– Digital Banking
Operations Benefitting from Significant
Operating Leverage as Loan
Portfolio Continues to Experience Strong
Growth –
All amounts are unaudited and in Canadian dollars and are
based on financial statements prepared in compliance with
International Accounting Standard 34 Interim Financial Reporting,
unless otherwise noted. Our second quarter 2023 ("Q2 2023")
unaudited Interim Consolidated Financial Statements for the period
ended April 30, 2023 and Management's
Discussion and Analysis ("MD&A"), are available online at
www.versabank.com/investor-relations, SEDAR at www.sedar.com and
EDGAR at www.sec.gov/edgar.shtml. Supplementary Financial
Information will also be available on our website at
www.versabank.com/investor-relations.
LONDON,
ON, June 7, 2023 /PRNewswire/ - VersaBank
("VersaBank" or the "Bank") (TSX: VBNK) (NASDAQ: VBNK), a North
American leader in business-to-business digital banking, as well as
technology solutions for cybersecurity, today reported its results
for the second quarter of fiscal 2023 ended April 30, 2023. All figures are in Canadian
dollars unless otherwise stated.
CONSOLIDATED AND SEGMENTED FINANCIAL SUMMARY
(unaudited)
|
As at or for the
three months ended
|
|
As at or for the six
months ended
|
|
April
30
|
January
31
|
|
April
30
|
|
|
April
30
|
April
30
|
|
(thousands of Canadian
dollars except per share amounts)
|
2023
|
2023
|
Change
|
2022
|
Change
|
|
2023
|
2022
|
Change
|
Financial
results
|
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
26,685
|
$
25,918
|
3 %
|
$
18,635
|
43 %
|
|
$
52,603
|
$
36,901
|
43 %
|
|
Cost of
funds(1)
|
3.27 %
|
2.95 %
|
11 %
|
1.38 %
|
137 %
|
|
3.13 %
|
1.30 %
|
141 %
|
|
Net interest
margin(1)
|
2.78 %
|
2.83 %
|
(2 %)
|
2.77 %
|
0 %
|
|
2.82 %
|
2.69 %
|
5 %
|
|
Net interest margin on
loans(1)
|
2.99 %
|
3.03 %
|
(1 %)
|
3.11 %
|
(4 %)
|
|
3.02 %
|
3.14 %
|
(4 %)
|
|
Net
income
|
10,263
|
9,417
|
9 %
|
4,943
|
108 %
|
|
19,680
|
10,509
|
87 %
|
|
Net income per common
share basic and diluted
|
0.38
|
0.34
|
12 %
|
0.17
|
124 %
|
|
0.72
|
0.36
|
100 %
|
Balance sheet and
capital ratios
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
3,729,393
|
$
3,531,690
|
6 %
|
$
2,692,146
|
39 %
|
|
$
3,729,393
|
$
2,692,146
|
39 %
|
|
Book value per common
share(1)
|
13.19
|
12.77
|
3 %
|
11.94
|
10 %
|
|
13.19
|
11.94
|
10 %
|
|
Common Equity Tier 1
(CET1) capital ratio
|
11.21 %
|
11.19 %
|
0 %
|
13.66 %
|
(18 %)
|
|
11.21 %
|
13.66 %
|
(18 %)
|
|
Total capital
ratio
|
15.37 %
|
15.34 %
|
0 %
|
18.68 %
|
(18 %)
|
|
15.37 %
|
18.68 %
|
(18 %)
|
|
Leverage
ratio
|
8.83 %
|
9.21 %
|
(4 %)
|
11.63 %
|
(24 %)
|
|
8.83 %
|
11.63 %
|
(24 %)
|
|
|
|
|
|
|
|
|
|
|
|
(1) See definitions
under 'Non-GAAP and Other Financial Measures' in the Q2 2023
Management's Discussion and Analysis.
