock price target to $13 from $15 while maintaining an Outperform rating. The bank’s financial performance was characterized by a 21 basis point expansion in net interest margin, which rose to 2.29% quarter-over-quarter, leading to net interest income exceeding projections. However, noninterest expenses were higher than anticipated, and fee income fell short of forecasts. In a strategic move, VersaBank announced its intention to relocate its corporate headquarters to the United States, a decision expected to cost approximately $8 million CAD. This relocation is anticipated to reduce regulatory expenses and potentially broaden the bank’s investor base, with the possibility of inclusion in the Russell 2000 Index by June 2026. Additionally, VersaBank is exploring other growth initiatives, including the launch of digital deposit receipts and the sales process for its cybersecurity subsidiary, DTR Cyber. Despite the headquarters move, Raymond James reaffirmed its $15 price target, viewing these developments positively. These recent developments reflect VersaBank’s efforts to capitalize on strategic opportunities and strengthen its market position.

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