LONDON,
ON, Sept. 3, 2024 /PRNewswire/
- VersaBank ("VersaBank" or the "Bank") (TSX: VBNK) (NASDAQ:
VBNK), a North American leader in business-to-business digital
banking, as well as technology solutions for cybersecurity, today
announced that, on August 30, 2024,
it closed its previously announced acquisition of Stearns Bank
Holdingford N.A. ("SBH"). SBH is a national bank chartered
under the laws of the United
States and regulated by the national Office of the
Comptroller of the Currency (OCC) (the "Acquisition"). Upon
closing, SBH was renamed VersaBank USA N.A. ("VersaBank USA"). The closing of the Acquisition marks
the formal launch of VersaBank's unique Receivable Purchase Program
(RPP) funding solution for point-of-sale finance companies in the
underserved multi-trillion-dollar U.S. market.
VersaBank acquired SBH, a $62
million asset-sized bank from Stearns Financial Services,
Inc. ("Stearns Financial"), a multi-bank holding company owning
several banks including its flagship Stearns Bank National
Association having over $3 billion in
assets.
"This is a transformational event in VersaBank's growth
strategy, enabling us to bring our unique and highly attractive RPP
solution, which has been very successful in Canada, to the largest point-of-sale financing
market in the world," said David
Taylor, President and Chief Executive Officer, VersaBank.
"Over the last 14 years in Canada,
we have proven the value proposition of our RPP solution to
point-of-sale finance companies, while validating the very low-risk
nature of the RPP cash holdback model, both of which are the direct
result of our proprietary, state-of-the-art banking technology.
To date, our RPP portfolio has never had a loan loss. We are
actively working toward finalizing our first U.S. RPP partners as
VersaBank USA."
"Importantly, because our Bank effectively operates in the
cloud, we are able to launch our RPP solution in the U.S with
essentially no capital expenditures and de minimus
additional operating expenditures. As a result, the
monumental U.S. RPP opportunity, alongside our expected continued
steady growth in Canada, is
expected to generate a strong and sustainable expansion of our loan
portfolio for years to come, enabling us to further capitalize on
the significant operating leverage in our digital, branchless model
to drive growth in profitability and return on common equity and
efficiency, that we believe is unmatched in the North American
banking industry."
Mr. Taylor added, "With the acquisition of SBH complete, I want
to personally reiterate VersaBank's commitment to continuing to
serve the community of Holdingford, building on the proud legacy of
the SBH team."
"The community of Holdingford is in good hands with VersaBank
and I have full confidence that they will continue to provide the
same levels of service that SBH customers have come to expect,
while playing a meaningful role in support of the broader
community," said Kelly Skalicky, President and Chief Executive
Officer, Stearns Financial.
"It has been a pleasure to work with the VersaBank team, we share
important core values and we at Stearns Financial look forward to a
long fruitful relationship with VersaBank as we continue to
discover a myriad of additional opportunities for collaboration
between our two organizations."
Summary of the Acquisition
VersaBank acquired 100% of the outstanding shares of SBH from
Stearns Financial for cash consideration of approximately
US$14.0 million (CAD$19.3 million). As part of the
Acquisition, VersaBank acquired approximately US$61.1 million in assets and assumed
approximately US$54.1 million in
deposits and other liabilities. Upon closing, SBH was renamed
VersaBank USA N.A. and VersaBank
anticipates that the Acquisition will be accretive to earnings per
share within the first year following the closing.
Stearns Financial's flagship and largest national bank, Stearns
Bank National Association ("Stearns Bank") (headquartered
in St. Cloud, Minnesota)
having more than $3 billion in
assets, and Stearns Bank Upsala National Association (located in
Upsala, Minnesota), are not part
of the Acquisition and will continue to operate independently of
VersaBank as they have for more than 60 years.
Raymond James & Associates, Inc. served as financial
advisor, Davis Polk & Wardwell LLP served as U.S.
legal counsel, Stikeman Elliott LLP served as Canadian legal
counsel and Chain Bridge Partners, LLC acted as regulatory advisor
to VersaBank in the Acquisition. Stinson LLP served as legal
counsel to Stearns Financial and SBH.
