Should you sell your VersaBank stock?

Roth Capital Partners analyst Craig Irwin says though he remains neutral on the stock, VersaBank (VersaBank Stock Quote, Chart, News, Analysts, Financials NASDAQ:VBNK) posted solid second-quarter results, supported by strong loan growth and early momentum in digital assets.

In a June 8 update, Irwin maintained his “Neutral” rating on VersaBank while raising his target to US$20.00 from US$14.00, rolling his 11-times valuation onto his fiscal 2027 adjusted EPS estimate of US$1.80.

VersaBank reported second-quarter net revenue and adjusted EPS of US$27.6-million and US$0.28, compared with Irwin’s estimates of US$26.2-million and US$0.29 and consensus at US$26.4-million and US$0.25.

Net interest margin was 2.33%, above Irwin’s and consensus estimates of 2.27%, reflecting a seasonal lift. Management expects NIM to remain relatively steady compared with the 2.29% reported in the first half of fiscal 2026, with potential upside.

Irwin said year-over-year loan growth was the strongest in 11 quarters. Ending loans were $5.7-billion, up 25.5% from a year earlier, supported by stronger-than-expected demand in Canada SRP. U.S. SRP loans were $150-million, down $50-million sequentially, though management remains committed to its $1.0-billion U.S. SRP funding target for fiscal 2026.

Irwin said VersaBank’s planned launch of individual-loan SRP funding in July could be important because it would remove the need for warehouse financing by partners. Management expects the product to reduce the amount of equity partners need to commit to SRP programs by about half and improve liquidity because cash is received immediately.

“We could become more constructive on ramping U.S. SRP volumes,” Irwin said.

VersaBank also generated initial revenue from stablecoin custody services for QCAD, with balances exiting the quarter in the $700,000 to $800,000 range. The company is also working with U.S. partners on its Real Bank Tokenized Deposits rollout after the FDIC confirmed the deposits will be insured.

Irwin noted that VersaBank has publicly filed its S-4 with the SEC for its planned reorganization into a U.S.-domiciled bank. The structural realignment is expected to reduce annual expenses by about $8.0-million.

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