– Digital Banking Operations
Realizing Significant Operating Leverage from Strong Loan Portfolio
Growth as Transitory Costs for Growth Initiatives Substantially
Dissipate –
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 first quarter 2023 ("Q1 2023")
unaudited Interim Consolidated Financial Statements for the period
ended January 31, 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, March 8, 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 first quarter of fiscal 2023 ended January 31, 2023. All figures are in Canadian
dollars unless otherwise stated.
CONSOLIDATED AND SEGMENTED FINANCIAL SUMMARY
(unaudited)
|
|
|
As at or for the
three months ended
|
|
|
|
|
|
January
31
|
October
31
|
|
January
31
|
|
(thousands of Canadian
dollars except per share amounts)
|
2023
|
2022
|
Change
|
2022
|
Change
|
Financial
results
|
|
|
|
|
|
|
|
Total
revenue
|
|
$
25,918
|
$
24,252
|
7 %
|
$
18,266
|
42 %
|
|
Cost of
funds(1)
|
|
2.95 %
|
2.45 %
|
20 %
|
1.29 %
|
129 %
|
|
Net interest
margin(1)
|
|
2.83 %
|
2.81 %
|
1 %
|
2.77 %
|
2 %
|
|
Net interest margin on
loans(1)
|
3.03 %
|
3.03 %
|
(0 %)
|
3.23 %
|
(6 %)
|
|
Net
income
|
|
|
9,417
|
6,429
|
46 %
|
5,566
|
69 %
|
|
Net income per common
share basic and diluted
|
0.34
|
0.23
|
48 %
|
0.19
|
79 %
|
Balance sheet and
capital ratios
|
|
|
|
|
|
|
Total assets
|
|
|
$
3,531,690
|
$
3,265,998
|
8 %
|
$
2,415,346
|
46 %
|
|
Book value per common
share(1)
|
12.77
|
12.37
|
3 %
|
11.78
|
8 %
|
|
Common Equity Tier 1
(CET1) capital ratio
|
11.19 %
|
12.00 %
|
(7 %)
|
14.83 %
|
(25 %)
|
|
Total capital
ratio
|
|
15.34 %
|
16.52 %
|
(7 %)
|
20.34 %
|
(25 %)
|
|
Leverage
ratio
|
|
9.21 %
|
9.84 %
|
(6 %)
|
12.69 %
|
(27 %)
|
|
|
|
|
|
|
|
|
|
|
(1) See definitions
under 'Non-GAAP and Other Financial Measures' in the Q1 2023
Management's Discussion and Analysis.
|
(thousands of Canadian
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
for the three months
ended
|
January 31,
2023
|
October 31,
2022
|
January 31,
2022
|
|
|
|
|
Digital
|
DRTC
|
Eliminations/
|
Consolidated
|
Digital
|
DRTC
|
Eliminations/
|
Consolidated
|
Digital
|
DRTC
|
Eliminations/
|
Consolidated
|
|
|
|
|
Banking
|
|
Adjustments
|
|
Banking
|
|
Adjustments
|
|
Banking
|
|
Adjustments
|
|
Net interest
income
|
|
$ 24,274
|
$
-
|
$
-
|
$
24,274
|
$ 22,477
|
$
-
|
$
-
|
$
22,477
|
$ 16,885
|
$
-
|
$
-
|
$
16,885
|
Non-interest
income
|
|
2
|
1,833
|
(191)
|
1,644
|
38
|
1,778
|
(41)
|
1,775
|
-
|
1,422
|
(41)
|
1,381
|
Total
revenue
|
|
|
24,276
|
1,833
|
(191)
|
25,918
|
22,515
|
1,778
|
(41)
|
24,252
|
16,885
|
1,422
|
(41)
|
18,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (recovery
of) credit losses
|
385
|
-
|
-
|
385
|
205
|
-
|
-
|
205
|
2
|
-
|
-
|
2
|
|
|
|
|
23,891
|
1,833
|
(191)
|
25,533
|
22,310
|
1,778
|
(41)
|
24,047
|
16,883
|
1,422
|
(41)
|
18,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and
benefits
|
|
6,684
|
1,573
|
-
|
8,257
|
5,678
|
1,541
|
