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 2024 ended April 30, 2024. All figures are in Canadian dollars unless otherwise stated.

Consolidated and Segmented Financial Summary

 

Management Commentary

"Our financial results for the second quarter of fiscal 2024 continue to demonstrate the power of the operating leverage in our branchless, business-to-business Digital Banking model, as well as the benefits of our focus on risk mitigation throughout our Digital Banking operations," said David Taylor, President and Chief Executive Officer, VersaBank. "We achieved a new record efficiency ratio of 38% as we continued to see strong year-over-year growth in our Point-of-Sale Financing Portfolio, while reducing our fixed costs."

"We achieved another record level for both our total assets and our loan portfolio, with sequential growth in the Point-of-Sale Financing reflecting seasonality in that business, as well as some impact of the elevated interest rate environment and softness in certain parts of the economy.  Sequential performance of the Real Estate portfolio reflects the planned strategic transition from higher yielding, higher risk-weighted loans to lower yielding, lower risk-weighted CMHC-insured loans. The contribution from DRTC also reflects seasonality in that business."

"The second quarter contributed to a strong first half of fiscal 2024, highlighted by year-over-year asset growth of 18%, net income growth of 25% and earnings per share growth of 29%.  We expect improved growth in both the Point-of-Sale Financing portfolio, as well as a ramp up in loan originations in the CMHC-insured finance facilities in our Real Estate portfolio, in the third and fourth quarters, however, softness in consumer spending could delay reaching our next total asset milestone of $5 billion.  We continue to look forward to a decision from the US regulatory authorities on our proposed acquisition of a US bank, which represents a significant opportunity to drive total assets to transformative levels, enabling us to further capitalize on the operating leverage in our Digital Banking model and drive outsized increases in profitability and return on common equity."

Highlights for the SECOND Quarter of Fiscal 2024

Consolidated

Digital Banking Operations

DRTC's Cybersecurity Services Operations (Digital Boundary Group)

FINANCIAL SUMMARY  

This news release is intended to be read in conjunction with the Bank's Consolidated Financial Statements  and Management's Discussion & Analysis (MD&A) for the three & six months ended April 30, 2024, which will be filed on SEDAR (www.sedarplus.ca) and will be available at www.versabank.com.

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, corporations of all sizes 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 and the impact of both on global supply chains and markets; the impact of outbreaks of disease or illness that affect local, national or international economies; 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, 2023.

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 5, 2024, at 9:00 a.m. (ET) 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

Please call between 8:45 a.m. and 8:55 a.m. (ET).

To join the conference call by telephone without operator assistance, you may register and enter your phone number in advance at https://emportal.ink/4btMyMS 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/KZxwXNElMqd or from the Bank's web site.

Instant Replay

The archived webcast presentation will also be available via the Internet for 90 days following the live event at https://app.webinar.net/KZxwXNElMqd and on the Bank's website.

Visit our website at:  www.versabank.com

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SOURCE VersaBank

SOURCE: VersaBank

LodeRock Advisors, Lawrence Chamberlain, (416) 519-4196,
lawrence.chamberlain@loderockadvisors.com

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