Q2 2025 VersaBank Earnings Call
Unknown Executive: Good morning, ladies and gentlemen. Welcome to VersaBank's second quarter Fiscal 2025 Financial Results Conference Call. This morning, VersaBank issued the 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 and the Investor Relations section, as well on CDERplus 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 are 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.
Good morning, ladies and gentlemen, welcome to break the bank second quarter fiscal 'twenty 25 financial results Conference call.
This morning, Bruce of Bank issued a news release reporting its financial results for the second quarter ended April 32025.
That news release, along with the banks financial statements MD&A and supplemental financial information are available on the bank's website and the Investor Relations section as well on SEDAR and Edgar.
Please note that in addition to the telephone dial in most of that gets that testing this morning's conference call and webcast listen only if you are listening to the webcast that wish to ask a question, indicating session. Following Mr. Taylor Express edition. Please dial in to the conference line did he Delta which are included in this morning's news release and on the bank's website.
Unknown Executive: For those participating in today's call by telephone, the accompanying slides 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 1 hour following completion of the call. Details on how to access the replays are available in this morning's news release.
For those participating in today's call by telephone the accompanying slide presentation is available on the bank's club site.
So todays 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.
Unknown Executive: 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 VersaBank management. Actual results could be prematurely from our expectations due to various material risks and uncertainties associated with VersaBank's businesses. Please refer to VersaBank's forward-looking statement advisory in today's presentation.
I would like to remind our listeners that these statements about future events made on this call are forward looking in nature and are based on certain assumption and then I'll, let just made my birthday Bank management.
Actual results could differ materially from our expectation due to various material risks and uncertainties associated with burst event businesses.
Please refer to break the bank forward looking statement advisory in today's presentation.
David Taylor: I would 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 is our Chief Financial Officer, John Asma.
Speaker Change: I would now like to turn the call over to David Taylor, President and Chief Executive Officer of Best Bank. Please go ahead Mr. Taylor.
Speaker Change: Good morning, everyone and thank you for joining us for today's call with me is our Chief Financial Officer, John Allison.
David Taylor: The second quarter 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 U.S. RPP portfolio, which by the end of the quarter had surpassed U.S. dollars 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 positive. 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.
The second quarter.
Speaker Change: Fiscal 'twenty twenty-five unfolded as planned with a number of positive highlights that will continues to drive momentum in our business.
We saw the first draw downs of our U S. R. T P portfolio, which by the end of the quarter had surpassed U S dollars $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.
Speaker Change: Joe will go into these more detail and we do expect these trends to continue to support NIM around these levels for the remaining remainder of the year.
David Taylor: 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.
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.
David Taylor: And 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.
Speaker Change: And subsequent to quarter end, we initiated a structural realignment of our business.
So that is a standard U S Bank framework, which if approved by regulatory authorities and the shareholders. We expect we will realize additional shareholder value reduce costs and further mitigate risk.
David Taylor: 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.
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.
Net interest margin also expanded as we saw several favorable trends continue driving 23 basis point increase in NIM on credit assets sequentially.
David Taylor: I will note here there were two items that did slightly damage 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.
I will note here that.
There were two items that did slightly damp.
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 noncash loss due to a precipitous drop of the U S versus the Canadian dollar.
You too.
David Taylor: Including these items, earnings per share is 28 cents, or excuse me, excluding I will take the opportunity to remind you that this is early point in our U.S. receivable purchase program. Although profitable, the results of our U.S. operations continue to reflect the cost structure that will support our ramp to vastly larger revenue.
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 U S receivable purchase program, although profitable the results of our U S operations continue to reflect the cost structure that will support our ramp to vastly larger revenues.
David Taylor: 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 significantly understated.
Speaker Change: 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 U S banking operations can go.
Speaker Change: And we are pleased to see both improved sequentially, excluding the two hour per mentioned items.
Speaker Change: 244% and 12.53% respectively.
Speaker Change: And I would remind you that our Canadian banking operations, where the vast majority of our corporate overhead costs, including our public company costs. So that's an indicator of true potential efficiency and return on equity of our U S business is actually segment significantly understated.
David Taylor: 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 we're on 2.5% spread, so it is very accretive.
Speaker Change: And finally as I did last quarter I'll remind you that our EPS for the quarter reflects the 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.
Speaker Change: We deploy our capital at around 12 times or more.
Speaker Change: And around 2.5% spread so it is very accretive.
John Asma: 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 investor 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.
Speaker Change: Now I'd like to turn the call over to John to review the financial results in detail.
John.
John: Thanks, David.
Speaker Change: 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.
Well as on SEDAR and Edgar.
John: All of the following numbers are reported in Canadian dollars as per our financial statements unless otherwise noted.
John: Yeah.
John Asma: 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 deploy 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 target.
John: 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.
John: Cash and securities were 445 million.
Or 9% of total assets down from 11% at the end of Q1 as we steadily deploy the capital we raised in December of last year.
John: Okay.
Book value per.
Book, Sorry book value per share increased to a record $16.25.
Our CET one ratio increased to $14, two 8% and our leverage ratio was 961% both remaining above our internal targets.
Yeah.
Yeah.
John Asma: Total consolidated revenue was a record $30.1 million, up 6% year-over-year and 8% sequentially. The increase was driven primarily by our continued growth in credit assets, with the sequential growth being additionally driven by solid expansion of our net interest margin. Consolidated net interest expense was $17.5 million compared to $12.2 million in Q2 of last year and $15.7 million for Q1 of this year. As David discussed, Q2 NIEs included $900,000 related to the preliminary costs associated with the bank's proposed structural realignment, as well as an atypically high unrealized foreign exchange translation loan. Excluding these costs, NIEs were in line with our expectations.
John: Total consolidated revenue was a record $30 1 million up 6% year over year and 8% sequentially.
John: The increase was driven primarily by our continued growth in credit assets with the ships with the sequential growth being Additionally, driven by solid expansion of our net interest margin.
John: Yeah.
John: Consolidated net interest expense was $17 5 million compared to $12 2 million in Q2 of last year and $15 7 million for Q1 of this year.
Speaker Change: As David discussed Q2, and Ies included 900000 related to the preliminary costs associated with the banks proposed structural realignment as well as in a typically high unrealized foreign exchange translation was.
John: Excluding these costs and <unk> were in line with our expectations.
