VersaBank(VBNK) - 2023 Q4 - Annual Report

Financial Performance - Total revenue for Q4 2023 reached $29.173 million, a 9% increase from the previous quarter and a 20% increase year-over-year[3] - Net income for Q4 2023 was $12.479 million, up 25% from the previous quarter and 94% year-over-year[3] - Consolidated net income surged 94% YoY and 25% sequentially to $12.5 million, supported by operating leverage and credit loss recovery[11] - Consolidated net income for the full fiscal year rose 86% to $42.2 million, with earnings per share up 99% to $1.57[16] - Total revenue for the three months ended October 31, 2023, was $29.2 million, up from $24.3 million in the same period last year[32] - Net income for the three months ended October 31, 2023, was $12.5 million, compared to $6.4 million in the same period last year[32] Asset Growth - Total assets grew to $4.201 billion as of October 31, 2023, a 6% increase from the previous quarter and a 29% increase year-over-year[3] - Total assets grew 29% YoY and 6% sequentially to a record $4.2 billion, driven by strong loan growth[11] - VersaBank's total assets increased to $4.2 billion as of October 31, 2023, up from $3.3 billion in the previous year[32] - The company expects to surpass the $5 billion total asset milestone in fiscal 2024, driven by loan portfolio growth[15] Loan Performance - Loans increased 29% YoY and 5% sequentially to a record $3.85 billion, led by a 30% YoY growth in the Point-of-Sale Financing portfolio[11] - Net interest margin on loans decreased 34 bps YoY to 2.69%, impacted by higher cost of funds[11] - The bank's net interest margin was 2.54% for the three months ended October 31, 2023, compared to 2.81% in the same period last year[32] Profitability Metrics - Return on average common equity (ROCE) improved to 13.58% in Q4 2023, a 22% increase from the previous quarter and an 86% increase year-over-year[3] - VersaBank's return on average common equity was 13.58% for the three months ended October 31, 2023, up from 7.32% in the same period last year[32] - Efficiency ratio improved to 45% (down from 51% YoY), reflecting operational leverage in the digital banking model[11] - The bank's efficiency ratio improved to 43% for the three months ended October 31, 2023, compared to 57% in the same period last year[32] Income and Expenses - Net interest income for Q4 2023 was $26.239 million, a 5% increase from the previous quarter and a 17% increase year-over-year[5] - Non-interest income for Q4 2023 was $2.934 million, a 52% increase from the previous quarter and a 65% increase year-over-year[5] - Salaries and benefits expenses for Q4 2023 were $7.289 million, a 2% decrease from the previous quarter but a 1% increase year-over-year[5] - General and administrative expenses for Q4 2023 were $4.163 million, a 6% decrease from the previous quarter and a 25% decrease year-over-year[5] Credit and Capital - Provision for credit losses in Q4 2023 was a recovery of $184,000, compared to a provision of $171,000 in the previous quarter and $205,000 year-over-year[5] - Total capital ratio as of October 31, 2023, was 15.38%, a 2% increase from the previous quarter but a 7% decrease year-over-year[3] - VersaBank's Common Equity Tier 1 (CET1) capital ratio was 11.33% as of October 31, 2023, down from 12.00% in the previous year[32] Cybersecurity Services - Cybersecurity Services revenue increased 21% YoY to $3.4 million, with gross profit up 50% to $2.6 million due to improved operational efficiency[10] - Cybersecurity Services revenue for the full fiscal year increased 9% YoY to $10.6 million, with gross profit up 38% to $7.8 million[14] Business Segments - DRTC revenue increased 83% sequentially and 108% year-over-year to $3.7 million, with net income of $1.2 million compared to a net loss of $99,000 in the previous quarter[30] - DBG revenue increased 46% sequentially and 21% year-over-year to $3.4 million, with gross profit up 45% sequentially and 50% year-over-year to $2.6 million[31] Strategic Developments - The company is advancing the acquisition of Stearns Bank Holdingford N.A., with a regulatory decision expected in Q1 2024[11] - VersaBank announced strategic realignment of senior management roles, including the appointment of Shawn Clarke as Chief Operating Officer and John Asma as Chief Financial Officer[34]