VersaBank(VBNK)2025-03-05 12:15Financial Performance - Net income for the three months ended January 31, 2025, was CAD 8.1 million, a decrease of 35.5% compared to CAD 12.7 million for the same period in 2024[6] - Total revenue for the three months ended January 31, 2025, was CAD 27.8 million, down 3.6% from CAD 28.9 million in the prior year[6] - VersaBank's basic and diluted income per common share decreased to CAD 0.28 for the three months ended January 31, 2025, down from CAD 0.48 in the same period of 2024[6] - For the three months ended January 31, 2025, total revenue was 28,851,000 in the same period of 2024[75] - Net income for the three months ended January 31, 2025, was 12,699,000 in the prior year[75] Asset and Equity Growth - As of January 31, 2025, VersaBank's total assets increased to CAD 4,971.7 million, up from CAD 4,838.5 million as of October 31, 2024, representing a growth of 2.8%[4] - Shareholders' equity increased to CAD 521.3 million as of January 31, 2025, up from CAD 399.2 million as of October 31, 2024, indicating a growth of 30.6%[4] - Cash and cash equivalents increased to CAD 386.7 million as of January 31, 2025, from CAD 225.3 million at the end of October 2024, marking a significant increase of 71.5%[8] - The bank's credit assets, net of allowance for credit losses, rose to CAD 4,346.7 million as of January 31, 2025, compared to CAD 4,236.1 million as of October 31, 2024, reflecting a growth of 2.6%[4] - The Bank's total assets increased to CAD 30.623 million as of January 31, 2025, compared to CAD 29.574 million on October 31, 2024[34] Credit Losses and Risk Management - The provision for credit losses was CAD 1.0 million for the three months ended January 31, 2025, compared to a recovery of CAD 0.1 million in the same period of 2024[6] - The allowance for expected credit losses (ECL) was CAD 4,233 thousand as of January 31, 2025, up from CAD 3,303 thousand as of October 31, 2024, reflecting a 28.1% increase[29] - The Bank's maximum exposure to credit risk is the carrying value of its financial assets, with security held against the majority of credit assets[23] - Management's credit risk modeling incorporates macroeconomic indicators such as real GDP, unemployment rate, and long-term interest rates to assess credit risk parameters[25] - The Bank anticipates potential tightening of credit conditions due to high household debt-service obligations, although loan performance is expected to remain stable[27] Capital and Regulatory Metrics - The Bank's Common Equity Tier 1 (CET1) capital increased to CAD 373,503 thousand on October 31, 2024, reflecting a growth of 33.8%[61] - The CET1 capital ratio improved to 14.61% as of January 31, 2025, compared to 11.24% on October 31, 2024, indicating a stronger capital position[61] - The Bank's leverage ratio increased to 9.67% as of January 31, 2025, up from 7.38% on October 31, 2024, demonstrating enhanced capital adequacy[63] - Total regulatory capital rose to CAD 481,176 thousand on October 31, 2024, marking an increase of 27.4%[61] - The Bank's total risk-weighted assets were CAD 3,323,595 thousand on October 31, 2024, reflecting a growth of 3.0%[61] Segment Performance - Digital Banking Canada segment generated net interest income of 26,568,000 year-over-year[75] - Non-interest income for the Digital Banking USA segment was 1,920,000 in the previous year, reflecting a growth of 3.6%[75] - Digital Banking Canada focuses on a business-to-business model to serve underserved segments in the Canadian banking market, utilizing proprietary financial technology[69] - Digital Banking USA aims to implement a similar business-to-business model to address underserved segments in the US banking market[70] - DRTC is dedicated to cybersecurity services and the development of banking and financial technology, targeting large-market opportunities in cybersecurity[71] Expenses and Tax Provisions - The income tax provision for the three months ended January 31, 2025, was CAD 3.0 million, a decrease from CAD 4.3 million in the same period of 2024[42] - Salaries and benefits expenses rose to 6,538,000, marking an increase of 31.7%[75] - General and administrative expenses increased to 4,333,000, reflecting a growth of 26.7%[75] - The company reported an income tax provision of 4,255,000 in the previous year, a decrease of 30.5%[75] Securities and Investments - The bank's securities held decreased to CAD 158.5 million as of January 31, 2025, from CAD 299.3 million as of October 31, 2024, a decline of 47%[18] - The fair value of FVOCI securities decreased from 158,546 on January 31, 2025, indicating a decline of 47%[68] - The fair value of FVTPL securities is 225,254 as of October 31, 2024, reflecting a significant increase of 71.5%[68] Other Financial Metrics - Loan commitments decreased to CAD 635,433 thousand on October 31, 2024, representing a decline of approximately 12.2%[50] - The outstanding foreign exchange forward contract had a notional value of USD 63.0 million, hedging a portion of the USD 97.1 million net investment in VersaBank USA[45] - The Bank's total off-balance sheet exposure at gross notional amount was CAD 701,104 thousand on October 31, 2024, indicating a decrease of approximately 11.4%[63]