VersaBank

Good morning, ladies and gentlemen. Welcome to VersaBank's first quarter fiscal 2024 financial results conference call. This morning, VersaBank issued a news release reporting its financial results for the first quarter ended January 31, 2024. That news release, along with the bank's financial statements and DNA and supplemental financial information, are available on the bank's website in the Investor Relations section. as well as on Cedar Plus and Edgar. Please note that in addition to the telephone dial-in, VersaBank is webcasting this morning's conference call. The webcast is listen-only. If you're listening on the webcast but wish to ask a question in the Q&A session following Mr. Taylor's presentation, please dial into the conference line, the details of which are included in this morning's news release and on the bank's website. For those participating in today's call by telephone, the accompanying slide presentation is available on the bank's website. Also, today's call will be archived for replay both by telephone and via the internet, beginning approximately one hour following completion of the call. Details on how to access the replays are available in this morning's news release. I would like to remind our listeners that that the statements about future events on this call are forward-looking in nature and are based on certain assumptions and analysis made by VersaBank management. Actual results could differ naturally from our expectations due to various material risks and uncertainties associated with VersaBank businesses. Please refer to VersaBank's forward-looking statements adversary in today's presentation. I will now like to turn the call over to David Taylor. President and Chief Executive Officer of VersaBank. Please go ahead, Mr. Taylor.

Good morning, everyone, and thank you for joining us for today's call. With me for the first time on these calls is our new Chief Financial Officer, John Asma, who was appointed to that role in December. Before I begin, I'd like to remind you that our financial results are reported and will be discussed on this call in our reporting currency of Canadian dollars. For those interested, we provide US dollar translations for most of our financial numbers in our Standard Investor presentation, which will be updated and available on our website shortly. Now for the highlights. Our first quarter results continue to demonstrate the significant and increasing operating leverage in our highly efficient branchless business-to-business digital banking model. 22% year-over-year growth in total assets generated 35% year-over-year growth in net income, marking another new quarterly record for profitability. And that, combined with our continued focus on management of our fixed costs, drove both year-over-year and sequential improvement in our efficiency ratio to a new record of 40%. and 24% year-over-year increase in average return on common equity to 13.4%. Notably, Q1 was a solid quarter for our point-of-sale receivable purchase program business, which expanded by a healthy 7% sequentially as the HVAC home improvement sector, which makes up the largest components of our point of sale portfolio, continues to see robust consumer activity. That contributed to another record high for total assets of $4.3 billion, another meaningful step towards our next milestone of $5 billion and the continued outsized positive impact of our efficiency, our profitability, and our return on equity. Taking a closer look at Q1 numbers, even with a continued very healthy year-over-year growth, I will highlight that our Q1 numbers were dampened slightly by a temporary contraction of our non-core real estate lending portfolio compared to the end of Q4. You have heard me say in prior calls that we will always look to be opportunistic with our real estate portfolio, expanding and contracting our portfolio depending on opportunities and risks within the market. You have also heard me say that we would be happy to trade lower net interest margin for return on equity if such opportunities arise. Such a situation recently emerged in the evolving regulatory environment has created an opportunity to transition the focus of our real estate portfolio from higher yielding, higher risk-weighted real estate loans to zero risk-weighted CMHC-insured real estate loans. We are trading net interest margin for return on equity. This is a great example of our ability of our bank to be flexible and agile to drive additional shareholder value. As we begin this transition in Q1, we saw our real estate portfolio temporarily contract from Q4 as we ran off old loans ahead of deploying capital to new zero risk weighted loans. We expect that this strategic adjustment will enhance the return on equity and contribute to stronger growth in subsequent quarters throughout the year. With our very low cost source of funds throughout the insolvency professional deposits, we have a distinct competitive advantage in the CMHC market. The other item I would note is some ongoing softness in our net interest margin. This is a natural outcome of the growth of the point of sale portfolio, which has lower margins, but higher risk weighted returns than our real estate portfolio. So as point of sale portfolio grows, we earn less net interest margin, but we make up the profitability on volume. It's also a natural outcome of the growth of our wealth management deposits relative to our lower cost insolvency professional deposits to fund strong growth in our loan portfolio. The good news, at least for us, left for Canadians, is that our low cost insolvency professional deposits, as expected, are expanding as the number of consumer and small business insolvencies continues to increase. And, in fact, both the size of these deposits and the number of accounts is now at an all-time high. And this is as we continue to see the significant increase in insolvencies based on recent data, which is a leading indicator for our insolvency deposits. According to statistics, Canada, insolvencies in Canada in January were up 34% from the prior year and up 14% from December. We have seen that reflected in our insolvency deposit accounts, which are opened by trustees ahead of being filled with actual deposits, which were up 18% year over year and 6% sequentially. This will go some way towards supporting stronger net interest margins going forward. As our Canadian point of sale receivable purchase program business continues to see steady growth, we are increasingly encouraged by the very positive feedback we continue to receive from potential US partners for this unique and attractive solution. In fact, we just returned from the annual KBW FinTech conference in New York City last week, where we once again had the opportunity to introduce ourselves to a number of potential partners. Our meetings continue to confirm that there is a massive unmet need for our solution, and potential partners are eager for us to enter the U.S. market. With respect to the approval process for our proposed acquisition of U.S.-based Stearns Bank Holdingford, the process does continue to move forward. We continue to have productive engagement with the U.S. regulators and remain optimistic as we have been at any time throughout this entire process about the prospects for a favorable outcome. With three weeks left in the calendar quarter, while we still think it's possible that we could receive a decision before March 31st, we have adjusted our expectations to the second calendar quarter of this year. We continue to do everything we can to advance the process as quickly as possible, but respect the need for regulators to be thorough. And we continue to appreciate the patience of our shareholders.

I'd now like to turn the call over to John to review the financial results in detail. John?