Slide 1: Digital Bank: Roaring into the 20s
Digital Bank Roaring into the 20s With 5 yr. 40% Cash Earnings Growth 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: 1st Quarter Presentation
1st Quarter Presentation World’s First Branchless Digital Bank David Taylor, CEO & Founder Clean Sheet Design of a Bank Our Model The Q1 Results The Future: Enhanced Point-of Sale Banking New Deposit Channels Cyber Security Solutions 3
Slide 4: Leveraging Technology Model
Leveraging Technology Model Use existing distribution channels to minimize investment in physical infrastructure and people. $ 1.85 Billion Total Assets Develop & Maintain state-of-the-art custom banking software to maximize capacity, velocity and efficiency. 26,000 Depositors in order to maximize t
Slide 5: Nationwide Deposit Gathering Network
Nationwide Deposit Gathering Network 5
Slide 6: Nationwide Lending Network
Network of 30 Lending Partners Nationwide Lending Network 6
Slide 7: State-of-the-Art Bank Model
Interest Expense Interest Revenue $34 Million (1.9%) $88 Million (4.9%) Net Interest Income Personal Point of Sale $54 Million (3%) Loans & Leases Deposits 1.9% 4.9% Commercial Real Estate Deposits Mortgages Fixed Cost Core Cash Earnings $26 Million (1.4%) $28 Million (1.6%) State-of-the-Art Bank Mo
Slide 8: Commercial Mortgages @ VersaBank
Commercial Mortgages @ VersaBank
Slide 9: eCommerce – Point of Sale Loans & Leases
eCommerce – Point of Sale Loans & Leases 9
Slide 10: Reducing Reliance on Higher Cost Personal Deposits
Personal Deposits $1,203MM $1,150MM $1,098MM $1,052MM $1,041MM $960MM $1,014MM 2014 2015 2016 2017 2018 2019 Q1 2020 Reducing Reliance on Higher Cost Personal Deposits 10
Slide 11: Increasing Low Cost Commercial Funding
Commercial Funding $600 $500 $105MM $97MM $96MM $400 $89MM $300 $83MM $430MM $441MM $200 $386MM $61MM $314MM $100 $37MM $210MM $86MM $113MM $0 2014 2015 2016 2017 2018 2019 Q1 2020 Trustee Deposits RPP Holdbacks Commercial GIC Increasing Low Cost Commercial Funding 11
Slide 12: Loan Portfolio Mix & Distribution
Loans ($) $605MM Commercial Banking 37% $1.1 Billion Mainly eCommerce Ontario 63% All across Canada Loan Portfolio Mix & Distribution 12
Slide 13: Rapidly Increasing Point of Sale Financing
State-of-the-Art eCommerce Lending $1,061MM $995MM $895MM $784MM $811MM $608MM $392MM $187MM $109MM 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020 Rapidly Increasing Point of Sale Financing 13
Slide 14: Industry Leading Net Interest Margin
Net Interest Income 60 3.00% 2.96% 2.91% 3.00% 50 2.57% 2.31% 40 2.21% 30 1.96% 2.00% $51MM $54MM $44MM 20 $39MM $34MM $28MM 10 $14MM 0 1.00% 2014 2015 2016 2017 2018 2019 Q1 2020 Industry Leading Net Interest Margin 14
Slide 15: Industry Leading for Credit Quality
Industry Leading for Credit Quality 0.40% 0.35% 0.35% 0.35% 0.32% 0.32% 0.29% 0.30% 0.30% PCL as a % of Average Loans 0.25% 0.20% 0.15% Credit Quality Gap 0.12% 0.10% 0.08% 0.06% 0.05% 0.02% 0.00% -0.01% -0.01% -0.02% -0.05% 2014 2015 2016 2017 2018 2019 Q1 2020 VB PCLs CDN Big Bank Average PCLs Env
Slide 16: Cents to Earn $1 of Revenue
Economies of Scale at Work $0.80 $0.75 $0.75 $0.70 $0.70 Cents to Earn $1 of Revenue $0.65 $0.65 $0.62 $0.60 $0.55 $0.51 $0.50 $0.49 $0.49 $0.45 $0.40 2014 2015 2016 2017 2018 2019 Q1 2020 Cost to Earn $1 of Revenue Rapidly Decreasing 16
Slide 17: Huge Operating Leverage
5 Year Efficiency Ratio Trend $60 $55 $54 Revenue and Non-Interest Expenses $MM $52 $50 $45 $44 $40 $40 The Technology $35 Advantage $35 $31 $30 $25 $27 $26 $26 $26 $25 $23 $20 2014 2015 2016 2017 2018 2019 Revenue Non-Interest Expenses Huge Operating Leverage 17
Slide 18: Substantial Core Cash Earnings Growth
Core Cash Earnings Growth CCE - 5 yr CAGR 40 % $28MM $25MM $18MM $13MM $9MM $7MM 2015 2016 2017 2018 2019 Q1 2020 Core Cash Earnings = pre-tax earnings adjusted for non-core operating income/expenses Substantial Core Cash Earnings Growth 18
Slide 19: Quarterly Core Cash Earnings
Quarterly Core Cash Earnings $0.45 $8,000 $7,443 $0.40 Basic Core Cash Earnings per Share ($/share) $7,108 $7,085 $7,000 $6,794 $6,747 $6,837 $6,446 $0.35 $5,905 $5,902 Core Cash Earnings (000s) $6,000 $0.30 $5,000 $4,671 $4,650 $4,488 $4,359 $0.25 $4,000 $3,501 $0.20 $3,204 $3,185 $2,960 $3,000 $0.
Slide 20: Plenty of Excess Capital to Fuel Growth
Comparative Leverage Percentage 11.86% 8.30% 7.07% 4.90% 4.60% 4.20% 4.30% 4.30% 4.00% 4.00% 4.00% Plenty of Excess Capital to Fuel Growth 20
Slide 21: In the Works
In the Works: • New US$ Deposit Products; • New Long-term Deposit Products; • New Direct-Connect App for large low risk markets ; • New Prepaid and Secured Credit Cards; • On the hunt for suitable acquisitions; • DRT Cyber is developing marketable cyber security solutions. 21
Slide 22: State-of-the-art Digital Bank Exploiting Profitable New Markets
State-of-the-art Digital Bank Exploiting Profitable New Markets 22