By Robb M. Stewart

VersaBank's shares jumped after the online bank flagged expansion in its net interest margin this quarter and faster-than-anticipated growth in assets for a digital funding solution.

In Thursday morning trading, the shares rose 13% to C$15.08 in Toronto, narrowing the loss in 2025 to 24%. On Nasdaq, the stock was ahead 11% at $10.85, for a year-to-date decline of 22%.

VersaBank, which runs a branchless business-to-business banking model in Canada and the U.S., said its net interest margin for the first two months of the fiscal second quarter had expanded meaningfully. That was being driven by factors including a normalization of the yield curve, a substantial replacement of higher interest rate term deposits for lower rate term deposits in Canada as those mature, and continued expansion of insolvency professional deposits as bankruptcies increase, it said.

The London, Ontario-based company also said it was on target to achieve $290 million in U.S. receivable purchase program assets for the fiscal year after surpassing $70 million in the 75 days since it added its first partner on Jan. 30.

VersaBank said it has entered an agreement with a second U.S. receivable purchase program partner, which will use the program to fund a portion of its loan and lease originations. The program was developed for finance companies that lend money to consumers and small businesses for what are typically big ticket purchases such as consumer home improvement and commercial equipment.

The bank said it also remains on track to reach its target of 1 billion Canadian dollars ($721.6 million) of commitments in Canada Mortgage and Housing Corp.-insured loans by the end of fiscal 2025. As of April 15, CMHC-insured loan commitments had increased to more than C$730 million, with C$266 million in loans outstanding, it said. CMHC-insured loans require no risk weighted capital and generate an attractive spread that contributes to credit asset net interest margin.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

April 17, 2025 11:23 ET (15:23 GMT)

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