John Asma: Otherwise, the year-over-year increase in net interest expenses was primarily due to the addition of VersaBank U.S. As a reminder, DRT cyber expenses were included in our consolidated net interest expenses and totaled $2.7 million for the quarter. Reported net income was $8.5 million and consolidated earnings were $0.26 per share. excluding the preliminary costs associated with the proposed structural realignment and the impact of the foreign exchange translation.
John: Otherwise the year over year increase in net interest expenses was primarily due to the addition of versa Bank USA.
John: As a reminder, Dr. T. Cyber expenses were included in our consolidated net interest expenses and totaled $2 7 million for the quarter.
John: Reported net income was $8 5 million and consolidated earnings were 26 cents per share.
John: Excluding the preliminary costs associated with the proposed structural realignment and the impact.
John: The foreign exchange translations consolidated net income was $9 2 million and consolidated earnings per share was 28 cents.
John Asma: Consolidated net income was $9.2 million and consolidated earnings per share was $0.28.
John: Okay.
John Asma: Looking at the income statement on a segmented basis, the vast majority of revenue continues to be driven by our Canadian digital operations, or pardon me, our Canadian Digital Banking Operations. and within that Canadian Banking Operations as well as our US RPP program ramped up with continued incremental growth. Revenue for the Canadian banking operations was $25.6 million up 8% sequentially from Q1. As the corporate expenses flow through the Canadian digital banking segment, net income and net earnings per share were negatively impacted by costs associated with the structural realignment and the impact of foreign exchange translation. Excluding these impacts, net income for the Canadian banking operation was $9.9 million.
John: Looking at the income statement on a segmented basis. The vast majority of revenue continues to be driven by our Canadian digital operations or pardon me our Canadian did.
John: Digital banking operations.
John: Within that Canadian banking operations as well as our U S. RPT program ramped up with continued incremental growth.
John: Revenue for the Canadian banker banking operations was $25 6 million up 8% sequentially from Q1.
John: How does the corporate expenses flow through the Canadian digital banking segment net income and net earnings per share were negatively impacted by costs associated with the structural realignment and the impact of foreign exchange translation. Excluding these impacts net income for the Canadian banking operation.
John: <unk> was $9 9 million.
John Asma: which comes to $0.30 per share.
John: Which comes to <unk> 30 per share.
John Asma: Revenue from the US banking operations was $2.5 million, a 22% sequential increase. And yet income for U.S. banking operations was $133,000, a 29% increase sequentially. within DRT Cyber. Within the, I'm sorry, within the DRT, within DRTC, the cybersecurity component generated revenue of $1.8 million, down from $2.3 million in Q2 of last year. Net loss was $652,000 impacted by higher operating expenses. Within DRTC, digital media revenue was $569,000 with net loss of $152,000.
John: Revenue from the U S banking operations was $2 5 million.
John: 22% sequential increase.
John: And net income for U S banking operations was 133000% to 29% increase sequentially.
John: Okay.
John: Within <unk> cyber.
John: <unk>.
John: Within that I'm, sorry within the D.
John: T within Dr. T C. The cyber security component generated revenue of $1 8 million down from $2 3 million in Q2 of last year net loss was 652000 and impacted by higher operating expenses.
John: With N D. R. T C digital media revenue was 569000 Whitney with net loss of 152000.
John: Yeah.
John Asma: Our credit assets grew to a record $4.52 billion at the end of Q2, driven once again by our receivable purchase program, which increased 14% year over year and 4% sequentially to $3.5 billion. Our RPP portfolio represented 79% of our total asset portfolio. at the end of Q2 consistent with the end of Q1. Our multifamily residential loans and other portfolio grew 8% year-over-year and 3% sequentially to $958 million, as we steadily drew down on CMHC-insured loan commitments. As a reminder, our multifamily residential loans and other portfolio is primarily business to business mortgages and construction loans for residential properties.
John: Our credit assets grew to a record $4 five 2 billion at the end of Q2, driven once again by our receivable purchase program, which increased 4% I'm, sorry, 14% year over year, and 4% sequentially to $3 5 billion.
John: Our RPT portfolio represented 79% of our total asset portfolio.
John: At the end of Q2, consistent with the end of Q1.
John: Our multifamily residential loans and other portfolio grew 8% year over year, and 3% sequentially to $958 million as we steadily drew down on CMA sea insured loan commitments.
John: As a reminder, our multifamily residential loans and other portfolio is primarily business to business mortgages and construction loans for residential properties, we have very little exposure to commercial use properties.
John Asma: We have very little exposure to commercial use properties.
John: Yeah.
John Asma: Turning to the income statement. of Digital Banking Operations. Net interest margin on credit assets, that is excluding cash and securities, was 2.59%. That was 7 basis points or 3% higher on a year-over-year basis and 16 basis points or 10% higher sequentially. As David discussed, our net interest margin on credit assets is benefiting from several positive trends. The yield curve is no longer inverted, further replacement of maturing higher interest rate term deposits with lower interest rate term deposits, continued expansion of our low-cost insolvency professional deposits, and higher margin generated by our USRP. Net interest margin overall, including the impact of cash, securities, and other assets, was 2.29%, an increase of 21 basis points sequentially.
John: Turning to the income statement.
John: Of digital banking operations net interest margin on credit assets that is excluding cash and securities was 259%.
John: That was seven basis points.
John: Or that was seven basis points or 3% higher on a year over year basis, and 16 basis points or 10% higher sequentially.
John: As David discussed our net interest margin on credit assets is benefiting from several positive trends.
John: The yield curve is no longer inverted further replacement of maturing higher interest rate term deposits with lower interest rate term deposits continued expansion of our low cost insolvency professional deposits and higher margin generated by our U S. R. P. P.
John: Net interest margin overall.
John: Including the impact of cash securities and other assets was $2 two 9% an increase of 21 basis points sequentially.
John Asma: which still remained among the highest of the publicly traded financial licensed banks in Canada.
John: Which still remained among the highest of the publicly traded financial life.
John: Our license banks in Canada.
John: Yeah.
John: Okay.
John Asma: Our provision for credit losses, or PCL, in Q2 increased slightly this quarter to 0.08% of average credit assets, compared to 0% last year, and is higher than our 12-quarter average of 0.02%. The increase this quarter was due to changes in forward-looking information used in our credit risk models, mainly due to increased uncertainty and more challenging outlook for the economy.