|
(thousands of Canadian
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
for the three months
ended
|
April 30,
2023
|
January 31,
2023
|
April 30,
2022
|
|
|
|
|
Digital
|
DRTC
|
Eliminations/
|
Consolidated
|
Digital
|
DRTC
|
Eliminations/
|
Consolidated
|
Digital
|
DRTC
|
Eliminations/
|
Consolidated
|
|
|
|
|
Banking
|
|
Adjustments
|
|
Banking
|
|
Adjustments
|
|
Banking
|
|
Adjustments
|
|
Net interest
income
|
|
$ 24,609
|
$
-
|
$
-
|
$
24,609
|
$ 24,274
|
$
-
|
$
-
|
$
24,274
|
$ 17,242
|
$
-
|
$
-
|
$
17,242
|
Non-interest
income
|
|
122
|
2,146
|
(192)
|
2,076
|
2
|
1,833
|
(191)
|
1,644
|
1
|
1,434
|
(42)
|
1,393
|
Total
revenue
|
|
|
24,731
|
2,146
|
(192)
|
26,685
|
24,276
|
1,833
|
(191)
|
25,918
|
17,243
|
1,434
|
(42)
|
18,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery
of) credit losses
|
237
|
-
|
-
|
237
|
385
|
-
|
-
|
385
|
78
|
-
|
-
|
78
|
|
|
|
|
24,494
|
2,146
|
(192)
|
26,448
|
23,891
|
1,833
|
(191)
|
25,533
|
17,165
|
1,434
|
(42)
|
18,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and
benefits
|
|
6,930
|
1,499
|
-
|
8,429
|
6,684
|
1,573
|
-
|
8,257
|
5,586
|
1,140
|
-
|
6,726
|
|
General and
administrative
|
3,131
|
377
|
(192)
|
3,316
|
2,862
|
455
|
(191)
|
3,126
|
3,761
|
300
|
(42)
|
4,019
|
|
Premises and
equipment
|
612
|
369
|
-
|
981
|
623
|
329
|
-
|
952
|
659
|
363
|
-
|
1,022
|
|
|
|
|
10,673
|
2,245
|
(192)
|
12,726
|
10,169
|
2,357
|
(191)
|
12,335
|
10,006
|
1,803
|
(42)
|
11,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
13,821
|
(99)
|
-
|
13,722
|
13,722
|
(524)
|
-
|
13,198
|
7,159
|
(369)
|
-
|
6,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
3,991
|
(532)
|
-
|
3,459
|
3,789
|
(8)
|
-
|
3,781
|
1,744
|
103
|
-
|
1,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
9,830
|
$
433
|
$
-
|
$
10,263
|
$
9,933
|
$
(516)
|
$
-
|
$
9,417
|
$
5,415
|
$
(472)
|
$
-
|
$
4,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$ 3,719,592
|
$
25,559
|
$
(15,758)
|
$
3,729,393
|
$ 3,522,279
|
$
23,797
|
$
(14,386)
|
$
3,531,690
|
$ 2,692,510
|
$
21,386
|
$
(21,750)
|
$
2,692,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
$ 3,366,614
|
$
29,057
|
$
(22,797)
|
$
3,372,874
|
$ 3,174,197
|
$
27,751
|
$
(21,435)
|
$
3,180,513
|
$ 2,347,610
|
$
23,727
|
$
(20,605)
|
$
2,350,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIGHLIGHTS FOR THE SECOND QUARTER OF FISCAL 2023
Consolidated
- Consolidated revenue increased 43% year-over-year and 3%
sequentially to a record $26.7
million, driven by higher interest income resulting
primarily from continuing strong loan growth, as well as an
increased contribution from DRT Cyber Inc. ("DRTC");
- Consolidated net income increased 108% year-over-year and 9%
sequentially to a record1 $10.3
million as a function of higher revenue, which was driven
primarily by strong loan growth, as well as an increased
contribution from DRTC, offset partially by higher non-interest
expense;
- Consolidated earnings per share increased 124% year-over-year
and 12% sequentially to $0.38 as a
function of higher net income, as well as the positive impact of
the purchase and cancellation of VersaBank's common shares through
its Normal Course Issuer Bid ("NCIB");
- The Bank purchased and cancelled 419,500 common shares under
its NCIB, bringing the total number of common shares purchased
through the NCIB as at April 30, 2023
to 1,437,096; and,
- The Bank continues to advance the process seeking approval of
its proposed acquisition of OCC-chartered US bank, Stearns Bank
Holdingford, and expects a decision with respect to approval of its
application from US regulators by the end of summer 2023. If
favourable, the Bank will proceed toward completion of the
acquisition as soon as possible, subject to Canadian regulatory
(OSFI) approval.
