Versabank · TSX:VBNK
Versabank — Investor Presentation (January 2023)
21 slides from Versabank's investor presentation, January 2023
Slide 1: Investor Presentation – Banking on the Future!
TSX: VBNK NASDAQ: VBNK Investor Presentation January 2023 Banking on the Future!
Slide 2: Advisory
2 Advisory The Bank occasionally makes forward-looking statements about its objectives, operations and targeted financial results. These statements may be written or verbal and may be included in such things as press releases, corporate presentations, annual reports and other disclosure documents an
Slide 3: Proprietary Software & Technology Capabilities for Two High-Growth Opportunities
Proprietary Software & Technology Capabilities 3 for Two High-Growth Opportunities State-of-the art software platform for 1 2 banking operations and IT security Expert team of ~65 software developers A Leading A North American (>50% of workforce) North American Leader in Track record of rapid Digita
Slide 4: Value-Add Solutions for Depositors and Lenders Drives Industry Leading Net Interest Margin
Value-Add Solutions for Depositors and Lenders Drives 4 Industry Leading Net Interest Margin Proprietary 2022 technology to provide Loans @ 4.47% Deposits @ 1.77% innovative deposit and lending solutions for financial Industry Leading Net Interest Margin (Canada): 2.70% intermediaries Total Revenue:
Slide 5: Software Platform Enables a Highly Efficient, Low-Risk Branchless Partnership Model
Software Platform Enables a Highly Efficient, 5 Low-Risk Branchless Partnership Model Deposits Loans ~52,000 Depositors Through ~160,000 Borrowers Through >220 Partners >275 Partners Insolvency Professionals (>100 Offices) Point-of-Sale Financing (Loans and Leases) Wealth Management (>120 Partners)
Slide 6: Proven History of Addressing Unmet Market Needs: Insolvency Professional Deposit Business
Proven History of Addressing Unmet Market Needs: 6 Insolvency Professional Deposit Business Market Need: Canada’s insolvency professionals were • Proprietary software solution developed being underserved by entirely in-house to seamlessly integrate generic “big bank” with industry’s most commonly us
Slide 7: Low-Cost Deposit Model Contributes to Industry Leading Net Interest Margins
Low-Cost Deposit Model Contributes to Industry Leading 7 Net Interest Margins Historical Deposit Composition • Federal License in Canada provides US92M C$126M access to low-cost CDIC-insured deposits US$438M C$598M US$89M • Insolvency professional deposits C$111M provided at very low cost (currently
Slide 8: Proven Track Record of Profitably Addressing Underserved Banking Opportunities – Lending
Proven Track Record of Profitably Addressing Underserved Banking 8 Opportunities – Lending Solution: Point-of-Sale Loans & Lease Market Need: Financing In the wake of the • Proprietary software solution 2007/2008 financial developed entirely in-house in crisis, Canada’s “big under a year ticket” poi
Slide 9: Growing Higher Margin, Lower Risk-Weighted Point of Sale Loans and Leases
Growing Higher Margin, Lower Risk-Weighted 9 Point of Sale Loans and Leases Rapid Growth in Point-of-Sale Financing C$2,980M Loan Portfolio Breakdown (at Oct. 31/22) US$2.39B C$2,415M C$1,045M US$1.95B US$766M Point-of-Sale C$1,944M C$1,809M C$1,785M US$1.46B Loans/ Cash & Other C$1,704M C$1,725M US
Slide 10: Outstanding Credit Performance
10 Outstanding Credit Performance Non-Performing Loans 0.40% Organization-Wide 7 0.35% (1) 0.35% Focus on Risk Mitigation 6 0.30% 5 • Technology-based 4 C$6.3M 0.25% approach to risk US$4.9M 0.20% 3 C$0.6M C$0.6M 0.15% analysis/ monitoring 2 US$0.5M US$0.5M 0.10% 0.04% 0.03% • Rigorous, multi-step,
Slide 11: Momentum in Profitability and Long-Term Earnings Capacity