John: Our provision for credit losses, or PCL in Q2 increased slightly this quarter, 2.08% of average credit assets compared to zero percent last year and is higher than our 12 quarter average out 0.0% to 2%.
John: The increase this quarter was due to changes in forward looking information used to do.
John: Used in our credit risk models, mainly due to increased uncertainty and more challenging outlook for the economy.
David Taylor: I'd now like to turn the call back to David for some closing remarks. Thanks, John. Looking ahead to the second half of the year, we expect positive trends of Q2 to continue into the third and fourth quarters, which we expect will drive steady sequential growth in core earnings, meaning excluding the investment in the structural realignment. Credit assets should continue to steadily grow, driven by momentum in our U.S. receivable purchase program, which we continue to expect to reach at least $290 million U.S. by the end of the year. The U.S. has vastly underserved market for big ticket, point of sale financing, and we have a unique solution that offers a number of clear advantages over existing alternatives.
John: I'd now like to turn the call back to David for some closing remarks David.
David: Thanks, John.
John: Looking ahead to the second half of the year, we expect positive trends of Q2 to continue into the third and fourth quarters, which we expect will drive steady sequential growth in core earnings, meaning excluding the investment in the structural realignment.
John: Credit assets should continue to steadily grow driven by momentum in our U S receivable purchase program, which we continue to expect to reach at least 290 million U S dollars by the end of the year.
John: The U S is vastly underserved market for big ticket point of sale financing and we have a unique solution that offers a number of clear advantages over existing alternatives.
David Taylor: We see some potential for incremental growth in Canada amidst what remains a challenging environment for consumer spending. And we expect to see an increasing contribution from our growing CMHC-insured multifamily residential loan business and this opportunistic part of our Canadian business and remain on target to achieve $1 billion in commitments by the end of the year. We will increasingly benefit from the operating leverage in our business model as those assets scale, especially as we deploy the capital from our equity offering last December, contributing to further improvements in efficiency and return on common equity on core earnings.
John: We see some potential for incremental growth in Canada admits what remains a challenging.
John: Environment for consumer spending and we expect to see an increasing contribution from our growing CMA sea insured multifamily residential loan business and this opportunistic parts of our Canadian business and remain on target to achieve 1 billion in commitments by the end of the year.
John: We will increasingly benefit from the operating leverage in our business model as those assets scale, especially as we deploy the capital from our equity offering last December contributing to further improvements in efficiency and return on common equity on core earnings.
David Taylor: We expect to see the continuation of this favorable trend in support of our net interest margins that are in line with our expanding Q2 level. further replacement of maturing higher cost term deposit receipts for those of the current rates, the normalized yield curve, which benefits from our RPP spreads, the higher spread we generate on RPP assets in the US. and the higher deposits. in our low cost and solvency deposit business. Q2's insolvency balances were up another 5% sequentially and 22% year-over-year, and we continue to expect those deposits to grow to about $1 billion. Finally, as discussed in our last call, we are aggressively pursuing the renewed opportunity for our proprietary digital deposit resources.
John: We expect to see the continuation of this favorable trend in support of our net interest margins.
John: With our expanding Q2 levels.
John: Further replacement of maturing higher cost term deposit receipts for those.
John: At the current rates, the normalized yield curve, which benefits our R. P. P spreads the higher spread we generate on our P. P assets in the U S.
John: And the higher deposits.
John: And our low cost and solvency deposit business.
John: Q2s and solvency balances were up another 5% sequentially and 22% year over year, and we continue to expect those deposits to grow to about $1 billion.
John: Finally as discussed in our last call we are aggressively pursuing the renewed opportunity for our proprietary digital deposit receipts.
David Taylor: As we expected with the US administration's significantly more favorable view towards digital assets, including digital currencies and stablecoins, we are starting to see the industry itself ramping up their plans. Most notably, Wall Street Journal reported JPMorgan Chase, Citi, Wells Fargo, and Bank of America and others are all exploring the use of this technology to modernize payments. Our digital deposit receipts are a market-ready solution created by a bank or banks that seamlessly integrate with existing bank software systems while addressing the major concerns of regulators. They take the concept of stablecoin to an entirely new level.
John: As we expected with the U S administration's significantly more favorable view towards digital assets, including digital currencies stable clients, we're starting to see the industry itself ramping up their plans.
John: Most notably Wall Street Journal reported J P. Morgan Chase Citi Wells Fargo.
Speaker Change: Oh, Hey Bank of America, and others are all exploring the use of this technology to modernize payments.
Speaker Change: Our digital deposit receipts are market ready solution created by a bank or banks that seamlessly integrate with existing bank software systems, while addressing the major concerns of regulators. They take the concept of stable points to an entirely new level.
David Taylor: In fact, next week, I'll be speaking at the Florida Bankers Association Annual Meeting, the title of my presentation, Introducing the Ultimate Stablecoin, the only USD digital deposit I will discuss why we believe our first-of-a-kind stablecoin, minted by a national bank, SOC 2 approved, based on the highest military-grade security, can, and we believe will, play a role in changing the banking industry.
Speaker Change: In fact next week I'll be speaking at the Florida Bankers Association annual meeting the title of my presentation, introducing the ultimate stable quite the only U S. D digital deposit received I.
Speaker Change: I will discuss why we believe our first of a kind of stable coin minted by a national bank stocks to approve based on the highest military grade security, Ken and we believe will play a role in changing the banking industry.
David Taylor: Before we open the call to questions, a few words on the proposed structural realignment we announced last week. The details are a little convoluted and well laid out in our news release, so I won't get into those here. The purpose of this initiative is to realign our corporate structure to that of the most international banks under which there is a corporate parent entity that holds the various operating subsidiaries. This is the structure with which U.S. and international investors are most familiar. Under the proposed plan, the new parent would be domiciled in the United States and fall under the purview of the U.S.
Speaker Change: Before we open the call to questions a few words on the proposed structural realignment, we announced last week.
Speaker Change: The details are a little convoluted and well laid out in our news release, so I won't get into those here.
Speaker Change: The purpose of this initiative is to realign our corporate structure to that are the most.
Speaker Change: International banks under which there is a.
Speaker Change: Our corporate parent entity that holds the various operating subsidiaries.
Speaker Change: This is the structure with which U S and international investors are most familiar.