About VersaBank's Receivable Purchase Program (RPP)
VersaBank's Receivable Purchase Program (RPP) is an innovative
and highly attractive digital funding solution for finance
companies that lend money to consumers and small businesses for
what are typically "big ticket" purchases (e.g. consumer home
improvement/HVAC projects and a wide variety of commercial
equipment). It was specifically designed to address an unmet need
in the market for consistently available, readily accessible,
economically attractive capital using VersaBank's proprietary,
state-of-the-art banking technology. Consistent with its
branchless, business-to-business, partner-based digital banking
strategy, VersaBank's RPP enables it to access the massive and
growing consumer and small business financing market in an
indirect, efficient and highly risk-mitigated manner.
As of July 31, 2024, VersaBank's
RPP portfolio exceeded CAD$3.1
billion (US$2.3 billion) and
has been growing at compounded annual rate of over 26% over the
last five years as of fiscal year ended October 31. Since VersaBank's RPP was first
launched in Canada in 2010 and
launched on a limited basis in the U.S. in April 2022, VersaBank has provided more than
CAD$9 billion (US$6.5 billion) in funding to North American
finance companies.
About Stearns Financial Services, Inc.
Stearns Financial Services Inc. ("Stearns Financial") is a
multi-bank holding company headquartered in St. Cloud, MN that is privately held with its
more than 500 employees owning 25% of Stearns Financial and profit
sharing as employee-owners through its Employee Stock Ownership
Plan established over 40 years ago. Stearns Financial is the
holding company for Stearns Bank National Association and Stearns
Bank Upsala, N.A. As Stearns Financial's flagship, Stearns Bank
National Association has over $3
billion in assets with physical branch locations in
Minnesota, Florida, and Arizona and branchless nationwide operations
for over 20 years across all 50 states, proudly financing
affordable housing nationwide for more than 40 years and currently
banking over 35,000 small business customers nationwide.
Stearns Bank is consistently
recognized as one of the Best Banks to Work For, most recently
ranked by American Banker as the 5th best bank to work for among
banks in the nation, while earning top rankings based on its strong
capital and earnings as one of the nation's highest-performing
banks. The Independent Banker's 2024 "Best of the Best" ranks
Stearns Bank as the 8th
best-performing bank in the U.S. among banks having more than
$1 billion in assets based on banks'
3-year average Return on Assets. Stearns
Bank and its employee-owners are driven by their passion to
help others achieve their greatest ambitions. For more
information, visit www.stearnsbank.com
About VersaBank
VersaBank is a North American bank (federally chartered in
Canada and the U.S.) with a
difference. VersaBank has a branchless, digital,
business-to-business model based on its proprietary
state-of-the-art technology that enables it to profitably address
underserved segments of the banking industry in a significantly
risk mitigated manner. Because VersaBank obtains
substantially all of its deposits and undertakes the majority of
its lending electronically through financial intermediary partners,
it benefits from significant operating leverage that drives
efficiency and return on common equity. In August 2024, VersaBank launched its unique
Receivable Purchase Program (RPP) funding solution for
point-of-sale finance companies, which has been highly successful
in Canada for nearly 15 years, to
the underserved multi-trillion-dollar U.S. market. VersaBank
also owns Washington, DC-based DRT
Cyber Inc., a North America leader
in the provision of cyber security services to address the rapidly
growing volume of cyber threats challenging financial institutions,
multi-national corporations and government entities.
VersaBank's Common Shares trade on the Toronto Stock Exchange
("TSX") and Nasdaq under the symbol VBNK. Its Series 1
Preferred Shares trade on the TSX under the symbol VBNK.PR.A.
Forward-Looking Statements
VersaBank's public communications often include written or oral
forward-looking statements. Statements of this type are included in
this document, and may be included in other filings and with
Canadian securities regulators or the U.S. Securities and Exchange
Commission, or in other communications. All such statements are
made pursuant to the "safe harbor" provisions of, and are intended
to be forward-looking statements under, the United States Private
Securities Litigation Reform Act of 1995 and any applicable
Canadian securities legislation. 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, including those
related to VersaBank USA, the
Acquisition's anticipated impact on earnings per share within the
first year following closing and/or VersaBank's Receivable Purchase
Program (RPP), 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 and
U.S. economy in general and the strength of the local economies
within Canada and U.S. 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 and the U.S. Federal
Reserve; 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 wars or conflicts including the crisis in
Ukraine and the impact of the
crisis on global supply chains and the Bank's 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, 2023.
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 and
others 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 the related
management's discussion and analysis or made from time to time by
the Bank or on its behalf.
Visit our website at: www.versabank.com
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