(1)
|
Record net income
adjusting for the impact of the recognition of a deferred tax asset
attributable to future tax loss carry-forwards. In the first
quarter of 2017 the Bank recognized an $8.8 million deferred tax
asset derived from the tax loss carryforwards assumed pursuant to
the amalgamation of VersaBank with PWC Capital Inc. and in the
current quarter recognized a $530,000 deferred tax asset associated
with DRTC's non-capital loss carryforwards. Quarterly net income
for January 31, 2017, excluding the $8.8 million deferred tax asset
was $3.1 million, while the quarterly net income for April 30,
2023, excluding the $530,000 deferred tax asset was $9.7
million.
|
Digital Banking Operations
- Loans increased 40% year-over-year and 6% sequentially to a
record $3.42 billion, driven
primarily by growth in the Bank's Point-of-Sale ("POS") Financing
portfolio, which increased 58% year-over-year and 5% sequentially,
as well as growth in the Bank's Commercial Real Estate ("CRE")
portfolio (predominantly related to residential use properties),
which increased 4% year-over-year and 7% sequentially;
- Revenue increased 43% year-over-year and 2% sequentially to a
record $24.7 million, driven
primarily by loan growth, as well as redeployment of available cash
into higher yielding, low risk securities, offset partially by
higher interest expense attributable to higher deposit
balances;
- Net interest margin on loans decreased 12 bps, or 4%,
year-over-year and decreased 4 bps, or 1%, sequentially to 2.99%
due to higher cost of funds attributable primarily to a shift in
the Bank's funding mix, offset partially by higher yields earned on
the Bank's lending assets;
- Net interest margin increased 1 bp year-over-year, or less than
1%, and decreased 5 bps, or 2%, sequentially to 2.78%. The
year-over-year trend was as a function primarily of higher yields
earned on the Bank's lending and treasury assets resulting
primarily from a higher interest rate environment, offset partially
by higher cost of funds. The sequential trend was a function
primarily of higher cost of funds attributable primarily to a shift
in the Bank's funding mix, offset partially by higher yields earned
on the Bank's lending and treasury assets;
- Provision for credit losses as a percentage of average loans
was 0.03%, compared with a 12-quarter average of -0.01%, which
remains among the lowest of the publicly traded Canadian Schedule I
(federally licensed) Banks; and,
- Efficiency ratio (excluding DRTC) improved year-over-year to
43% (down from 58%) due to revenue growth (43%) continuing to
significantly outpace non-interest expense growth (8%) over the
same period. On a sequential basis, efficiency ratio increased
slightly (up from 42%).
DRTC (Cybersecurity Services and Banking and Financial
Technology Development)
- Revenue for the Cybersecurity Services component of DRTC
(Digital Boundary Group, or DBG) increased 5% year-over-year to
$2.6 million as a function of higher
service engagement in the current quarter, while gross profit
increased 35% to $1.9 million as a
function primarily of improved operational efficiency.
Sequentially, revenue and gross profit for Digital Boundary Group
increased 11% and 17% respectively as a function of higher service
engagements in the current quarter. DBG's gross profit amounts are
included in DRTC's consolidated revenue which is reflected in
non-interest income in VersaBank's consolidated statements of
income and comprehensive income. DBG remained profitable on a
standalone basis within DRTC.
MANAGEMENT COMMENTARY
"Our second quarter financial results were once again
evidence that VersaBank is at an inflection point in terms of
realizing the significant operating leverage inherent in our
branchless, digital banking model," said David Taylor, President and Chief Executive
Officer, VersaBank. "40% year-over-year loan growth to a record
$3.42 billion loan portfolio drove a
108% year-over-year increase in net income and a 124% increase in
earnings per share, as we continue to take advantage of our share
buyback program."
