VersaBank

Good morning, ladies and gentlemen. Welcome to VersaBank's second quarter fiscal 2025 financial results conference call. This morning, VersaBank issued a news release reporting its financial results for the second quarter ended April 30, 2025. That news release, along with the bank's financial statements, MD&A, and supplemental financial information are available on the bank's website in the investor relations section, as well on Cedar Plus and Edgore. 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 to the webcast but wish to ask a question in the Q&A session following Mr. Taylor's presentation, please dial in to 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 by 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 the statements about future events made on this call are forward-looking in nature and are based on certain assumptions and analysis made by Bursa Bank Management. Actual results could differ materially from our expectations. due to various material risks and uncertainties associated with Bursa Bank's businesses. Please refer to Bursa Bank's forward-looking statement advisory in today's presentation. I would now like to turn the call over to David Taylor, President and Chief Executive Officer of Bursa Bank. Please go ahead, Mr. Taylor.

Good morning, everyone, and thank you for joining us for today's call. With me is our Chief Financial Officer, John Asman. The second quarter of of fiscal 2025 unfolded as planned, with a number of positive highlights that will continue to drive momentum in our business. We saw the first drawdowns of our US RPP portfolio, which by the end of the quarter had surpassed US$70 million. We saw growth in our Canadian residential construction loan portfolio. We saw meaningful expansion of our net interest margin due to several factors that are trending positively. John will go into these in more detail, and we do expect these trends to continue to support NIM around these levels for the remainder of the year. This drove record assets, record credit assets, record revenue alongside sequential improvements in banking efficiency and return on common equity based on our core earnings. Subsequent to quarter end, we initiated a structural realignment of our business to that of the standard U.S. bank framework, which if approved by regulatory authorities and shareholders, we expect will realize additional shareholder value, reduce costs, and further mitigate risk. Looking at the financial highlights in more detail, as I noted, record credit assets and very healthy expansion of our net interest margin drove record revenue. Credit assets on both sides of the border are expanding more or less in line with expectations this year. Net interest margin also expanded as we saw several favorable trends continue, driving 23 basis point increase in NIM on credit assets sequentially. I will note here there were two items that did slightly dampen our income. The first is some preliminary costs associated with our proposed structural realignment. The second is the impact of foreign exchange translation of U.S. subsidiary assets, which was a typically large, unrealized non-cash loss due to precipitous drop of the U.S. versus Canadian dollar in Q2. Including these items, earnings per share is 28 cents, or excuse me, excluding these items. I will take the opportunity to remind you that this is early point in our US Receivable Purchase Program. Although profitable, the results of our US operations continue to reflect the cost structure that will support our ramp to vastly larger revenues. As I noted last quarter, we tend to look at our Canadian banking operations as a proxy for where we think the efficiency and return on common equity of our US banking operations can go. And we are pleased to see both improve sequentially, excluding the two aforementioned items, to 44% and 12.53% respectively. And I will remind you that our Canadian banking operations bear the vast majority of our corporate overhead costs, including our public company costs. So as an indicator of true potential efficiency and return on equity of our U.S. business is actually significant. significantly understated. And finally, as I did last quarter, I'll remind you that our EPS for the quarter reflects a significant higher number of shares outstanding in Q2 as a result of our December capital raise, most of which we are still putting to work. We deploy this capital at around 12 times or more and around 2.5% spread, so it is very accretive. Now I'd like to turn the call over to John to review the financial results in detail. John?

Thanks, David. Before I begin, I will remind you that our financial statements and MD&A for the second quarter are available on our website under the Investors section, as well as on CDAR and EDGAR. All of the following numbers are reported in Canadian dollars as per our financial statements, unless otherwise noted. Starting with the balance sheet, total assets at the end of the second quarter of fiscal 2025 grew 15% year-over-year and 2% sequentially to a new high of over $5 billion. Cash and securities were $445 million, or 9% of total assets, down from 11% at the end of Q1 as we steadily deployed the capital we raised in December of last year. Book value per share increased to a record $16.25. Our CET1 ratio increased to 14.28%, and our leverage ratio was 9.61%, both remaining above our internal targets.