-
|
7,219
|
5,440
|
643
|
-
|
6,083
|
|
General and
administrative
|
2,862
|
455
|
(191)
|
3,126
|
5,154
|
457
|
(41)
|
5,570
|
3,482
|
183
|
(41)
|
3,624
|
|
Premises and
equipment
|
623
|
329
|
-
|
952
|
624
|
361
|
-
|
985
|
582
|
347
|
-
|
929
|
|
|
|
|
10,169
|
2,357
|
(191)
|
12,335
|
11,456
|
2,359
|
(41)
|
13,774
|
9,504
|
1,173
|
(41)
|
10,636
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
13,722
|
(524)
|
-
|
13,198
|
10,854
|
(581)
|
-
|
10,273
|
7,379
|
249
|
-
|
7,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
3,789
|
(8)
|
-
|
3,781
|
3,939
|
(95)
|
-
|
3,844
|
1,961
|
101
|
-
|
2,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
9,933
|
$ (516)
|
$
-
|
$
9,417
|
$
6,915
|
$ (486)
|
$
-
|
$
6,429
|
$
5,418
|
$
148
|
$
-
|
$
5,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$ 3,522,279
|
$
23,797
|
$
(14,386)
|
$
3,531,690
|
$ 3,267,479
|
$
22,345
|
$
(23,826)
|
$
3,265,998
|
$ 2,412,167
|
$
23,767
|
$
(20,588)
|
$
2,415,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
$ 3,174,197
|
$
27,751
|
$
(21,435)
|
$
3,180,513
|
$ 2,912,249
|
$
25,755
|
$
(22,681)
|
$
2,915,323
|
$ 2,072,691
|
$
25,147
|
$
(19,443)
|
$
2,078,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIGHLIGHTS FOR THE FIRST QUARTER OF FISCAL 2023
Consolidated
- Consolidated revenue increased 42% year-over-year and 7%
sequentially to a record $25.9
million, driven by higher interest income resulting
substantially from strong loan growth;
- Consolidated net income increased 69% year-over-year and 46%
sequentially to a record1 $9.4
million as a function of higher net interest income
attributable substantially to strong loan growth and modest NIM
expansion. The sequential trend also reflected lower non-interest
expenses;
- Consolidated earnings per share increased 79% year-over-year
and 48% sequentially to $0.34 as a
function of higher net income and the purchase and cancellation of
VersaBank's common shares through its Normal Course Issuer Bid
("NCIB") for its common shares;
- Purchased and cancelled 822,296 common shares under its NCIB,
bringing the total number purchased through the NCIB as at
January 31, 2023 to 1,017,596;
and,
- Completed submission of the requisite US regulatory filings to
the OCC and Federal Reserve Bank of Minneapolis seeking approval of VersaBank's
proposed acquisition of OCC-chartered US bank, Stearns Bank
Holdingford. VersaBank anticipates receiving a decision with
respect to approval of the proposed application from US regulators
during the second calendar quarter of 2023 and, if favourable, will
proceed to complete the acquisition as soon as possible, subject to
Canadian regulatory (OSFI) approval.
(1)
|
Record net income
excludes the first quarter 2017 which benefitted from the
recognition of $8.8 million in deferred income tax assets derived
from the tax loss carry-forwards assumed pursuant to the
amalgamation of VersaBank with PWC Capital Inc. on January 31,
2017.