"We anticipate continued strong growth in our loan portfolio in
the second half of 2023, driven by continued growth in our Canadian
Point of Sale portfolio, which typically benefits from higher
consumer spending in the spring and summer months. We also expect
to benefit from continued growth from the ramp up of the limited
launch of our US Receivable Purchase Program, which we plan to
broadly launch upon approval of our pending US bank acquisition. At
the same time, we are being opportunistic in our Commercial Real
Estate portfolio, 90% of which is related to residential use
properties, an asset class that continues to present an attractive
return on equity and low risk profile in Canada."
"Our pending acquisition of a national, OCC-chartered US bank
presents the opportunity to supercharge our already strong growth
prospects domestically through the opportunity to address an
underserved market need with an innovative, proven financing
solution. We continue to be encouraged by our discussions with
prospective partners as we advance toward regulatory approval of
our acquisition, which we now expect to receive by the end of the
summer of this year. If favourable, we will proceed toward Canadian
regulatory approval and closing of the acquisition as quickly as
possible thereafter."
"Continued strong growth in our loan portfolio combined with the
significant operating leverage in our model is expected to drive
meaningful improvement in our efficiency ratio, continued strong
growth in net income, significant expansion of return on common
equity and continued creation of value for our shareholders."
FINANCIAL REVIEW
Consolidated
Net Income – Net income for the second quarter of
fiscal 2023 was $10.3 million, or
$0.38 per common share (basic and
diluted), compared with $9.4 million,
or $0.34 per common share (basic and
diluted) last quarter and $4.9
million, or $0.17 per common
share (basic and diluted), for the same period of fiscal 2022. The
sequential and year-over-year increases were a function of higher
revenue attributable primarily to lending asset growth,
redeployment of available cash into higher yielding, low risk
securities and higher revenue contributions from DRTC, offset
partially by higher non-interest expense.
Digital Banking Operations
Net Interest Margin – Net interest margin (or
spread) for the quarter was 2.78% compared to 2.83% last quarter
and 2.77% for the same period of fiscal 2022. The sequential trend
was a function primarily of higher cost of funds attributable to a
shift in the Bank's funding mix, offset partially by higher yields
earned on the Bank's lending and treasury assets. The
year-over-year trend was as a function primarily of higher yields
earned on the Bank's lending and treasury assets attributable to a
higher interest rate environment offset partially by higher cost of
funds.
Net Interest Margin on Loans – Net interest margin on
loans for the quarter was 2.99% compared to 3.03% last quarter, and
3.11% for the same period of fiscal 2022. Year-to-date net interest
margin on loans was 3.02% compared to 3.14% for the same period a
year ago. The sequential and year-over-year trends were a function
primarily of higher cost of funds attributable to a shift in the
Bank's funding mix offset partially by higher yields earned on the
Bank's lending assets due to a higher interest rate
environment.
Net Interest Income – Net interest income for the
quarter increased to a record $24.6
million from $24.3
million last quarter and $17.2
million for the same period of fiscal 2022. The sequential
and year over year trends were a function primarily of higher
interest income earned on higher loan balances attributable to
strong growth in both the Bank's POS Financing and CRE Mortgage
portfolios, higher yields earned on floating-rate lending assets,
and the redeployment of available cash into higher-yielding,
low-risk securities offset partially by higher interest expense
attributable to higher deposit balances.
Non-Interest Expenses – Non-interest expenses for
the quarter were $12.7 million
compared with $12.3 million last
quarter and $11.8 million for the
same period of fiscal 2022. The sequential and year-over-year
trends were a function primarily of higher salary and benefits
amounts attributable to higher staffing levels to support expanded
business activity across the Bank, higher general, annual
compensation adjustments and higher professional fees attributable
to the continuing regulatory approval process associated with
VersaBank's acquisition of a US bank. Investments associated with
the acquisition of the US bank are expected to continue over the
course of fiscal 2023 in amounts similar to the current period and
will be related primarily to the Bank ensuring that it is in
compliance with all necessary US banking regulatory requirements.
The year-over-year increase in non-interest expenses was partially
offset by lower insurance premiums relative to the premiums paid
during the comparative period attributable to VersaBank's listing
on the Nasdaq in September 2021 and
lower capital tax expense attributable to a shift in the provincial
allocation of the Bank's loan and deposit originations.