Speaker Change: Under the proposed plan the new parent would be domiciled in the United States and fall under the purview of the U S regulators as would our U S operations.
David Taylor: regulators, as would our U.S. operation. Our Canadian operations would remain domiciled in Canada and remain under the purview of the Canadian Regulation. The benefits of this proposed realignment are clear. We would simplify our regulatory oversight. We would further mitigate risks, something we continuously seek to do. We would generate meaningful cost savings. Our stock should become eligible for certain indices, including the Russell 2000. and looking longer term, it would provide a structure that would be favourable to further international expansion. We would expect all this to generate additional shareholder value over and above the value we expect to drive through growth of the business itself.
Speaker Change: Our Canadian operations would remain domiciled in Canada and remain under the purview of the Canadian regulators.
Speaker Change: The benefits of this proposed realignment are clear, we would simplify our regulatory oversight.
Speaker Change: Further mitigate risks something we continuously seek to do we would generate meaningful cost savings.
Speaker Change: Our stock should become eligible for a certain indices, including the Russell 2000.
Speaker Change: And looking longer term it would provide a structure that would be favorable to further international expansion.
Speaker Change: We would expect all this to generate additional shareholder value over and above the value, we expect to drive through growth of the business itself.
David Taylor: The realignment is subject to a number of approvals, the OCC, the Fed, and in the US, the Minister of Finance in Canada, the Nasdaq, and the Toronto Stock Exchange, of course, and our shareholders. There is a significant cost to this undertaking, which is very much. we view as an investment with a substantial expected return. We estimate that to be around $8 million Canadian, to be roughly divided between third and fourth quarters this year, with a small amount incurred in Q2, as noted earlier. That expected $8 million investment equates to about 1.5% of our current market cap.
Speaker Change: The realignment is subject to a number of approvals the OCC that Ted and the U S. The minister of finance in Canada, The NASDAQ and the Toronto stock exchange of course, and our shareholders.
Speaker Change: There is a significant cost in this undertaking which is very much.
Speaker Change: We view as an investment with a substantial expected return, we estimate that to be around $8 million Canadian to be roughly divided between third and fourth quarters. This year with a small amount incurred in Q2 as noted earlier.
Speaker Change: That expected $8 million investment equates to about one 5% of our current market cap.
David Taylor: We are confident that the combined benefits will drive incremental shareholder value far in excess of this investment.
Speaker Change: We're confident that the combined benefits will drive incremental shareholder value far in excess of this investment.
Unknown Executive: With that, I'd like to open up the call to questions. Operator. Thank you.
Speaker Change: With that I'd like to open up the call to questions.
Speaker Change: Greater.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session to ask a question you May press star followed by the number one I gotta telephone keypad.
Unknown Executive: And, ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star followed by the number two.
Speaker Change: As long as speaker phone. Please speak up your handset before pressing any keys do we do I hear a question. Please press star followed by then and breakthrough.
Joey Yanchunis: With that, our first question comes from the line of Joey Yanchunis with Raymond James. Please go ahead. Good morning. Good morning, Joe. So in your prepared remarks, I believe you said that you expect insolvency deposits will reach $1 billion. What's the timing for that target? And in conjunction with this tailwind and the several others that you listed, do you have a sense for the magnitude of dim expansion in the atmosphere? Can you repeat the second half? I broke up a little bit. Yeah, it was the timing for the billion and then, you know, kind of an outlook, a near-term outlook for the NIM expansion.
Julien <unk>: Our first question comes from the line of Julien <unk> with Raymond James. Please go ahead.
Julien <unk>: Good morning.
Speaker Change: Good morning, Joe.
Speaker Change: Oh.
Speaker Change: So in your prepared remarks, I believe you said that you expect insolvency deposits will reach $1 billion.
Speaker Change: What's the timing that target.
Speaker Change: And in conjunction with this tailwind and there's several others that you listed do you have a sense for the.
Speaker Change: The magnitude of NIM expansion in the out quarters.
Speaker Change: Sure can you repeat the second half as I broke up a little bit.
Speaker Change: Yeah. It was the timing for the $1 billion and then you know kind of an outlook on near term outlook for the NIM expansion.
David Taylor: Well, with the billing, I'm thinking by the end of the calendar year, we should get there. As you see, we're growing at 22% year over year. And unfortunately for Canada, we're almost a record low for consumer sentiment and insolvency. So while it's a tough time for most Canadians, it's a good time for the insolvency business. And It should splice us with some economically-priced deposits. So I think if the balances continue to grow at the present rate, by the end of the calendar year, it should hit about a billion. Now with respect to NIM expansion, I'm very pleased to see the 29 basis points sequentially in the credit assets.
Speaker Change: Well with that.
Speaker Change: The 1 billion I'm thinking by the end of the calendar year.
Speaker Change: We should get there as you can see we're growing at 22% year over year and Unfortunately for Canada.
Speaker Change: It's almost a record low for consumer sentiment and then solvency so well.
Speaker Change: A tough time for most.
Speaker Change: As Canadians.
Speaker Change: Good time for the insolvency business and.
Speaker Change: It should its supply says with the with some economically priced deposit so I'm thinking about it wrong.
Speaker Change: Continue the balances continue to grow with at the present rate by the end of the calendar year should add about $1 billion now with respect to NIM expansion.
Speaker Change: I'm very pleased to see the 29 basis points sequentially and the credit assets, there's a little bit of a dampening effect right now happening in Canada, even though we have about 700 million and GIC is maturing in the next few months at about 1% less than.
David Taylor: There's a little bit of a dampening effect right now happening in Canada, even though we have about 700 million in GICs maturing in the next few months at about 1% less than them. and the replacement GIC is about 1% less. So that's all very favorable for us. But the yield curve is still pretty flat and might have a little tiny inversion in the short end. That puts a bit of damper on it. So it hasn't quite swung back up as it normally is. And the margin over government cannabis that our GICs have over the last while are high too.
Speaker Change: And the replacement J C is about 1% left so that's all very favorable for us but.
Speaker Change: The yield curve is still pretty flat and might have a little tiny.
Speaker Change: And version.
Speaker Change: In the short end.
Speaker Change: That puts a bit of a dam product so it hasn't quite swung back up is.
Speaker Change: As it normally is.
Speaker Change: The margin of the government of Canada bonds.
Speaker Change: Our GIC is half over.