|
Digital Banking Operations
- Loans increased 46% year-over-year and 8% sequentially to a
record $3.24 billion, driven
primarily by growth in the Bank's Point-of-Sale ("POS") Financing
portfolio, which increased 68% year-over-year and 9% sequentially,
as well as growth in the Bank's Commercial Real Estate ("CRE")
portfolios, which increased 5% year-over-year and 6%
sequentially;
- Revenue increased 44% year-over-year and 8% sequentially to a
record $24.3 million due primarily to
loan growth and redeployment of available cash into higher
yielding, low risk securities, offset partially by higher interest
expense attributable to higher deposit balances;
- Net interest margin increased 6 bps, or 2%, year-over-year and
increased 2 bps, or 1%, sequentially to 2.83% as a function of
higher yields earned on the Bank's lending and treasury assets
attributable primarily to a higher interest rate environment
resulting from the Bank of Canada
tightening monetary policy over the course of the past year;
- Net interest margin on loans decreased 20 bps, or 6%,
year-over-year and was unchanged sequentially, at 3.03%, due
primarily to a shift in the Bank's funding mix and the Bank
successfully executing on its strategy to grow its POS Financing
portfolio, offset partially by higher yields earned on the Bank's
lending portfolio due to higher interest rates;
- Provision for Credit Losses ("PCLs") as a percentage of average
loans was 0.05%, compared with a 12-quarter average of 0.00%, which
remains among the lowest of the publicly traded Canadian Schedule I
(federally licensed) Banks; and,
- Efficiency ratio (excluding DRTC) improved 1,406 bps (or 25%)
year-over-year and 877 bps (or 18%) sequentially to 42%.
DRTC (Cybersecurity Services and Banking and Financial
Technology Development)
- Revenue for the Cybersecurity Services component of DRTC
(Digital Boundary Group, or DBG) decreased 3% year-over-year to
$2.3 million as a function of lower
service work volume in the current quarter while gross profit
increased 17% to $1.6 million as a
function primarily of improved operational efficiency.
Sequentially, revenue and gross profit for Digital Boundary Group
decreased 19% and 6% respectively as a function of lower
engagements in the first quarter of fiscal 2023. 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 record results for the first quarter, highlighted by 69%
year-over-year growth in net income to $9.4
million, reflect the significant operating leveraging
inherent in our value-added, branchless, digital banking model,"
said David Taylor, President and
Chief Executive Officer, VersaBank. "Our loan portfolio grew 46%
year-over-year and non-interest expense, as expected, trended to
normalized levels following our strategic growth investments in
fiscal 2022. As a result, our efficiency ratio improved
substantially – more than 875 bps sequentially and more than 1,400
bps year-over-year – to 42%, and return on common equity improved
347 bps sequentially and 421 bps year-over-year to 10.79% –
clear evidence of the true efficiency and earnings potential
of our model at scale."
"Looking out to the remainder of fiscal 2023, we expect to see
similar healthy sequential growth in our Canadian loan portfolio to
that of the first quarter of this year, as consumer spending
remains healthy in the sectors of the economy our Canadian Point of
Sale business finances. Importantly, VersaBank was
specifically designed to do well in good economic environments and
even better in more challenging economic environments."
"We also look forward to the additional upside potential of the
broad roll out of our Receivable Purchase Program in the U.S.
Following submission of our requisite filings for our proposed U.S.
bank acquisition, we remain optimistic with respect to near-term
approval and continue to actively prepare for the significant
opportunity to broadly offer our differentiated and attractive
financing solution to U.S. partners, which is already proving
successful in its limited roll out to date. As we continue to
grow our loan portfolio on both sides of the border, and with
non-interest expense returning to normalized levels in the
near-term, we expect to continue to realize the full potential of
the return on equity generation capability of our model."
"The cybersecurity segment within DRTC continues to be driven by
our Digital Boundary Group operation, which was profitable in the
current quarter and has been every quarter since being acquired by
DRTC in late 2020. The market for DBG's critical
cybersecurity services continues to rapidly expand as businesses
and government entities are increasingly concerned about the
likelihood of cybersecurity attacks. Recently, DBG added a
major publicly traded, North American financial institution as a
customer, further evidence of its leadership in the industry and
the significant opportunity for growth."