Provision for/Recovery of Credit Losses – Provision for
credit losses for the quarter was $237,000 compared to a provision for credit
losses of $385,000 last quarter and a
provision for credit losses of $78,000 for the same period of fiscal 2022. The
sequential trend was a function primarily of changes in the
forward-looking information used by the Bank in its credit risk
models, offset partially by higher lending asset balances and
changes in the Bank's lending asset mix. The year-over-year trend
was a function primarily of changes in the forward-looking
information used by the Bank in its credit risk models, higher
lending asset balances and changes in the Bank's lending asset mix.
Provision for credit losses as a percentage of average loans was
0.03%, compared with a 12-quarter average of -0.01%,
Capital – At April 30,
2023, VersaBank's total regulatory capital was $455 million compared with $447 million last quarter and $432 million a year ago. The Bank's total capital
ratio at April 30, 2023 was 15.37%,
compared 15.34% last quarter and 18.68% a year ago. The
sequential and year-over-year capital ratio trends were a function
primarily of retained earnings growth, the impact of the purchase
and cancellation of common shares through the Bank's NCIB and
changes to the Bank's risk-weighted asset balances and composition
over the same periods.
Credit Quality – The Bank's allowance for expected credit
losses, ("ECL") at April 30, 2023 was
$2.5 million compared with
$2.3 million last quarter and
$1.5 million a year ago. The
sequential and year-over-year changes were a function primarily of
the factors set out in the Provision for/Recovery of Credit
Losses section above. VersaBank's Provision for Credit Losses
ratio continues to be one of the lowest in the Canadian banking
industry, reflecting the very low risk profile of the Bank's
lending portfolio, enabling it to generate superior net interest
margins by offering innovative, high-value deposit and lending
solutions that address unmet needs in the banking industry through
a highly efficient partner model. Given that the vast majority of
the Bank's CRE portfolio is composed of loans and mortgages for
residential use properties, it has very limited exposure to the
commercial real estate market.
Lending Operations: POS Financing – POS Financing
portfolio balances for the quarter increased 5% sequentially and
58% year-over-year to $2.5 billion as
a function primarily of continued strong demand for home
improvement/HVAC and transportation receivable financing. Although
consumer spending and business investment in Canada are expected to slow during the second
half of 2023 (due primarily to the impact of higher interest rates
combined with elevated inflation), the economic slowdown is
expected to be short lived, with modest layoffs and stable
unemployment levels. As was the case during the first half of
fiscal 2023, management expects any impact of a slower economy on
the POS Financing portfolio in the second half of fiscal 2023 to be
substantially outweighed by the Bank's continued success in adding
new origination partners and expanding business with existing
partners. Combined with what is seasonally stronger growth
historically in the POS portfolio in the second half of the fiscal
year, management expects growth in the POS portfolio for the second
half of 2023 to be, at a minimum, consistent with that of the first
half.
US Receivable Purchase Program ("RPP") - Despite
higher interest rates, elevated inflation and high gas prices in
the US, the labour market remains tight which management expects
will continue to support consumer spending, and in turn will
support stable demand for durable goods and agricultural products
which is expected to continue to stimulate transportation and
manufacturing equipment purchases. Additionally, despite a cooling
of the residential home market in the US overall construction
activity is expected to continue to expand modestly over the course
of 2023 which is anticipated to support demand for construction
equipment in the near term which management believes will continue
to support growth in the Bank's RPP portfolio over the course of
fiscal 2023.
Lending Operations: Commercial Lending – The
Commercial Lending portfolio for the quarter increased 7%
sequentially and 4% year-over-year to $866
million. Management anticipates continued moderate growth in
the commercial mortgage sector related to financing for residential
housing properties, which is expected to result in healthy demand
for the Bank's residential construction and term financing products
for which the Bank is currently experiencing and expects to
continue to experience high quality deal flow, throughout at least
fiscal 2023. Notwithstanding the effective risk mitigation
strategies that are employed in managing the Bank's CRE portfolios,
including working with well-established, well-capitalized partners
and maintaining modest loan-to-value ratios on individual
transactions, management continues to take a cautionary stance with
respect to its broader CRE portfolios due to the anticipation of
volatility in CRE asset valuations in the current and anticipated
interest rate environment and the potential impact of same on
borrowers' ability to service debt, as well as due to concerns
related to inflation and higher input costs, which continue to have
the potential to drive higher construction costs. Additionally,
management anticipates more meaningful participation in the OFSI
B-20 compliant conventional, uninsured mortgage financing space.
