VersaBank (VBNK) Earnings Call Transcript & Summary

In view of the fact that the United States Congress has decided to delay, I guess, is the best word to clarity, passage of the Clarity Act. Can you give us any sort of update on the staple coin, which VersaBank owns and is in a pilot program with -- can you give us any information on -- and the second question is what about the sales growth in the United States? Does it meet your expectations? Or is there more work to do?

Two really good questions. A while back when the so-called Genius came out in us to be a lunchtime speaker at the Florida Batteries Association. And I was speaking to my fellow bankers and I referred to it as the more on. And I still stand by those words. And I'm not this pleased that it's faltered. And of course, the Clarity Act, it was just another add-on that would create more confusion I'm not unhappy that it's fall through also. We believe that only fully licensed financial institutions should be issuing taking people's harder money as I said at that meeting that we have a cultural imperative to ensure our depositors get their money back with interest. And of course, you know that stable coins are prohibited from paying interest, and they don't have FDIC insurance fees or a CDI insurance. So I think there was reasonable heads prevailed. And now it's up to us back produce stable coins if that's what customers want. But ultimately, it will be a deposit token because it comes with interest and insurance -- you'll still see us a little bit doing some stable coin business. There's some programs that we are underway, and they still have a little bit of momentum with them. So don't be surprised if you see a press release coming out sooner or later. About a stable corn initiative. But I think eventually, they'll evolve into tokenized deposits. With respect to our growth in the United States, it has exceeded expectations. It's been extremely well received, particularly with the real-time purchase of receivables. That's a game changer and biggest guys in the United States say that, this is a revolution. There's a $1 trillion market of asset-backed securities and pretty well, they rendered, it's rendered obsolete. We can now buy the receivables from the point-of-sale company partners. We can do it in 10 minutes, but one of the biggest partners said to me, David, if you can do it every day, that's all we need. And only that we're buying them, we're pricing them too and that was a big deal because they don't like being left in the wind with interest rates going up or down and interest rates go up rapidly mainly receivables are holding on to for 60, 90 days to decline the value because they're in a loss. And we can price instantly basically. So it's a hell of a deal on both sides of the border -- sign the tops as we can. At another meeting, I predicted we 3 billion in the United States. And I also said where is our Canadian guys. So right there, that they can do a CAD 3 billion too, and I'm sure I hope they can with this restructuring, it's allowed us to have access to the largest capital markets in the world by far. Last count between the NASDAQ and the New York Stock Exchange, we're looking at $80 trillion in U.S., that's a big gap. And there's nothing -- nowhere on the planet that comes close to those numbers. And of course, with these new programs, we're extremely well received. So John longwinded way to answer the question, but it's good time.

One of the things I understand about receivable program is that you don't -- the aggregators do not until they aggregate a sufficient volume of loans to then go to the bank and sell them to the bank that they no longer now need to use their own capital because the bank's capital can be used from have an issue in the process.

Absolutely. That's a huge advantage. Those that invest in point-of-sale companies can recapture some of their capital now. So just firstly, mathematically, the return on equity doubled. And then they save all the inventory expenses, where the warehousing, the lines, the interest that they're spending to save all that. It's fantastic deal. It's a classic win-win, win for us. We get high-quality receivables in a hurry. And when for our partners, they get their reliable economical funding that they've been dreaming of. Some people have said to me here in the early days will can't take funded from the market. And I said, "Yes, in an 8-year cycle, there's 2 years probably the market is strothy and they get all the may they want. But this is those 2 years where they can't get a nickel. Hitching their wagon to VersaBank. They know they've got funding forever. Right through the liquidity crisis right through the COVID 19x supporting our point-of-sale people. mean that trickles down, of course, to Canadian small business that needed capital. So we're proud to be doing that. And hopefully, we can do a lot more with this restructuring. Any other good questions coming. There's Nash.

The rest, I mean, it's really exciting to go down to the U.S. Could you just sort of explain we've got VersaBank Canada at a subsidiary in OFC is happy with that, the way you've structured. And then the U.S. and then the wonderful stuff that you're doing with the tokens thing if you just.