Financial Review
Consolidated
Net Income – Net income for the first quarter of
fiscal 2023 was $9.4 million, or
$0.34 per common share (basic and
diluted), compared with $6.4 million,
or $0.23 per common share (basic and
diluted) for the fourth quarter of fiscal 2022 and $5.6 million, or $0.19 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, with the year-over-year trend reflecting a
partial offset due to higher non-interest expense attributable to
higher salary and benefits expense attributable to general, annual
compensation adjustments and higher staffing levels to support
expanded business activity across the Bank, as well as higher costs
related to investments in the Bank's business development
initiatives.
Digital Banking Operations
Net Interest Margin – Net interest margin (or
spread) for the quarter increased to 2.83% from 2.81% for the first
quarter of fiscal 2023 and 2.77% for the same period of fiscal
2022. The sequential and year-over-year increases were primarily
the result of higher yields earned on the Bank's lending and
treasury assets attributable to higher interest rates offset
partially by higher cost of funds.
Net Interest Margin on Loans – Net interest margin on
loans for the quarter remained unchanged sequentially, and
decreased 20 bps, or 6%, year-over-year and to 3.03%, due primarily
to a shift in the Bank's funding mix and the Bank successfully
executing on its strategy to grow its POS Financing portfolio
offset partially by higher yields earned on the Bank's lending
portfolio due to higher interest rates.
Net Interest Income – Net interest income for the
quarter increased to a record $24.3
million from $22.5
million for the fourth quarter of 2022 and $16.9 million for the same period of fiscal 2022.
The sequential and year-over year increases were due primarily to
higher interest income earned on a 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 as a result of higher interest rates, 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 $12.3 million
compared with $13.8 million for the
fourth quarter of 2022 and $10.6
million for the same period of fiscal 2022. The sequential
trend was a function primarily of lower costs attributable to
investments in the Bank's business development initiatives
including, but not limited to, the acquisition of a US national
bank, the development of the US RPP and preparation for commercial
launch of the Canadian-dollar version of VersaBank's Digital
Deposit Receipts and lower capital tax expense, offset partially by
higher salary and benefits expense attributable to general, annual
compensation adjustments and higher staffing levels to support
expanded business activity across the Bank . Notwithstanding the
favourable sequential trend investments associated with the
acquisition of the US bank are anticipated to continue over the
first half of fiscal 2023 but will be substantially lower than the
amounts invested over the course of fiscal 2022 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 was a function primarily of higher salary and benefits
expense attributable to higher staffing levels to support expanded
business activity across VersaBank and higher costs associated with
employee retention as well as higher costs related to investments
in the Bank's business development initiatives, noted above, offset
partially by lower insurance premiums attributable to VersaBank's
listing on the Nasdaq in September
2021 and lower capital tax expense.
Provision for/Recovery of Credit Losses – Provision
for credit losses for the quarter was $385,000 compared to a provision for credit
losses of $205,000 for the fourth
quarter of 2022 and a provision for credit losses of $2,000 for the same period of fiscal 2022. The
sequential and year-over-year changes were a function primarily of
changes in the forward-looking information used by the Bank in its
credit risk models and higher lending asset balances.
Capital – At January 31,
2023, VersaBank's total regulatory capital was $447 million compared with $449 million at October
31, 2022 and $426 million at
January 31, 2022. The Bank's total
capital ratio at January 31, 2023 was
15.34%, compared 16.52% at October 31,
2022 and 20.34% at January 31,
2022. The sequential and year-over-year capital ratio trends
were a function primarily of retained earnings growth, 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 – Gross impaired loans at January 31, 2023 were $1.7
million, compared with $0.3
million last quarter and $nil a year ago. The Bank's
allowance for expected credit losses, ("ECL") at January 31, 2023 was $2.3
million compared with $1.9
million last quarter and $1.5
million a year ago. The quarter-over-quarter 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.
Lending Operations: POS Financing – POS Financing
portfolio balances for the quarter increased 9% sequentially and
68% year-over-year to $2.4 billion as
a function primarily of continued strong demand for home finance,
home improvement/HVAC receivable financing, and auto financing.
Consumer spending and business investment in Canada are expected to slow during the first
half of 2023 due primarily to higher interest rates combined with
higher inflation relative to recent historical levels.
