VersaBank, a provider of digital banking and cyber security solutions, through its wholly-owned U.S. subsidiary, VersaHoldings US, signed a definitive agreement to acquire Minnesota-based Stearns Bank Holdingford, a privately-held, wholly-owned subsidiary of Stearns Financial Services for an estimated $13.5 million (subject to adjustment at closing).
Stearns Bank Holdingford is an OCC-chartered bank that focuses on small business lending. It is expected to add approximately $60 million in total assets to VersaBank, subject to any adjustments at closing. Upon closing, Stearns Bank Holdingford will be renamed VersaBank USA. Stearns Financial Services and its other subsidiaries (Stearns Bank and Stearns Bank Upsala) will continue to operate as usual.
The acquisition will provide VersaBank access to U.S. deposits to fuel the growth of its receivable purchase program business, which VersaBank recently launched in the United States following a period of growth in Canada. The acquisition is also expected to be accretive to VersaBank’s earnings per share within the first year after closing, VersaBank USA is expected to be well capitalized on closing with a total capital ratio in excess of 10%.
“This acquisition represents a transformational next step in VersaBank’s long-term growth strategy,” David Taylor, president and CEO of VersaBank, said. “We have built a tremendously successful digital banking operation in Canada, providing innovative, technology-based solutions to serve unmet needs, which has driven outsized earnings growth. Now, with the acquisition of U.S.-based SBH, we will have a platform from which to replicate that success in the western world’s largest banking market, in particular, through acceleration of the roll-out of our innovative and highly differentiated receivable purchase program solution, which has been very successful in Canada, in the US$1.8 trillion and growing U.S. consumer and small business point-of-sale financing market. It has been a pleasure working with the team at SFSI and we look forward to exploring future opportunities for collaborations to our mutual benefit.”
“For over 45 years, Stearns Bank has proudly served the strong and vibrant Holdingford community, and we are excited to continue to do so in our partnership with VersaBank,” Heather Plumski, president of Stearns Bank Holdingford, said. “It speaks volumes that our Canadian neighbor, VersaBank, has chosen Holdingford as the best location to launch its U.S.-based banking and financing. VersaBank shares our values and culture, and we’re confident VersaBank will be welcomed with open arms in Holdingford when the community gets to know our Canadian partner.”
“Congratulations to Holdingford on its continued growth and for attracting VersaBank for its U.S. expansion plan,” Kelly Skalicky, president and CEO of Stearns Financial Services, said. “David and the VersaBank team are terrific and proving to be a perfect partner. Together, we will deliver even more to our local communities and beyond.”
Closing of the acquisition is expected before the end of VersaBank’s fiscal year on Oct. 31 and is subject to regulatory approval in both the United States and Canada.
Raymond James & Associates served as financial advisor, Davis Polk & Wardwell served as legal counsel and Chain Bridge Partners acted as regulatory advisor to VersaBank for this transaction.