Management anticipates business generated from this initiative will
have a positive balance sheet impact through fiscal 2024.
Deposit Funding – Cost of funds for the second quarter
was 3.27%, an increase of 32 bps sequentially and 189 bps
year-over-year attributable to a shift in the Bank's funding mix
and a higher interest rate environment. Management expects that
commercial deposit volumes raised via VersaBank's Trustee
Integrated Banking ("TIB") program will return to growth late in
the second half of fiscal 2023 as a function of an increase in the
volume of consumer and commercial bankruptcy and proposal
restructuring proceedings over the same timeframe, attributable
primarily to a more challenging current and forecasted economic
environment as evidenced by increasing Canadian consumer bankruptcy
filing volumes. Further, VersaBank continues to pursue a number of
initiatives to grow and expand its well-established, diverse
deposit broker network through which it sources personal deposits,
consisting primarily of guaranteed investment certificates. The
Bank's current deposit channels remain an efficient, reliable and
diversified source of funding providing ample access to reasonably
priced deposits in volumes that comfortably support the Bank's
liquidity requirements. Substantially all of the Bank's
deposit volumes raised through these channels are eligible for CDIC
insurance.
DRTC (Cybersecurity Services and Banking and Financial
Technology Development)
DRTC revenue (including that from services provided to the
Digital Banking operations) increased 17% sequentially to
$2.1 million and 50% year-over-year,
as a function primarily of higher service engagements in the
current quarter and higher gross profit from DBG. DRTC recorded net
income of $433,000 compared to a net
loss of $516,000 in the sequential
quarter and net loss of $472,000 a
year ago. The sequential and year-over-year trends were a function
primarily of a $530,000 deferred tax
asset associated with DRTC's non-capital loss carryforwards which
are anticipated to be applied to future taxable earnings.
DBG revenue increased 11% sequentially as a function of higher
service engagements in the current quarter while gross profit
increased 17% sequentially as a function primarily of improved
operational efficiency achieved by DBG over the course of the year.
DRTC's DBG services revenue and gross profit increased 5% and 35%
year-over-year to $2.6 million and
$1.9 million respectively as a
function of higher service engagements in the current quarter.
DBG's gross profit amounts are included in DRTC's consolidated
revenue which is reflected in non-interest income in VersaBank's
consolidated statements of income and comprehensive income.
FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
(unaudited)
|
for the three months
ended
|
|
for the six months
ended
|
|
|
|
April
30
|
April
30
|
|
April
30
|
April
30
|
(thousands of Canadian
dollars except per share amounts)
|
2023
|
2022
|
|
2023
|
2022
|
Results of
operations
|
|
|
|
|
|
|
Interest
income
|
$
53,595
|
$
25,848
|
|
$ 103,156
|
$
50,568
|
|
Net interest
income
|
24,609
|
17,242
|
|
48,883
|
34,127
|
|
Non-interest
income
|
2,076
|
1,393
|
|
3,720
|
2,774
|
|
Total
revenue
|
26,685
|
18,635
|
|
52,603
|
36,901
|
|
Provision for credit
losses
|
237
|
78
|
|
622
|
80
|
|
Non-interest
expenses
|
12,726
|
11,767
|
|
25,061
|
22,403
|
|
|
Digital
Banking
|
10,673
|
10,006
|
|
20,842
|
19,509
|
|
|
DRTC
|
2,245
|
1,803
|
|
4,602
|
2,977
|