Notwithstanding these factors, given the continuing strength of the
labour market management anticipates that consumers will continue
to spend in the various sectors to which the Bank provides POS
financing although at levels measurably lower than the outsized
spending of 2022. This consumer behaviour, combined with the
anticipated addition of new origination partners in Canada, is expected to contribute to continued
meaningful growth in the Bank's POS Financing portfolio throughout
fiscal 2023 that is more consistent with pre-fiscal 2022
levels.
U.S. Receivable Purchase Program - Despite higher
interest rates, elevated inflation, higher gas prices and supply
chain disruptions in the US continued momentum in the job market
and higher wages are expected to mitigate material declines in
consumer spending, which 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 in fiscal 2023 which is anticipated to
support demand for construction equipment in the near term.
Management believes that the anticipated US macroeconomic and
industry trends described above will support growth in the Bank's
RPP portfolio in the US throughout fiscal 2023, which will be
focused on the provision of commercial equipment financing over the
course of the same period. The Bank's RPP launched in a limited
manner in the second quarter of fiscal 2022 with a large, North
American, commercial transportation financing business focused on
independent owner/operators and added a second commercial equipment
financing partner over the course of the first quarter of fiscal
2023.
Lending Operations: Commercial Lending – The
Commercial Lending portfolio for the quarter increased 6%
sequentially and 5% year-over-year to $807
million. Management anticipates modest 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 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 highly 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 has taken a cautionary stance with respect to its
broader CRE portfolios due to the anticipation of volatility in CRE
asset valuations in a rising 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 B-20 compliant conventional,
uninsured mortgage financing space, however, does not expect this
lending activity to impact the Bank's balance sheet until
mid-fiscal 2023.
Deposit Funding – Cost of funds for the first quarter was
2.95%, an increase of 50 bps sequentially and 166 bps
year-over-year attributable to a shift in the Bank's funding mix
and a higher interest rate environment. Commercial
deposits at January 31, 2023
were $586 million, down 2%
year-over-year and down 2% sequentially.
Personal deposits at January 31,
2023 were $2.3 billion, up 87%
year-over-year and up 14% sequentially. Management expects that
commercial deposit volumes raised via VersaBank's Trustee
Integrated Banking ("TIB") program will return to growth 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.
DRTC (Cybersecurity Services and Banking and Financial
Technology Development)
DRTC revenue (including that from services provided to the
Digital Banking operations) increased 3% sequentially to
$1.8 million and 29% year-over-year,
as a function primarily of higher gross profit from DBG.
Notwithstanding this positive trend DRTC recorded a net loss of
$516,000 compared to a net loss of
$486,000 in the sequential quarter
and net income of $148,000 a year
ago. The sequential trend was function primarily of DRTC
recognizing an income tax recovery in the comparative period
related to tax adjustments in fiscal 2022, while the year-over-year
trend was function primarily of higher non-interest expenses
attributable to higher salary and benefits expense due to higher
staffing levels to support expanded business activity and higher
costs associated with employee retention amidst the current
challenging labour market.