Speaker Change: Last while our high to its about 80 odd basis points he used that round.
David Taylor: It's about 80-odd basis points, usually around 50. So right now I'm thinking NIML will stay where it is and probably start edging up again when some of this noise gets out of the system. Got it. I appreciate that.
Speaker Change: It was around 50.
Speaker Change: No.
Speaker Change: Right now I'm thinking nimble stay where it is and.
Speaker Change: Probably start edging up again, when some of this sort.
Speaker Change: Some of this noise gets out of the system.
Speaker Change: Got it I appreciate that.
David Taylor: And then Kind of moving over to expenses, so excluding the realignment costs. How should we think about, you know, non-interest expenses kind of trending from here? And then, what are the expected annual savings? from re-domiciling in the U.S. Well, With excluding the those one-time expenditures with respect to reorganizing is probably a little bit more in NIE in the States, maybe one more higher to do. And as of that, it should stabilize. So maybe a slight increase in the U.S. bank expenses going forward is unstable. With respect to the savings, you could probably pencil in around $2 million, $3 million a year once we've got that reorganization done.
Speaker Change: And then.
Speaker Change: Kind of moving over to expenses, so excluding the realignment costs.
Speaker Change: How should we think about you know noninterest expenses kind of trending from here and then what are the expected annual savings from.
Speaker Change: From re domiciled in the U S.
Speaker Change: Well.
Speaker Change: Excluding the.
Speaker Change: Those onetime expenditures with respect to reorganizing.
Speaker Change: There's probably a little bit more and and I E.
Speaker Change: In the states.
Speaker Change: Maybe one more hard to do and that is of that.
Speaker Change: Should stabilize.
Speaker Change: So maybe a slight increase in the U S banks expenses going forward and then stable.
Speaker Change:
Speaker Change: With respect to the savings.
Speaker Change: You could probably pencil and Oh.
Speaker Change: Around 2 million $3 million a year one so once we've got that the reorganization done.
David Taylor: Excellent, I appreciate that. Then just last one from me with respect to capital, and perhaps I missed this in the materials, but it didn't look like you utilized your recent share repurchase authorization. How should we think about your appetite for repurchases in the... Well, We're keen to buyers talk back less than book value. And it looks like it's less than book value. Maybe 10 has been the last. So we are keen to buy it back at that price. Personally, I don't expect you to stay down there that long, but if it is, you know, we've got loads of capital and that probably the best place to deploy our capital is buying back our stock less than booked.
Speaker Change: So I appreciate that and then just last one for me with respect to capital and perhaps I missed this in the materials, but then it looked like you utilize your recent share repurchase authorization.
Speaker Change: Should we think about your appetite for repurchases in the out quarters.
Speaker Change: Well.
Speaker Change: Routine to buyers talked back less than book value and it looks like it's less than book value.
Speaker Change: Maybe to say it has been in the last so.
Speaker Change: We are keen to buy it back at that price.
Speaker Change: Hi.
Speaker Change: Personally I don't expect it to stay down there not that long but.
Speaker Change: If it is you know we've got loads of capital and that probably be the best place to deploy our capital as buying back our stock less than book.
Joey Yanchunis: Excellent. Thank you for taking my question. Thank you, Joe.
Speaker Change: Excellent. Thank you for taking my questions.
Unknown Executive: Good to see you in Florida.
Speaker Change: Thank you, Joe, but foreseeing in Florida.
Tim Switzer: And your next question comes from the line of Tim Switzer with KBW. Please go ahead. Hey, good morning. Thank you for taking my question. Good morning, Tim. Great.
Speaker Change: And your next question comes from the line of Tim Switzer Vicki BW. Please go ahead.
Tim Switzer: Hey, good morning, Thank you for taking my questions.
Speaker Change: Good morning, Jim.
Jim: Good morning.
David Taylor: Um, can you update us on the expectations you have on the cell DRTC cyber. and the timeline there. Well, We're in sort of the final stages of engaging a firm to look after that sale. And I would expect by the end of this fiscal year, we'll have a deal done. It's a very popular business, unfortunately, but terrible comment on humanity, that cybersecurity attacks just seem to be relentless. And DRT is seen to be a world leader, particularly in the area of penetration testing. So we're actively in the sale process now. And as I say, we expect fairly soon to engage a firm to look after that for us.
Jim: Can you update us on.
Speaker Change: And the expectations you have on.
Speaker Change: The the cell D. R T C cyber.
Speaker Change: And the timeline there.
Speaker Change: Well.
Speaker Change: We're.
Speaker Change: And the sort of the final stages of engaging affirmed to look after that sale.
Speaker Change: And.
Speaker Change: I would expect by the end of this fiscal year, we will have a deal done.
Speaker Change: It's a I think a very popular business. Unfortunately bad does turbo.
Speaker Change: <unk> commented on humanity.
Speaker Change: [laughter] cyber security attacks, just seem to be relentless and DRG cyber is seem to be a world leader in protecting their penetration testing.
Speaker Change: So we're actively.
Speaker Change: And the on the sale.
Speaker Change: Process now and as I say pits, we expect fairly soon to engage your firm to to look after that for us.
Tim Switzer: Okay, great. That's good to hear.
Speaker Change: Okay, great that's good to hear and.
David Taylor: And can you provide an update on how like conversations with new partners in the US are going? Maybe how many new programs you expect to be fully launched, you know, by the end of the year? Well, the conversation's going quite well, and of course, it's a very attractive product, but the onboarding process is a little longer than I would like. We've got three signed up now, and by the end of the year, say, we have another three signed up. I'm hoping for a lot more than that, but it is taking a while to onboard. The legal work is different in the States versus what we have in Canada.
Speaker Change: And can you provide an update on how the conversations with new partners in the U S are going maybe how many new programs do you expect to be fully launched by the end of the year.
Speaker Change: Well the conversations going.
Speaker Change: Quite well for us it's a it's a very attractive product, but the onboarding processes and little longer, though I would like Oh, we've got three signed up now.
Speaker Change: And by the end of the year.
Speaker Change: So we have another three signed up.
Speaker Change: I'm, hoping for a lot more than that but it is it takes a while to onboard the legal work is different in the states versus what.
Speaker Change: What we have in Canada, not that much different but it is there are nuances to it.
Tim Switzer: Not that much different, but there are nuances to it. So three now, maybe another three. And if the guys pleasantly surprised me, maybe another three on top of that. Okay, that sounds good.