|
Net
income
|
10,263
|
4,943
|
|
19,680
|
10,509
|
|
Income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.38
|
$
0.17
|
|
$
0.72
|
$
0.36
|
|
|
Diluted
|
$
0.38
|
$
0.17
|
|
$
0.72
|
$
0.36
|
|
Dividends paid on
preferred shares
|
$
247
|
$
247
|
|
$
494
|
$
494
|
|
Dividends paid on
common shares
|
$
651
|
$
687
|
|
$
1,314
|
$
1,374
|
|
Yield*
|
6.05 %
|
4.15 %
|
|
5.95 %
|
3.99 %
|
|
Cost of
funds*
|
3.27 %
|
1.38 %
|
|
3.13 %
|
1.30 %
|
|
Net interest
margin*
|
2.78 %
|
2.77 %
|
|
2.82 %
|
2.69 %
|
|
Net interest margin on
loans*
|
2.99 %
|
3.11 %
|
|
3.02 %
|
3.14 %
|
|
Return on average
common equity*
|
12.07 %
|
5.92 %
|
|
11.38 %
|
6.25 %
|
|
Book value per common
share*
|
$
13.19
|
$
11.94
|
|
$
13.19
|
$
11.94
|
|
Efficiency
ratio*
|
48 %
|
63 %
|
|
48 %
|
61 %
|
|
Efficiency ratio -
Digital Banking*
|
43 %
|
58 %
|
|
43 %
|
57 %
|
|
Return on average total
assets*
|
1.13 %
|
0.75 %
|
|
1.11 %
|
0.79 %
|
|
Provision for credit
losses as a % of average loans*
|
0.03 %
|
0.01 %
|
|
0.04 %
|
0.01 %
|
|
|
|
as at
|
Balance Sheet
Summary
|
|
|
|
|
|
|
Cash
|
$ 223,661
|
$ 198,157
|
|
$ 223,661
|
$ 198,157
|
|
Securities
|
39,652
|
-
|
|
39,652
|
-
|
|
Loans, net of allowance
for credit losses
|
3,419,455
|
2,450,276
|
|
3,419,455
|
2,450,276
|
|
Average
loans
|
3,327,269
|
2,332,957
|
|
3,206,067
|
2,276,663
|
|
Total assets
|
3,729,393
|
2,692,146
|
|
3,729,393
|
2,692,146
|
|
Deposits
|
3,108,218
|
2,124,916
|
|
3,108,218
|
2,124,916
|
|
Subordinated notes
payable
|
104,532
|
98,410
|
|
104,532
|
98,410
|
|
Shareholders'
equity
|
356,519
|
341,414
|
|
356,519
|
341,414
|
Capital
ratios**
|
|
|
|
|
|
|
Risk-weighted
assets
|
$
2,957,933
|
$
2,313,030
|
|
$
2,957,933
|
$
2,313,030
|
|
Common Equity Tier 1
capital
|
331,614
|
315,963
|
|
331,614
|
315,963
|
|
Total regulatory
capital
|
454,622
|
432,083
|
|
454,622
|
432,083
|
|
Common Equity Tier 1
(CET1) ratio
|
11.21 %
|
13.66 %
|
|
11.21 %
|
13.66 %
|
|
Tier 1 capital
ratio
|
11.67 %
|
14.25 %
|
|
11.67 %
|
14.25 %
|
|
Total capital
ratio
|
15.37 %
|
18.68 %
|
|
15.37 %
|
18.68 %
|
|
Leverage
ratio
|
8.83 %
|
11.63 %
|
|
8.83 %
|
11.63 %
|
* See definitions under
'Non-GAAP and Other Financial Measures' in the Q2 2023 Management's
Discussion and Analysis.
|
** Capital management
and leverage measures are in accordance with OSFI's Capital
Adequacy Requirements and Basel III Accord.
|
About VersaBank
VersaBank is a Canadian Schedule I chartered (federally
licensed) bank with a difference. VersaBank became the world's
first fully digital financial institution when it adopted its
highly efficient business-to-business model in 1993 using its
proprietary state-of-the-art financial technology to profitably
address underserved segments of the Canadian banking market in the
pursuit of superior net interest margins while mitigating risk.
VersaBank obtains all of its deposits and provides the majority of
its loans and leases electronically, with innovative deposit and
lending solutions for financial intermediaries that allow them to
excel in their core businesses. In addition, leveraging its
internally developed IT security software and capabilities,
VersaBank established wholly owned, Washington, DC-based subsidiary, DRT Cyber
Inc. to pursue significant large-market opportunities in cyber
security and develop innovative solutions to address the rapidly
growing volume of cyber threats challenging financial institutions,
multi-national corporations and government entities on a daily
basis.
