Versabank · TSX:VBNK
Versabank — Q4 2018 Earnings Presentation
25 slides from Versabank's earnings presentation, January 2019
Slide 1: Fourth Quarter 2018
Fourth Quarter 2018 1
Slide 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 and communica
Slide 3: State of the Art Financial Technology aimed at lucrative niche markets
State of the Art Financial Technology aimed at lucrative niche markets 3
Slide 4: Senior Management
Senior Management Title David Taylor President & Chief Executive Officer Shawn Clarke Chief Financial Officer Michael Dixon Executive Head & SVP, eCommerce Ross Duggan Executive Head & SVP, Commercial Lending Nick Kristo Chief Credit Officer & SVP Jonathan Taylor Executive Head & SVP, Deposit Servic
Slide 5: Bank Overview
• First Digital First Branchless Schedule 1 Bank, employing Digital bank state of the art financial whose technology time has • arrived! $1.81 Billion Assets • High margin low risk lending model • Highly scalable • 85 Full-time employees • Listed on TSX In 2013 Bank Overview 5
Slide 6: Deposits
National Insolvency Professional Network National Deposit Broker Network of 113 Financial Institutions Deposits 6
Slide 7: Low Cost Commercial Deposits
Commercial Deposits Commercial Deposits # of Accounts Balances $M 4500 $400M $386M Millions 4000 3910 $350M $314M 3500 3369 $300M 3000 $250M 2490 2500 $210M $200M 2000 $150M 1500 $113M 1109 852 $100M $86M 1000 500 $50M $35M 198 22 $1M 0 $0M 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016
Slide 8: Cost of Funds Trend
0.35% 0.85% 1.35% 1.85% 2.35% 2.85% Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Cost of Funds Trend Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 COFs Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 GOC 2 yr Benchmark Bond Yield Jan-18 Apr-18 Jul-18 Oct-18 8
Slide 9: Lending
• Commercial Banking • eCommerce Lending 9
Slide 10: Lending: Commercial Banking – Real Estate
COMMERCIAL BANKING – REAL ESTATE Lending 10
Slide 11: Lending: eCommerce – Receivables Purchase Program
eCOMMERCE - RECEIVABLES PURCHASE PROGRAM Lending 11
Slide 12: Lending – Receivable Purchase Program
eCOMMERCE A variety of consumer and small business loan and lease receivables purchased electronically from partners operating throughout Canada Lending – Receivable Purchase Program 12
Slide 13: Loan & Lease Receivable Portfolio
Our Receivable Purchase Program continues to grow as we establish new relationships and increase our portfolio from 20 existing partners. $Millions 1000 900 800 700 600 500 895 400 784 811 300 608 200 392 100 187 109 0 2012 2013 2014 2015 2016 2017 2018 Loan & Lease Receivable Portfolio 13
Slide 14: Balance Sheet Mix
NIM for F18 2.91% up from 2.57% in F17 Construction Construction Loans Loans $225 $270 Other Assets $62 Commercial Other Assets Commercial 13% 15% Banking $56 Banking 4% 27% $467 $448 3% 25% Liquid Assets Liquid Assets $160 9% $140 8% 47% eCommerce 49% eCommerce $895 $811 October 31, 2017 October 31
Slide 15: Key Performance Trends
$M NIM-5yr CAGR 15 % 60 3.50% 2.57% 2.91% 50 3.00% 2.31% 2.21% 2.50% 40 1.96% 1.74% 2.00% Big 5 Bank 30 Average NIM 51 1.50% approx. 1.76% 20 1.00% 26 28 34 39 44 10 0.50% 0 0.00% 2013 2014 2015 2016 2017 2018 Net Interest Income (NII) Net Interest Margin (NIM ) Compound Annual Growth Rate (CAGR) Ke
Slide 16: Credit Quality
VersaBank Provision for Credit losses (PCL) Trend PCL % of Avg loan Major Canadian banks average PCL 0.28 % 0.25% 0.20% 0.15% 0.12% 0.10% 0.08% 0.06% 0.05% 0.03% 0.02% (0.01%) 0.00% 2013 2014 2015 2016 2017 2018 -0.05% Credit Quality 16
Slide 17: Core Cash Earnings Trend
Core Cash Earnings Trend $30M $25M CCE - 5 yr CAGR 48 % $20M $25M $15M $10M $18M $13M $5M $9M $5M $4M $M 2013 2014 2015 2016 2017 2018* Core Cash Earnings = pre-tax earnings adjusted for non-core operating income/expenses 17
Slide 18: Comparative Capital Ratios
COMMON EQUITY TIER 1 13.80% 12.00% 11.70% 11.58% 11.50% 11.40% 11.30% 11.10% 9.20% 9.00% Comparative Capital Ratios 18
Slide 19: Efficiency Ratio
67.20% 62.40% 53.20% 55.10% 55.60% 56.70% 57.10% 50.96% 46.70% 36.30% Efficiency Ratio 19
Slide 20: CCROCE vs. P/BV for CDN Banks
2.1 1.9 RBC TD Bank 1.7 National Bank Bank of Montreal CIBC 1.5 Bank of Nova Scotia P/B 1.3 Canadian Western 1.1 0.9 Laurentian Bank Versabank 0.7 0.5 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% CCROCE - F18 CCROCE vs. P/BV for CDN Banks 20
Slide 21: Financial Overview
Common Shares: Preferred Shares: Preferred Shares: VB:TSX $7.56 VB.PR.A:TSX VB.PR.B:TSX Issued Shares: 21,123,559 $10.00 (yield 7.0%) $10.00 (yield 7.0%) Based on Recent Share Price of Non-cumulative 5-year rate Non-cumulative 6-year rate $7.56, Market Capitalization was preferred shares, series 1.
Slide 22: VersaVault
VersaVault - The world’s first BlockChain Based safety deposit box. VersaVault Inc. (“VV”) is a wholly owned subsidiary of the Bank and was formed to develop and provide cyber-security services to commercial entities. VV recently announced the successful completion of its technology Beta-Testing
Slide 23: VersaVault digital box vs Traditional physical box
VersaVault digital box vs Traditional physical box VersaVault Traditional physical box • Quickly & easily expandable • Difficult to expand, large capex • Global market • Local market • Can only be opened by customer • Can be opened by drill if required with their own personal ‘key’ • Vulnerable to 3
Slide 24: Summary
Leverage digital technology to serve niche markets; Common share dividends increased by 50% in Q1 F19; High net interest margin, low loan losses; Highly scalable model; High growth rate; st Core Cash Earnings 5yr CAGR of 48% (Oct 31 -2018); Exciting new initiatives; VersaVault, the w
Slide 25: VB Stock Chart
VB Stock Chart - 3 Year Range VB Stock Chart Source: VersaBank, CA:VB Quick Chart - (TOR) CA:VB, VersaBank Stock Price - BigCharts.com 25