Speaker Change: So all three now maybe not three and the guys pleasantly surprised me made me in Austria on top of that.
Speaker Change: Okay. It sounds good and the last question I have is can you just provide some commentary on.
David Taylor: And the last question I have is, can you just provide some commentary on the credit trends you're seeing in the CRE book where we've seen some reserve release over the last few quarters, but have had also had some charge offs. Just would love to hear what you guys are saying there. Well, the charge-offs actually are sort of an academic charge-off in that they're part of the U.S. portfolio that we purchased when we purchased that U.S. bank. So they're not in the Canadian real estate area.
Speaker Change: On the credit trends Youre seeing in the CRE book, where we've seen some reserve released over the last few quarters, but have had also had some charge offs.
Speaker Change: Just would love to hear.
Speaker Change: What are you guys are seeing there.
Speaker Change: Well the charge offs actually.
Speaker Change: I'm sort of an academic charge offs in that they're part of the U S portfolio that we purchased will.
Speaker Change: <unk> can be purchased at U S bank, so they're not running the Canadian real estate area, we have no charge offs no.
David Taylor: We have no charge-offs, no real charge-offs at all in our book. But we purchased a portfolio to buy the bank, and along with it, we purchased their loss provision that's been charged against it.
Speaker Change: No real charge offs at all in our book.
Speaker Change: But we purchased the portfolio by the bank and.
Speaker Change: Along with it we purchase their expected loss provision that's been charged against it.
David Taylor: The Canadian real estate market is in a bit of a turmoil. So it's really a heads-up game lending in that area. We've been at it for, I guess, in my case, 48 years. So this is one of those periods of time where you have to be really careful. Hence our focus on the government-insured CMAC mortgages. And we intend to keep that focus. And we tend to lend to our clients that we've lent to for decades. around the London and Ontario area. So, yeah, it.
Speaker Change: The Canadian real estate market.
Speaker Change: It is.
Speaker Change: Bit of a turmoil.
Speaker Change: So it's really a heads up game lending in that area.
Speaker Change: We've been at it for I guess my case 48 years.
Speaker Change: So this is one of those periods of time, where you have to be really careful hence our focus on the government insured CMA sea mortgages and we.
Speaker Change: We intend to keep that focus.
Speaker Change: And we tend to lend to our clients that we've gone to for decades.
Speaker Change: Okay.
Speaker Change: The London, Ontario area.
Speaker Change: So yeah.
David Taylor: if like you and our real estate developer clients are, for the most part, sitting on a lot of cash, sort of waiting until things smooth out a bit in the economy.
Speaker Change: If.
Speaker Change: He was not a real estate developer clients are.
Speaker Change: For the most part.
Speaker Change: Sitting on a lot of cash sort of wait until things smooth out a bit.
Speaker Change: The economy.
Unknown Executive: Great, appreciate you answering all the questions, David. No problem, Tim, but maybe I'll say New York. I'm heading in there. next week sometime. Okay, yeah, we'll be in touch. Thank you and once again if you would like to ask a question, simply press star 1 on your telephone keypad.
David: Great I appreciate you answering all the questions David.
David: Oh, no problem, Tim, but maybe I'll say, New York I'm hidden in there. Thanks.
David: Next week sometime.
Speaker Change: Okay, Yeah, we'll be in touch.
Speaker Change: Yeah.
Speaker Change: Thank you and once again, if you would like to ask a question simply press the star one on your telephone keypad.
Andrew Scott: Your next question comes from the line of Andrew Scott with Roth Capital Partners. Please go ahead. Well, actually, Andrew, it surprised me the Canadian portfolio grew in that all the stats in Canada are pretty negative, like a consumer sentiment at an all time low, insolvencies at an all time high. So I was surprised to see any growth in Canada. I think last quarter, I said The vertical really is home improvement, and I suppose, you know, maybe that's to be expected. Canadians are buying new furnaces and energy-efficient furnaces and hot water heaters and that sort of thing.
Andrew Scott: Your next question comes from the line of Andrew Scott Roth Capital Partners. Please go ahead.
Andrew Scott: Hey, good morning, and thank you for taking my questions.
Andrew Scott: So my first one here is a little bit of a two part or you guys had a nice growth in E. R. P. P portfolio. So.
Andrew Scott: So kind of breaking it out by geography with the softness.
Andrew Scott: In the Canadian economy can you just kind of talk about what verticals you did see strength in and then maybe within the active U S portfolio is there anything you've kind of learned that surprised you. Thus.
Andrew Scott: Thus far.
Andrew Scott: Well.
Andrew Scott: Andrew It's surprising me the Canadian portfolio grew in the.
Speaker Change: All those stats in Canada pretty negative.
Speaker Change: Consumer sentiment at an all time low insolvencies that all time high.
Speaker Change: And so I was surprised to see any growth in Canada, I think at last quarter, I said that but.
Speaker Change: The the vertical it really is Holden.
Speaker Change: Home improvement and I suppose.
Speaker Change: But maybe maybe that's to be expected the Canadians are buying new furnaces, and energy efficient furnaces and hot water heaters.
David Taylor: They're saving them, ultimately, in monthly expenses. So that's where we see the growth in Canada, still, strangely enough, and it's probably gonna continue right through the end of the year. So you may very well see about a 10% increase year over year in the RPP. in Canada. And Of course, on the other side of that, we're seeing 22% growth year over year in the insolvency deposits, which are helping drive the expansion of our margin. In the United States, I suppose the lesson is that The alternate source of financing is securitization and the credit spreads in that area have been pretty narrow.
Speaker Change: Sort of things are saving them ultimately in the months and months of your expenses.
Speaker Change: So that's where we see the growth in Canada.
Speaker Change: Strangely enough and.
Speaker Change: It's probably going to continue right through the end of the year. So you may very well see a about a 10% increase year over year in the RTP.
Speaker Change: In Canada.
Speaker Change: <unk>.
Speaker Change: Of course on the other side of that we're seeing 22% growth year over year, and the insolvency deposits, which are helping drive our the expansion of our of our margins in the United States.
Speaker Change: The I suppose the lesson is that.
Speaker Change: The alternate source of financing as a securitization.
Speaker Change: And the credit credit spreads in that area have been pretty narrow so even though.
