LONDON, Ontario--(BUSINESS WIRE)--VersaBank (“VersaBank” or the “Bank”) today announced that it has added three new partners in its Insolvency Professional Deposits business, further expanding its access to very low-cost deposit funding, and further strengthening a core element of its business model to support continued growth, while providing additional risk-mitigation through increased deposit diversification.
“Low-cost deposit funding is an integral part of VersaBank’s business model and a significant contributor to the Bank having the highest net interest margins amongst its publicly traded peers, as well as the Bank’s track record of strong earnings growth,” said David Taylor, President and Chief Executive Officer, VersaBank. “As we recently reported, the second quarter of 2020 saw the Bank achieve one of the lowest cost of funds in our history. This further expansion of our access to Insolvency Professional deposits will contribute to what we expect to be a continuing decrease in cost of funds as we pursue expansion of our lending portfolio, notably enabling us to pursue new high-growth potential opportunities as we put our lending capacity of more than $2 billion to work.”
VersaBank’s three new Insolvency Professional partners add to its roster of more than 100 Insolvency Partner offices across Canada. In 2012, VersaBank identified a significant and unmet need amongst Canadian Insolvency Professionals who were being underserved by generic deposit offerings that did not integrate with their own systems, resulting in inefficiency and higher costs. Working closely with the two largest insolvency firms in Canada, the Bank developed a high value-add solution that is now used by the vast majority of Insolvency Professionals in the country, providing VersaBank with a very low-cost source of funding.
“The resounding success with our Insolvency Professional Deposits offering is an excellent example of VersaBank’s strategy to leverage our proprietary technology to capitalize on attractive opportunities in the banking sector that are being ignored by large, inflexible financial institutions – and how that translates directly into value for our shareholders,” said Mr. Taylor. “While VersaBank fully supports a robust and accelerated economic recovery in Canada, we expect the impact of the COVID-19 pandemic to substantially increase bankruptcies in the coming quarters, which should contribute to further reductions in our cost of funds.”
VersaBank adopted an electronic B2B branchless model in 1993, becoming the world’s first branchless financial institution. It holds a Canadian Schedule I chartered bank licence and obtains its deposits, and the majority of its loans and leases, electronically. VersaBank’s Common Shares trade on the Toronto Stock Exchange under the symbol VB and its Series 1 Preferred Shares and Series 3 Preferred Shares trade under the symbols VB.PR.A and VB.PR.B, respectively.
The statements in this press release that relate to the future are forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, many of which are out of our control. Risks exist that predictions, forecasts, projections, and other forward-looking statements will not be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements as several important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the Canadian economy in general and the strength of the local economies within Canada in which we conduct operations; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Bank of Canada; changing global commodity prices; the effects of competition in the markets in which we operate; inflation; capital market fluctuations; the timely development and introduction of new products in receptive markets; the impact of changes in the laws and regulations pertaining to financial services; changes in tax laws; technological changes; unexpected judicial or regulatory proceedings; unexpected changes in consumer spending and savings habits; the impact of COVID-19 pandemic and our anticipation of and success in managing the risks implicated by the foregoing. For a detailed discussion of certain key factors that may affect our future results, please see our annual MD&A for the year ended October 31, 2019.
The foregoing list of important factors is not exhaustive. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The forward-looking information contained in this document and the related management’s discussion and analysis is presented to assist our shareholders in understanding our financial position and may not be appropriate for any other purposes. Except as required by securities law, we do not undertake to update any forward-looking statement that is contained in this document and related management’s discussion and analysis or made from time to time by the Bank or on its behalf.