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 third quarter 2024 ("Q3 2024") unaudited Interim Consolidated Financial Statements for the period ended July 31, 2024 and Management's Discussion and Analysis ("MD&A"), are available online at www.versabank.com/investor-relations, SEDAR at www.sedarplus.ca and EDGAR at www.sec.gov/edgar. Supplementary Financial Information will also be available on our website at www.versabank.com/investor-relations.
LONDON, ON, Sept. 5, 2024 /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 third quarter and the first nine months of fiscal 2024 ended July 31, 2024. All figures are in Canadian dollars unless otherwise stated.
CLOSING OF THE ACQUISITION OF STEARNS BANK HOLDINGFORD N.A.
In June 2024, the Bank obtained approval from the US Office of the Comptroller of the Currency (the "OCC"), US Federal Reserve, and OSFI (Canada) to acquire Stearns Bank Holdingford N.A. ("SBH"), a privately held, wholly-owned subsidiary of Stearns Financial Services Inc. ("SFSI") based in St. Cloud, Minnesota. On August 30, 2024, the Bank, through its wholly-owned US subsidiary VersaHoldings US Corp., completed the acquisition, acquiring 100% of the outstanding shares of SBH for cash consideration of approximately US$14.0 million (CA$19.3 million), subject to closing related adjustments. Based in Minnesota, SBH is a fully operational, OCC-chartered, national bank, focused on small business lending. Upon closing, SBH was renamed VersaBank USA.
Several factors associated with preparations for the closing of the acquisition of SBH dampened VersaBank's third quarter fiscal 2024 financial results. In preparation to fund the capital requirements of the US subsidiary following closing of the SBH acquisition, VersaBank maintained higher than typical cash balances. The higher than typical cash balances exacerbated the impact of the temporary dampening of net interest margin that usually occurs when interest rates decline, the result of the lag in the adjustment of the Bank's term deposit rates. In addition, non-interest expense was higher due to acquisition-related costs, some of which were specific to the third quarter and some of which are being incurred ahead of asset growth and revenue generated by the launch of US Receivable Purchase Program ("RPP") in the US through VersaBank USA.
Net income and earnings per share for the first nine-months of fiscal 2024 increased 15% and 17%, respectively, from the first nine months of fiscal 2023.
CONSOLIDATED AND SEGMENTED FINANCIAL SUMMARY
(unaudited)
As at or for the three months ended
As at or for the nine months ended
July 31
April 30
July 31
July 31
July 31
(thousands of Canadian dollars, except per share amounts)
2024
2024
Change
2023
Change
2024
2023
Change
Financial results
Total revenue
$ 26,996
$ 28,501
(5 %)
$ 26,859
1 %
$ 84,348
$ 79,462
6 %
Cost of funds*
4.17 %
4.21 %
(1 %)
3.62 %
15 %
4.12 %
3.30 %
25 %
Net interest margin*
2.23 %
2.45 %
(9 %)
2.57 %
(13 %)
2.38 %
2.72 %
(13 %)
Net interest margin on loans*
2.41 %
2.52 %
(4 %)
2.69 %
(10 %)
2.58 %
2.89 %
(11 %)
Return on average common equity*
9.63 %
12.36 %
(22 %)
11.15 %
(14 %)
11.79 %
11.24 %
5 %
Net income
9,705
11,828
(18 %)
10,003
(3 %)
34,232
29,683
15 %
Net income per common share basic and diluted
0.36
0.45
(20 %)
0.38
(5 %)
1.29
1.10
17 %
Balance sheet and capital ratios**
Total assets
$ 4,516,436
$ 4,388,320
3 %
$ 3,980,845
13 %
$ 4,516,436
$ 3,980,845
13 %
Book value per common share*
15.23
14.88
2 %
13.55
12 %
15.23
13.55
12 %
Common Equity Tier 1 (CET1) capital ratio
11.75 %
11.63 %
1 %
11.15 %
5 %
11.75 %
11.15 %
5 %
Total capital ratio
15.40 %
15.33 %
0 %
15.10 %
2 %
15.40 %
15.10 %
2 %
Leverage ratio
8.54 %
8.55 %
0 %
8.53 %
0 %
8.54 %
8.53 %
0 %
* See definitions under 'Non-GAAP and Other Financial Measures' in the Q3 2024 Management's Discussion and Analysis.
** Capital management and leverage measures are in accordance with OSFI's Capital Adequacy Requirements and Basel III Accord.
(thousands of Canadian dollars)
for the three months ended
July 31, 2024
April 30, 2024
July 31, 2023
Digital
DRTC
Eliminations/
Consolidated
Digital
DRTC
Eliminations/
Consolidated
Digital
DRTC
Eliminations/
Consolidated
Banking
Adjustments
Banking
Adjustments
Banking
Adjustments
Net interest income
$ 24,944
$ -
$ -
$ 24,944
$ 26,242
$ -
$ -
$ 26,242
$ 24,929
$ -
$ -
$ 24,929
Non-interest income
175
2,219
(342)
2,052
262
2,336
(339)
2,259
101
2,020
(191)
1,930
Total revenue
25,119
2,219
(342)
26,996
26,504
2,336
(339)
28,501
25,030
2,020
(191)
26,859