David Taylor: So even though, first, everybody we talked to in the States wants to sign up for our program as a sort of a continuous, steady, reliable source of capital to fund their loans, the market is giving money pretty cheap right now. So it means that we're maybe not the top priority that it would be otherwise if credit spreads were really wide. So that's an American point of sale customers tend to be a lot larger than the Canadian ones. But the Canadian ones don't have, because of their size, don't have really access to the securitization programs. But the American ones do because they're so much larger.
Speaker Change: First everybody we talked to you in the states wants to sign up for our program out outside of kind of sort of a continuous steady reliable source of capital to fund their loans.
Speaker Change: The market is giving you money pretty cheap right now.
Speaker Change: So it means that we're maybe not the top priority.
Speaker Change: That would be otherwise if credit spreads are really wide.
Speaker Change: So that's.
Speaker Change: And American point of sale customers tend to be a lot larger than the Canadian ones.
Speaker Change: But they came ones don't have because they're of size don't have any access to the to the securitization programs by the American ones do because theres, so much larger and so their appetite.
David Taylor: And so their appetite for our program is sort of modified by the credit spread.
Speaker Change: For our program.
Speaker Change: Hum sort of modified by the credit spreads.
David Taylor: really appreciate the detail there. And second one for me, if I may, you guys added a additional deposit broker in the quarter, noted this could potentially be a tailwind to NIM. So can you kind of talk us through how that could be a benefit, guys, and if you're interested to, you know, further expand your network? Well, absolutely right. We're fortunate that Bank of Montreal put us on their board. In my early career, I started off with Bank of Montreal, so it was justice that they should have us on their board. Bank of Montreal is a huge channel for distributing our deposits.
Speaker Change: Really appreciate the.
Speaker Change: Detailed there and second one for me if I may you guys added a additional deposits broker in the quarter.
Speaker Change: Noted this could potentially be a tailwind to men. So can you kind of talk us through how that could be a benefit you guys and if you're interested to.
Speaker Change: Further expand your network.
Speaker Change: Well, absolutely right, where we're at.
Speaker Change: And at the bank of Montreal put us on their board.
Speaker Change: In my early career I started off with bank of Montreal. So it was it was just it was justice.
Speaker Change: You said that it has on their on their board.
Speaker Change: Bank My Charles a huge a huge channel for distributing our deposit so that is a tailwind on that that would be contributing to our net interest margin expansion and the diversity of our deposit base. So we're thankful of bank of Montreal outages.
David Taylor: So that is a tailwind on them that would be contributing to our net interest margin expansion and the diversity of our deposit base. So we're thankful that Bank of Montreal added us. There may be one large bank left in Canada to put us on their board. And again, that helps with the diversity and the expansion. And just to spell it out, the more channels we have that distribute our deposits, the less we have to pay for our deposits and that we don't overwhelm one particular channel because we're so well distributed all across the entire country of Canada.
Speaker Change: Maybe one large bank left in Canada, but it was on their board.
Speaker Change: And again that helps with the diversity and and the NIM expansion.
Speaker Change: And spell it out the more channels we have.
Speaker Change: That distribute our deposits.
Speaker Change: The less we have to pay for our deposits and that we don't overwhelm one one particular channel because it works so well distributed all across the entire country of Canada. So so that's helpful.
David Taylor: So that's helpful. And like I said, there may be one more bank that in the very early days of when I was just conceiving this model with actually a supplier, and then the market changed a bit, the industry changed. So we should really sign them up too.
Speaker Change: And they.
Speaker Change: Like I said, there may be one more bank debt.
Speaker Change: In the very early days of Oh. It was just conceiving. This this model was actually a supplier and then the market changed a bit the industry changed so.
Speaker Change: We should really signed them up to and then we have the entire country.
David Taylor: And then we have the entire country.
Andrew Scott: Great, we really appreciate the call and thanks for taking my question. Well, thank you, Andrew. See you in New York soon. Yeah, that'd be great.
Speaker Change: Great really appreciate the color and thanks for taking my questions.
Andrew Scott: Well, thank you Andrew.
Andrew Scott: See you in New York soon.
Andrew Scott: Yeah that'd be great.
Jeff Wogman: And your next question comes from the line of Jeff Wogman with Raymond James, please go ahead. Hey, good morning, David and John. Good morning. It's been a while. Are you in the baking hot St. Petersburg right now? No, no, I'm in actually getting warmer Toronto. Oh, oh, no kidding. Sorry. Yeah. I thought you were down in the headquarters. I hope to be in London sometime through the summer.
Speaker Change: And your next question comes from the line of Jack Jack Logmein Raymond James. Please go ahead.
Jack: Hey, good morning, David and John.
Andrew Scott: Good morning.
Andrew Scott: It's been Hawaii safeguards.
Andrew Scott: In the baking Hot St. Petersburg, right now no.
Andrew Scott: No no I'm I'm in actually getting warmer Toronto.
Speaker Change: Oh, Oh, no kidding, sorry, sorry, yeah.
Speaker Change: But you were down.
Speaker Change: Quarters.
Speaker Change: [laughter] now now hoping to be in London, and sometimes through the summer.
David Taylor: But anyway, just a general question, given the political climate, and, you know, the expansion and wisely, I think Concentration. to the United States. Are you experiencing or hearing of any possible pushback? No, not yet. But, you know, we've, we've heard sort of statements earlier on about cane bags in general. And it hasn't affected us negatively. In fact, on the balance, the current US administration's for Digital Commerce has helped us a lot. As you know, we have the world's first digital deposit receipt. We pioneered it in Canada under the Canadian regulatory environment, and now it seems that it's absolutely perfect for what the U.S.
Speaker Change: But anyway.
Speaker Change: Just a general question given the political climate.
Speaker Change: Well the expansion and Oh wisely I think liver.
Speaker Change: Concentration over time.
Speaker Change: The business to the United States.
Speaker Change: Are you experiencing or hearing of any possible pushed back given the political.
Speaker Change: Environment regarding our furnace in the U S.
Speaker Change: No not yet but.
Speaker Change: We've heard sort of statements earlier on about came bags in general and.
Speaker Change: It hasn't affected us negatively impact.
Speaker Change: On the balance.
Speaker Change: The current.
Speaker Change: Current U S administrations.
Speaker Change: Propensity for digital Commerce.
Speaker Change: It has helped us a lot.
Speaker Change: We have.
