VersaBank (TSX:VBNK) Receives TSX Approval for Normal Course Issuer Bid

Highlights

• VersaBank has received approval from the Toronto Stock Exchange to proceed with a Normal Course Issuer Bid.

• The bid allows VersaBank to repurchase up to a specified number of its common shares.

• The purchases will be made through open market transactions on the TSX and Nasdaq.

The banking sector plays a crucial role in the overall economy, offering various TSX Financial Stocks services ranging from savings accounts and loans to investment products. Canadian banks, such as VersaBank (TSX:VBNK), navigate a highly competitive landscape with significant regulatory oversight. Banks also focus on shareholder value, often utilizing tools like share buybacks to optimize their capital structure.

VersaBank Announces NCIB Approval

VersaBank has announced that it has obtained approval from the Toronto Stock Exchange to execute a Normal Course Issuer Bid, allowing the bank to repurchase and cancel a specified number of its common shares. This approval marks a strategic move for VersaBank, signaling its confidence in the value of its shares despite challenging market conditions in the banking sector.

Purpose of the NCIB

The objective of this Normal Course Issuer Bid is to enable VersaBank to purchase its common shares for cancellation, thereby reducing the number of shares outstanding in the market. This process may improve the value of the remaining shares and reflects the bank's belief in its financial strength. VersaBank's leadership emphasized that its recent performance and current market valuation have created an environment where share repurchases are considered a strategic decision.

Details of the Normal Course Issuer Bid

VersaBank plans to repurchase common shares in accordance with the rules established by the Toronto Stock Exchange. The bank has set a limit on the number of shares it can buy back, which will be determined based on the average daily trading volume. Additionally, there are specific conditions under which daily repurchases can be made, ensuring that they occur in an orderly and compliant manner. The repurchase program will run for a year, with an option for earlier completion if the set goals are met before the scheduled end date.

Share Repurchases Through TSX and Nasdaq

The repurchases will occur through both the Toronto Stock Exchange and Nasdaq, in line with the applicable rules for each exchange. VersaBank is committed to making these purchases at market prices on the open market. All shares repurchased under this initiative will be canceled, meaning they will not be reissued, reducing the total number of shares available for trading.

Operational Efficiency and Profitability

VersaBank’s announcement follows a period of positive financial results, with the bank highlighting its growing profitability despite challenges in the North American banking environment. The institution has reached a stage where it is seeing notable improvements in its operational efficiency and return on common equity, as its loan portfolio continues to scale. These developments align with the bank's belief in the undervaluation of its shares, reinforcing the rationale for the buyback strategy.

Impact on Shareholders

For shareholders, the buyback program may offer value in the form of reduced share supply, which can be beneficial in specific market conditions. The decision to repurchase shares is part of the bank's ongoing strategy to optimize its capital structure and maintain shareholder value. While the purchases are not guaranteed to result in immediate changes to stock price, the program reflects VersaBank’s approach to leveraging its operational efficiency to benefit stakeholders.

Timeline and Conditions for Repurchases

The repurchase program will officially begin at the end of April and is scheduled to run for a year, concluding in the following April. The program’s success will depend on various factors, including market conditions and the number of shares available for repurchase. Any share purchases made under this initiative will be completed under the guidelines set by the Toronto Stock Exchange and Nasdaq, ensuring that the process is transparent and in compliance with market rules.