VersaBank's Common Shares trade on the Toronto Stock Exchange
("TSX") and Nasdaq under the symbol VBNK. Its Series 1 Preferred
Shares trade on the TSX under the symbol VBNK.PR.A.
Forward-Looking Statements
VersaBank's public communications often include written or oral
forward-looking statements. Statements of this type are included in
this document and may be included in other filings and with
Canadian securities regulators or the US Securities and Exchange
Commission, or in other communications. All such statements are
made pursuant to the "safe harbor" provisions of, and are intended
to be forward-looking statements under, the United States Private
Securities Litigation Reform Act of 1995 and any applicable
Canadian securities legislation. The statements in this
management's discussion and analysis that relate to the future are
forward-looking statements. By their very nature, forward-looking
statements involve inherent risks and uncertainties, both general
and specific, many of which are out of VersaBank's control. Risks
exist that predictions, forecasts, projections, and other
forward-looking statements will not be achieved. Readers are
cautioned not to place undue reliance on these forward-looking
statements as a number of important factors could cause actual
results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such
forward-looking statements. These factors include, but are not
limited to, the strength of the Canadian and US economy in general
and the strength of the local economies within Canada and the US in which VersaBank conducts
operations; the effects of changes in monetary and fiscal policy,
including changes in interest rate policies of the Bank of
Canada and the US Federal Reserve;
global commodity prices; the effects of competition in the markets
in which VersaBank operates; inflation; capital market
fluctuations; the timely development and introduction of new
products in receptive markets; the impact of changes in the laws
and regulations pertaining to financial services; changes in tax
laws; technological changes; unexpected judicial or regulatory
proceedings; unexpected changes in consumer spending and savings
habits; the impact of wars or conflicts including the crisis in
Ukraine and the impact of the
crisis on global supply chains and markets; the impact of potential
new variants of COVID-19; the possible effects on our business of
terrorist activities; natural disasters and disruptions to public
infrastructure, such as transportation, communications, power or
water supply; and VersaBank's anticipation of and success in
managing the risks implicated by the foregoing. For a detailed
discussion of certain key factors that may affect VersaBank's
future results, please see VersaBank's annual MD&A for the year
ended October 31, 2022.
The foregoing list of important factors is not exhaustive. When
relying on forward-looking statements to make decisions, investors
and others should carefully consider the foregoing factors and
other uncertainties and potential events. The forward-looking
information contained in the management's discussion and analysis
is presented to assist VersaBank shareholders and others in
understanding VersaBank's financial position and may not be
appropriate for any other purposes. Except as required by
securities law, VersaBank does not undertake to update any
forward-looking statement that is contained in this management's
discussion and analysis or made from time to time by VersaBank or
on its behalf.
Conference Call
VersaBank will be hosting a conference call and webcast today,
Wednesday, June 7, 2023, at
9:00 a.m. (EDT) to discuss its second
quarter results, featuring a presentation by David Taylor, President & CEO, and other
VersaBank executives, followed by a question and answer period.
Dial-in Details
Toll-free dial-in
number:
|
1 (888) 664-6392
(Canada/U.S.)
|
Local dial-in
number:
|
(416)
764-8659
|
Please call between 8:45 a.m. and 8:55 a.m.
(EDT).
To join the conference call by telephone without operator
assistance, you may register and enter your phone number in advance
at https://emportal.ink/3McGJdd to receive an instant
automated call back.
Webcast Access: For those preferring to listen to the conference
call via the Internet, a webcast of Mr. Taylor's presentation will
be available via the internet, accessible here
https://app.webinar.net/6VP5qe6YDXl or from the Bank's web
site.
Instant Replay
Toll-free dial-in
number:
|
1 (888) 390-0541
(Canada/U.S.)
|
Local dial-in
number:
|
(416)
764-8677
|
Passcode:
|
008318#
|
Expiry Date:
|
July 7th, 2023, at
11:59 p.m. (EDT)
|
The archived webcast presentation will also be available via the
Internet for 90 days following the live event at
https://app.webinar.net/6VP5qe6YDXl and on the Bank's web
site.
Visit our website at: www.versabank.com
Follow VersaBank on Facebook, Instagram, LinkedIn and
Twitter
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SOURCE VersaBank