Speaker Change: The world's first digital deposit received we pioneered it in Canada under the K regulatory environment.
Speaker Change: Now it seems that it's absolutely perfect for what the U S administration is talking about so other than that a little bit of rhetoric about Canadian banks.
David Taylor: administration is talking about. So other than that little bit of rhetoric about Canadian banks, the overwhelming positive thing is the endorsement of digital commerce and our digital deposit receipt, of course, is at least two years ahead of the game. We not only pioneered it in the regulatory environment, but we also obtained a SOC type two audit, which you can only get by having it actually be functional. So everybody else that's dreaming of doing this, they've got a few years to go, and we've got this thing ready to roll in the United States. So if anything, on the balance, it's positive to be in the United States.
Speaker Change: <unk>.
Speaker Change: The overwhelming positive thing is the endorsement of digital Commerce and art are digital deposit receipt of courses at least two years ahead of the game.
Speaker Change: We pioneered it.
Speaker Change: And the regulatory environment, but we also obtained a sock type two audits.
Speaker Change: On it which is.
Speaker Change: You can only get by having it actually be functional.
Speaker Change: So everybody else its dreaming of doing this.
Speaker Change: A few years to go and we've got we've got this thing.
Speaker Change: Ready to roll in the United States, So anything on the balance sheets, it's positive to be in the United States.
David Taylor: Alright, so now we'll propose talking about tax increases on foreigners investing in the states and the increase in withholding taxes. David Feaster, Joseph Yanchunis, Timothy Switzer, John Asma, Brent Hodge, VersaBank Yeah, a good portion of our shareholders are US other than our major holding company. It's 80% U.S. shareholder. But it won't impact your business as an operational thing. No. I don't see it. But we're part of the part of this restructuring will give us insights into how we can efficiently structure ourselves to minimize our tax burdens and foreign exchange translations that we saw us get hit with this quarter.
Speaker Change: Alright, so I now propose that we're talking about tax increases on foreigners investing in the states and the increase in withholding taxes.
Speaker Change: For.
Speaker Change: And that sort of thing, but I don't know about business operation. So that's I haven't heard anything about that.
Speaker Change: Yeah.
Speaker Change: A good portion of our shareholders are U S.
Speaker Change: Other than our own.
Speaker Change: Sure.
Speaker Change: Only company.
Speaker Change: It's 80% U S shareholders.
Speaker Change: Uh-huh.
Speaker Change: But it won't impact our business as well as an operational thing with it.
Speaker Change: No go ahead.
Speaker Change: Okay.
Speaker Change: Let's see it.
Speaker Change: At.
Speaker Change: Okay.
Speaker Change: Part of the.
Speaker Change: Part of this restructuring will.
Speaker Change: Give us insights into how we can efficiently structure ourselves to minimize our tax burdens and for.
Speaker Change: In exchange translation, so you saw us getting hit with the first quarter.
David Taylor: So that's all underway. Also obviously, with us adopting the same holding company structure that the other international U.S. banks have. that minimizes the risk that there might be some sort of aversion to Canadian banks in the United States. We will have a holding company structure identical to that of, say, J.P. Morgan. So that minimizes all that stuff.
Speaker Change: And that's all underway.
Speaker Change: Also obviously.
Speaker Change: With adopting the same holding company structure.
Speaker Change: Structure that the other international.
Speaker Change: Banks have.
Speaker Change: Now it minimizes the risk that there might be some sort of.
Speaker Change: Version two Canadian banks.
Speaker Change: In the United States, we will have a holding company structure identical to that of say J P. Morgan.
Speaker Change: So that minimizes although all that stuff.
Speaker Change: Okay.
Jeff Wogman: Okay, I'll give you a shout and hopefully when you guys are in London, I'll make a plan to come down and see you. Yeah, well, I'm in London right now. I'm right at the VersaBank Innovations Center of Excellence here. But alas, I'm without an airplane, so I can't fly on the island to visit with you. I've got a set of... No, I'm in Toronto. It's Jeff. Yeah, I know. Well, Island Airport, of course. Oh, the Island Airport. I forgot about that. Yeah, that's a 35-minute flight for me out of London Airport here where we're located.
Speaker Change: Oh Wow.
Speaker Change: I'll give you a shout and hopefully you guys around London, I'll make a plan to come down in Q1.
Speaker Change: Yeah, well I mean, I'm in London, right now right at the <unk> innovations center.
Speaker Change: Excellence here and but last time without an airplane so I cant find the island a visit with you.
Speaker Change: I've got a set of eyes and Toronto.
Speaker Change: Yeah, I know well Island airport of course, all the island I forgot about that yeah, that's right.
Speaker Change: That's a 35 minute flight for me out of out of our London airports Huber located but I've got a new set of garmin instruments going in in.
David Taylor: But I've got a new set of Garmin instruments going in, and it seems to take forever. Like a lot of things in life nowadays, everything seems to take a lot longer than you hoped for. That's right.
Speaker Change: It seems to take forever like a lot of things in lifestyle separately ships and take a lot longer than that right.
Jeff Wogman: Well, I'm tied up this month. We've got our kids in from overseas, so it'll be July or August, hopefully July. It'll be sometime in July. But I'll message you and John. Yeah, absolutely. I'm in L.A. Island regularly once I got my wings back. Yeah, I'm sure. All right. Well, thanks again. Thanks very much. Okay, thank you.
Speaker Change: I'm I'm tied up this month, we've got our kids from overseas so it'll.
Speaker Change: It'll be July August hopefully July it will be sometime in July, but all our message to you and John on that.
Speaker Change: Yeah, absolutely yeah, Yeah, I'm, an all day all great regularly so I got to my wings back.
Speaker Change: Alright, well thanks, thanks very much.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Unknown Executive: And we have no further questions at this time.
Speaker Change: And we have no further questions at this time I would like to turn it back to David Taylor for closing remarks.
David Taylor: I would like to turn it back to David Taylor for closing remarks. Well, I'd like to thank everyone for joining us today, and I look forward to speaking to you at the time of our third quarter results. Thank you, presenters, and ladies and gentlemen, this concludes today's conference call. Thank you all for joining.
Speaker Change: Well I'd like to thank everyone for joining us today and I look forward to speaking to you at the time of our third quarter results.
Speaker Change: Hello.
Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for joining you may now disconnect.
Unknown Executive: You may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].