Note 22 - Operating Segments

12 Months Ended

Oct. 31, 2022

Disclosure of entity's operating segments [text block]

22.

Operating Segments:

The Bank has established two reportable operating segments, those being Digital Banking and DRTC. The two operating segments are strategic business operations providing distinct products and services to different markets and are separately managed as a function of the distinction in the nature of each business. The following summarizes the operations of each of the reportable segments:

Digital Banking – The Bank employs a business-to-business model using its proprietary financial technology to address underserved segments in the Canadian and US banking markets. VersaBank obtains its deposits and provides the majority of its loans and leases electronically via innovative deposit and lending solutions for financial intermediaries.

DRTC (cybersecurity services and banking and financial technology development) - Leveraging its internally developed IT security software and capabilities, VersaBank established a wholly-owned subsidiary, DRTC, to pursue significant large-market opportunities in cybersecurity and to develop innovative solutions to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities.

The basis for the determination of the reportable segments is a function primarily of the systematic, consistent process employed by our chief operating decision maker, the Chief Executive Officer, and the Chief Financial Officer in reviewing and interpreting the operations and performance of each segment. The accounting policies applied to these segments are consistent with those employed in the preparation of our consolidated financial statements, as disclosed in note 3 Segment reporting.

Performance is measured based on segment net income, as included in the Bank’s internal management reporting. Management has determined that this measure is the most relevant in evaluating segment results and in the allocation of resources.

Following is information regarding the results of each reportable operating segment as at and for the year ended October 31, 2022 and 2021:

(thousands of Canadian dollars)
for the year ended	October 31, 2022										October 31, 2021
	Digital		DRTC			Eliminations/			Consolidated		Digital			DRTC		Eliminations/			Consolidated
	Banking					Adjustments					Banking					Adjustments
Net interest income	$	76,666	$	-		$	-		$	76,666	$	60,157		$	-	$	-		$	60,157
Non-interest income		52		5,839			(165	)		5,726		(60	)		5,411		(151	)		5,200
Total revenue		76,718		5,839			(165	)		82,392		60,097			5,411		(151	)		65,357

Provision for (recovery of) credit losses		451		-			-			451		(438	)		-		-			(438	)
		76,267		5,839			(165	)		81,941		60,535			5,411		(151	)		65,795

Non-interest expenses:
Salaries and benefits		22,303		4,493			-			26,796		18,354			1,889		-			20,243
General and administrative		17,614		1,283			(165	)		18,732		10,289			972		(151	)		11,110
Premises and equipment		2,475		1,390			-			3,865		2,403			1,250		-			3,653
		42,392		7,166			(165	)		49,393		31,046			4,111		(151	)		35,006

Income (loss) before income taxes		33,875		(1,327	)		-			32,548		29,489			1,300		-			30,789

Income tax provision		9,744		146			-			9,890		7,817			592		-			8,409

Net income (loss)	$	24,131	$	(1,473	)	$	-		$	22,658	$	21,672		$	708	$	-		$	22,380

Total assets	$	3,267,479	$	22,345		$	(23,826	)	$	3,265,998	$	2,411,790		$	22,309	$	(19,013	)	$	2,415,086

Total liabilities	$	2,912,249	$	25,755		$	(22,681	)	$	2,915,323	$	2,077,643		$	23,205	$	(17,868	)	$	2,082,980