DBG revenue decreased 3% as a function of lower service work
volume in the current quarter while gross profit increased 17% 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 decreased 19% and 6% to $2.3
million and $1.6 million
respectively as a function of lower 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
|
|
|
|
|
|
January
31
|
October
31
|
January
31
|
(thousands of Canadian
dollars except per share amounts)
|
2023
|
2022
|
2022
|
Results of
operations
|
|
|
|
|
|
Interest
income
|
|
$
49,561
|
$
42,072
|
$
24,720
|
|
Net interest
income
|
|
24,274
|
22,477
|
16,885
|
|
Non-interest
income
|
|
1,644
|
1,775
|
1,381
|
|
Total
revenue
|
|
25,918
|
24,252
|
18,266
|
|
Provision (recovery)
for credit losses
|
385
|
205
|
2
|
|
Non-interest
expenses
|
|
12,335
|
13,774
|
10,636
|
|
Digital
Banking
|
|
10,169
|
11,456
|
9,504
|
|
DRTC
|
|
|
2,357
|
2,359
|
1,173
|
|
Net
income
|
|
|
9,417
|
6,429
|
5,566
|
|
Income per common
share:
|
|
|
|
|
Basic
|
|
|
$
0.34
|
$
0.23
|
$
0.19
|
|
Diluted
|
|
|
$
0.34
|
$
0.23
|
$
0.19
|
|
Dividends paid on
preferred shares
|
$
247
|
$
247
|
$
247
|
|
Dividends paid on
common shares
|
$
663
|
$
680
|
$
687
|
|
Yield*
|
|
|
5.78 %
|
5.26 %
|
4.06 %
|
|
Cost of
funds*
|
|
2.95 %
|
2.45 %
|
1.29 %
|
|
Net interest
margin*
|
|
2.83 %
|
2.81 %
|
2.77 %
|
|
Net interest margin on
loans*
|
3.03 %
|
3.03 %
|
3.23 %
|
|
Return on average
common equity*
|
10.79 %
|
7.32 %
|
6.58 %
|
|
Book value per common
share*
|
$
12.77
|
$
12.37
|
$
11.78
|
|
Efficiency
ratio*
|
|
48 %
|
57 %
|
58 %
|
|
Efficiency ratio -
Digital banking*
|
42 %
|
51 %
|
56 %
|
|
Return on average total
assets*
|
1.07 %
|
0.77 %
|
0.87 %
|
|
Gross impaired loans to
total loans*
|
0.05 %
|
0.01 %
|
0.00 %
|
|
Provision (recovery)
for credit losses as a % of average loans*
|
0.05 %
|
0.03 %
|
0.00 %
|
|
|
|
|
|
As at
|
Balance Sheet
Summary
|
|
|
|
|
|
Cash
|
|
|
$ 201,372
|
$
88,581
|
$ 155,239
|
|
Securities
|
|
|
49,847
|
141,564
|
-
|
|
Loans, net of allowance
for credit losses
|
3,235,083
|
2,992,678
|
2,215,638
|
|
Average
loans
|
|
3,113,881
|
2,903,400
|
2,159,344
|
|
Total assets
|
|
|
3,531,690
|
3,265,998
|
2,415,346
|
|
Deposits
|
|
|
2,925,452
|
2,657,540
|
1,847,003
|
|
Subordinated notes
payable
|
102,765
|
104,951
|
97,726
|
|
Shareholders'
equity
|
|
351,177
|
350,675
|
336,951
|
Capital
ratios**
|
|
|
|
|
|
|
Risk-weighted
assets
|
|
$
2,917,048
|
$
2,714,902
|
$
2,095,335
|
|
Common Equity Tier 1
capital
|
326,411
|
325,657
|
310,825
|
|
Total regulatory
capital
|
|
447,472
|
448,575
|
426,237
|
|
Common Equity Tier 1
(CET1) capital ratio
|
11.19 %
|
12.00 %
|
14.83 %
|
|
Tier 1 capital
ratio
|
|
11.66 %
|
12.50 %
|
15.49 %
|
|
Total capital
ratio
|
|
15.34 %
|
16.52 %
|
20.34 %
|
|
Leverage
ratio
|
|
9.21 %
|
9.84 %
|
12.69 %
|
* This is a non-GAAP
measure. See definition under 'Non-GAAP and Other Financial
Measures' in the
|
Q1
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; 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, March 8, 2023, at
9:00 a.m. (EDT) to discuss its first
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://bit.ly/3JKSPJv 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/x8GVZWDBk1P 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:
|
158247#
|
Expiry Date:
|
April 8th, 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/x8GVZWDBk1P and on the Bank's web site.
Visit our website at: www.versabank.com
Follow VersaBank on Facebook, Instagram, LinkedIn and
Twitter
View original content to download
multimedia:https://www.prnewswire.com/news-releases/versabank-reports-continued-strong-results-for-first-quarter-2023-highlighted-by-69-year-over-year-growth-in-net-income-to-record-9-4-million-301765146.html
SOURCE VersaBank