See reconciliation of Core Cash Earnings to Net Income below.“During the third quarter, we continued to reap the benefits of success in leveraging our proprietary technology to offer innovative solutions that address unmet needs in the banking sector,” said David Taylor, President and CEO, VersaBank. Historically, VersaBank has lent to asset categories that have higher regulatory risk weightings. You must click the activation link in order to complete your subscription. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, many of which are out of our control. Net Interest Margin for the third quarter of 2020 decreased to 2.53% from 3.12% year over year, with the primary driver of this trend being higher liquidity costs attributable to management’s decision to maintain higher cash balances as a prudent liquidity practice given the material deterioration of the Canadian economy due to COVID-19. 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. With better visibility into the economic effects of the pandemic, we have been steadily redeploying cash into interest earning loans. VersaBank expects its Insolvency Professional deposits to increase significantly as bankruptcies increase due to the ongoing economic impact of the COVID-19 pandemic and is currently exploring other low-cost deposit channels that it believes will further lower its cost of funds. Further, the Bank continues to maintain a robust capital position having more than $90 million in surplus total regulatory capitalNet income for the third quarter of 2020 decreased to $4.4 million, or $0.18 on a per share basis, as a function primarily of lower interest income attributable to lower average earning assets and higher liquidity costs, offset partially by lower cost of funds, lower provision for credit losses and lower non-interest expenses. In particular, we are seeing renewed activity in our Point-of-Sale Loan and Lease business as Canadians have emerged from lock-down and resumed “big-ticket” discretionary purchases. VersaBank’s cost of funds for the third quarter of 2020 was 1.59%, down 39 bps from a year ago and 16 bps from the second quarter of this year.
Despite a modest recovery of credit losses in the current quarter, earnings from operations in fiscal 2020 continue to be impacted by higher provisions for credit losses which were $238,000 on a year to date basis compared to a recovery of credit losses of $319,000 for the same period a year ago as the Bank remains cautious given the uncertainty of the recovery profile of the Canadian economy.Core Cash Earnings (“CCE”) and CCE per share for the quarter decreased to $6.0 million and $0.29, respectively, as a function of the same factors set out above. 2019 Special Meeting of Shareholders & Management Information Circular. This is yet further testament to our low-risk model and culture of risk mitigation throughout our organization. You can unsubscribe to any of the investor alerts you are subscribed to by visiting the ‘unsubscribe’ section below. Even during this unprecedented environment, VersaBank continues to generate the highest net interest margin amongst publicly traded Canadian banks. See definitions under ‘Basis of Presentation’ in the Q3 2020 Management’s Discussion and Analysis.Core Cash Earnings is calculated as pre-tax earnings less non-core operating income/expenses. In our lending business, in addition to a return to expansion of the Point-of-Sale portfolio, we are optimistic about the prospects for the launch of our revolutionary Instant Mortgage high-volume app for real estate developers and brokers, for which beta testing has resumed post-“lock down”.
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