11 Momentum in Profitability and Long-Term Earnings Capacity Earnings Per Share Tangible Book Value Per Share Growth since 2014 14% 7% driven mainly by: CAGR since 2016 CAGR since 2016 C$0.96 Excludes Transitory C $0.96 • Lower COF C $0.85 C $0.82 $0.76 $0.701 Growth Expenses C $0.75 attributable la
Slide 12: Q4 2022 Key Metrics & Highlights: Record Results
12 Q4 2022 Key Metrics & Highlights: Record Results Consolidated Digital Banking: Strong loan portfolio growth to YoY Sequential another record: $2.99B Total Revenue 33% 14% Record quarterly revenue, net interest income and Net Income 9% 12% net income EPS 4% 15% Net income dampened by: Net Interest
Slide 13: FY 2022 Key Metrics & Highlights: Record Results
13 FY 2022 Key Metrics & Highlights: Record Results Consolidated Digital Banking: Strong loan portfolio growth to Change another record: $2.99B Total Revenue 26% Record quarterly revenue, net interest income and Net Income 1% net income EPS 18% Net income dampened by: Net Interest Margin 6 bps Digit
Slide 14: Digital Banking Growth Strategy: Momentum for the Future
14 Digital Banking Growth Strategy: Momentum for the Future 1 2 3 Further Reduce Grow Loan Portfolio Pursue Accretive Acquisitions Cost of Funding via New Near-Term Opportunities to Leverage Scalability of to Expand Net Interest Margin and Existing Offerings Platform & Enter New Markets Generate cap
Slide 15: Significant New Low-Cost Deposit Opportunity: Revolutionary Digital Deposit Receipts (DDRs)
Significant New Low-Cost Deposit Opportunity: 15 Revolutionary Digital Deposit Receipts (DDRs) • Actual fiat currency on deposit with VersaBank (1:1) Highly-Encrypted • Highest level of stability and security Digital Deposit Receipt • Addresses key concerns of global regulators (DDR) Representing •
Slide 16: U.S. Receivables Purchase Program: A New Financing Solution for the Underserved U.S. Market
U.S. Receivables Purchase Program: A New Financing 16 Solution for the Underserved U.S. Market Launched in U.S. on a Limited Basis in April 2022 Supporting an Emerging, High-Growth Industry Full Roll Out to Commence Upon Closing of U.S. Bank Acquisition With a massive millennial consumer base and an
Slide 17: Acquisition of OCC-Chartered, National US Bank: Transformational Next Step
Acquisition of OCC-Chartered, National US Bank: 17 Transformational Next Step in Long-Term Growth Strategy June 2022: Definitive Platform for significant growth in the United States Agreement to Acquire • Provides access to U.S. deposits to fuel growth of the Minnesota-based Stearns U.S. Receivable
Slide 18: DRT Cyber
18 Leveraging Our Banking Technology DNA DRT Cyber (VersaBank Wholly-Owned Subsidiary) for Addressing the Rapidly Growing Volume of Large-Market Cyber Threats Challenging Organizations Opportunities Beyond Our Core Developing innovative solutions for financial institutions, multi-national corporatio
Slide 19: DRT Cyber: One of North America's Premiere IT Security Assurance Services Firms
DRT Cyber: One of North America’s Premiere 19 IT Security Assurance Services Firms Comprehensive Suite of Services: • External network, web and mobile app penetration testing • Physical social engineering engagements • Supervisory control and data acquisition (SCADA) system assessments • Various asp
Slide 20: Investment Highlights
20 Investment Highlights Performance & Growth • Proven record of organic growth with EPS CAGR of 19% since 2015 • Opportunity for significant loan and deposit growth through technology solutions • Consistent shareholder value creation • Strong capital position State-of-the-Art Technology • Proprieta
Slide 21: Banking on the Future!
21 Banking on the Future! VersaBank Choice Through Innovation