By Robb M. Stewart

VersaBank's profit fell in the latest quarter as the Canadian digital bank was squeezed by the weakening of the U.S. dollar and costs tied with its plans to shift to the U.S.

VersaBank, which is focused on business-to-business banking and cybersecurity services, recorded fiscal second-quarter net income of 8.5 million Canadian dollars ($6.2 million), or C$0.26 a share, down from C$11.8 million, or C$0.45, a year earlier.

The latest quarter includes C$900,000 in pretax non-interest expenses related to costs associated with VersaBank's plan to realign its corporate structure to that of a standard U.S. bank framework as well as what it said was an atypically high unrealized foreign exchange translation loss resulting from depreciation of the U.S. dollar.

Overall revenue for the three months to April 30 rose 5.7% to C$30.1 million, buoyed by growth in credit assets. Net interest income increased to C$28 million from C$26.2 million last year, while non-interest income slipped to C$2.1 million from C$2.3 million.

The bank booked a provision for credit losses of C$889,000, up sharply from C$16,000 the prior quarter. The provision for the first six months of the fiscal year was raised to C$1.9 million, compared with a year-earlier recovery of C$111,000.

The London, Ontario-based online bank earlier late last month laid out plans to operate under a parent holding company that would be domiciled in the U.S., a shift aimed at boosting value for shareholders, mitigating risk and cutting costs.

Under the proposal, shares of the current parent company would be exchanged for new shares of VersaHoldings US, an existing U.S.-based entity that VersaBank originally set up to hold its U.S. subsidiaries. New shares of VersaHoldings will be listed on Nasdaq and the Toronto Stock Exchange in place of the current shares on the two exchanges.

In comes after VersaBank in August closed the $14 million acquisition of Stearns Bank Holdingford, a U.S. multi-bank holding company whose portfolio included its flagship Stearns Bank National Association. The business has been renamed VersaBank USA and is expected to boost per-share earnings within the first year of ownership.

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

(END) Dow Jones Newswires

June 04, 2025 07:33 ET (11:33 GMT)

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