VersaBank (NasdaqGS:VBNK) Conference Transcript

Summary of VersaBank Conference Call Company Overview - Company Name: VersaBank - Ticker Symbols: VBNK (Nasdaq and TSX) - Established: 30 years in operation, recognized as a fully digital bank in North America [2][3] Core Business Highlights - Growth Rate: Achieved a compounded average growth rate of 27% over the past three years, reaching nearly CAD 6 billion in assets [4] - Profitability: Generated nearly CAD 36 million in ordinary income in 2025, with expectations for increased efficiency and profitability as operations expand in the U.S. [4] - Business Model: Operates a cloud-based, branchless business-to-business model, benefiting from significant operating leverage [3] Digital Asset Strategy - Digital Asset Leadership: Positioned as a leader in the digital asset space, with a focus on tokenized deposits and stablecoins [5][6] - Market Trends: Approximately 70% of generational wealth is expected to transfer to non-bank entities, creating challenges for traditional banks [6] - Stablecoin Market: The total value of the stablecoin market has surpassed $300 billion, reflecting a growth of over one-third in the last year [8] Tokenized Deposits - Definition: Tokenized deposits are digital representations of actual bank deposits on the blockchain, eligible for deposit insurance and capable of paying interest [7][8] - Market Opportunity: Anticipated to provide low-cost funding for financing and lending activities, with billions in potential deposits from cross-border trade between the U.S. and Canada [12] - Regulatory Environment: No new legislation is expected to be required for the launch of tokenized deposits, as they are real bank deposits reflected on a blockchain [19][20] Community Bank Engagement - Licensing Opportunities: Plans to license deposit token technology to community banks, allowing them to issue their own tokens [22][23] - Community Bank Support: Received positive feedback from community banks eager for regulatory clarity to adopt deposit tokens [22] Cybersecurity Business Update - Divestiture: Currently in the process of selling the cybersecurity services business, which is unrelated to the digital asset operations [33][34] - Bids Received: Expecting to receive bids for the cybersecurity business within the next month [35] Future Outlook - Growth in U.S. Market: Anticipates continued strong growth in the U.S. market, with a focus on enhancing product offerings and leveraging AI for receivable purchases [30][32] - Deposit Insurance Expectation: Expects that tokenized deposits will be covered by deposit insurance, crucial for maintaining depositor confidence [36][39] Conclusion - Investment Proposition: VersaBank presents a low-risk, high-growth digital banking opportunity with significant upside potential in the digital asset space, particularly through tokenized deposits and stablecoin custody [14][15]