Yes. Well, VersaBank can will become a whole subsidiary of Versa Bancorp, which is a tagless company. But VersaBank Canada, will still stay at 144% be headed up by John ocean sitting right behind you. It will be what it always has done. And it will have access to a lot more capital, which is always on stream for a bank that's growing rapidly. I think we're the fastest institution in the country by far. And it was banks will any more capital. So First Bank Canada stays right where it is. FirstBank U.S.A. is headquartered in Minneapolis, and it stays where it is. The holding company is very classic modern company. It's cloud operated. I live in Florida half the year here half to year some of our people have deeper Florida, some all over. We -- we're sort of in theoretically, the address will be a little bit on the sale point. This facility here is our tech center, and we have a similar 1 in the Saskatchewan that looks after deposits. But this facility you can be proud of because it's leading edge in the world for providing those stable coins the custodies and the state of the art, which is the tokenized deposit and recognize.

Not a problem. Just a question now with the restructuring Versa bank shares trade on Toronto and that how will the new share structure look? Will you keep a Toronto listing -- where will the liquidity be?

Well, good question. Your VBNK shares likely will be swapped into the number -- the assemble -- so likely, your VBNKs will become VRSA. -- some RSAs to be listed on the TSX and on the NASDAQ. So for those of you that like trading on the France Stock Exchange, the difference will be you've got a different symbol. And you're still basically owning the same bank you had before. It's just the structure is different. Presently, the Canadian Bank owns the subsidiaries in sort of a totem pole structure. The new structure is the holding company, this is a classic U.S. banking structure pulls the banks individually so that each bank can operate in its regulatory environment very efficiently because they're different. The regulatory environment in the states is different on the rig Canada almost the same -- and who knows, I might dream of a U.K. bank who knows. I was with the governors of the Bank of England not so long ago, and I was dreaming about my Barclays heritage talking about, and I guess they ship me off to London, Ontario to open a branch for Barclays here, which something you're very good customers of if life in full as it should, I'll have recreated the international bank for the U.K. There will be a subsidiary of course, regulatory approvals required. But the model that we have is very compelling for countries, trickling down reliable, economical capital to small businesses and consumers is what everybody dreams of, that's what they want. And our model does that. So I'd expect there'll be other countries, U.K., I think, might be the next one that would like to see this to certainly stages, but -- it's one of those things where that governors and regulators sort of dream of capital to the masses but economical prices, stimulate economies. Some economies need stimulating. Well, we're very ambitious. I'm thinking before the end of October. Tim's passed out in the background there. You can do it Tammie. Yes, sometime fairly soon. We need those 2 regulatory approvals and the Minister of Finance in Ottawa and then we need the Fed to approve. I'm actually seeing both of those wonderful people fairly soon next week in D.C. And of course, in Ottawa, it looks to me that they're both fully endorsing the program and that means good things for both countries, more capital for the Canadian bank to do more of what it's already been doing and more in the states that very much wants to see this new revolutionary method of financing point-of-sale companies come to be -- that is very high. The cutoff date for the Russell 2000 is October 31, and then you go on about, I think, December 15, something around there. So all being well, we'll be a Russell 2000 company. There's a big deal. You've arrived when you're Russell 2000. Another big deal that I was mentioning to right there. that just a little historical milestones. When I started this thing, with $0.5 million, that was the book value of Pacific Western Trust. Now is today, I think it's $1 billion. So we've gone up 2,000 times during that period of time, which isn't a record. Elon Musk has got a little better than that, Jeff Bezos has done a little better. Warren hasn't done quite that well. But for those of you know I'm -- I mentioned I'm a pilot with these airplanes around here. We've got something common with Elon Musk, both of us have experienced unscheduled catastrophic is assembly. But I'm hoping to have something more in common join the $1 billion. Today, we're a market cap at $1billion though. Next step is U.S. All right. No more questions. Well, thank you very much. It's wonderful. This is a milestone event, of course. It's just the evolution of the bank, and it means good things for shareholders. and good things for the countries we operate in, too. Because as we know, everybody needs capital for small business is particularly, particularly in Canada, and that's what we do. And in the States, the lap, thank you.