VersaBank (VBNK) Q3 2024 Earnings Call Highlights: Record Asset Growth Amidst Margin Pressures

GuruFocus News
4 min read

In This Article:

  • Total Assets: Reached a record high of $4.5 billion, a 13% year-over-year increase.

  • Loan Portfolio: Grew 11% year-over-year to $4.05 billion.

  • Receivable Purchase Program Portfolio: Increased 16% year-over-year to $3.2 billion, representing 80% of the total loan portfolio.

  • Net Income: Decreased 3% year-over-year to $9.7 million.

  • Earnings Per Share (EPS): Increased 17% year-to-date.

  • Revenue: Increased 1% year-over-year to $27 million.

  • Net Interest Margin: Decreased 34 basis points year-over-year to 2.23%.

  • Book Value Per Share: Increased to $15.23.

  • CET1 Ratio: Increased to 11.75%.

  • Provision for Credit Losses: Remained at 0% for Q3.

  • Cybersecurity Business Revenue: Increased 8% year-over-year to $2.5 million.

Release Date: September 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • VersaBank (NASDAQ:VBNK) successfully closed its US acquisition, marking a significant milestone in its growth trajectory.

  • The bank achieved a record high for total assets of $4.5 billion, driven by an 11% year-over-year growth in its loan portfolio.

  • Net income for the first nine months of fiscal 2024 increased by 15%, with EPS up by 17%.

  • The receivable purchase program (RPP) in Canada expanded by 4% sequentially, demonstrating continued growth.

  • VersaBank (NASDAQ:VBNK) maintained a provision for credit losses at 0% in Q3, showcasing the effectiveness of its risk management model.

Negative Points

  • Net interest margin was temporarily depressed due to higher cash balances and slower decreases in Canadian term deposit rates.

  • Non-interest expenses increased due to acquisition-related costs, impacting profitability.

  • Consolidated net income for Q3 decreased by 3% year over year and 18% sequentially.

  • The real estate portfolio contracted by 9% year over year and 10% sequentially.

  • There were additional acquisition-related costs expected in the fourth quarter, indicating continued financial pressure.

Q & A Highlights

Q: How are conversations with new partners in the US progressing, and what is the expected growth trajectory for the RPP program there? A: David Taylor, President and CEO, stated that the reception in the US has been tremendous, with some partners having waited patiently for the bank to operate in the US. One partner is already in the process of becoming operational, with more expected to sign up over the next year. The US RPP program is expected to be more profitable due to lower bank cost of funds, which are about 1% lower than in Canada.

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