Mr. David Taylor reports

VERSABANK SIGNIFICANTLY EXPANDS ADDRESSABLE MARKET FOR STRUCTURED RECEIVABLE PROGRAM IN THE U.S. WITH LAUNCH OF FUNDING TO SMALL BUSINESS SECTOR

As the next step in the ramp-up of VersaBank's structured receivable program (SRP) in the United States, it has significantly expanded the addressable market for its SRP in the U.S. through the launch of its SRP, including its groundbreaking real-time SRP, to point-of-sale originators of small business loans and leases. Prior to the launch of the SRP for the small business sector, all the bank's SRP fundings in the U.S. have been to the retail consumer sector. The launch enables VersaBank to add SRP partners that are focused on lending to the small business sector, while also enabling existing partners to expand their utilization of the bank's SRP to small business loan originations. In anticipation of this launch, the bank has developed a robust pipeline of potential new SRP partners in the U.S.

David Taylor, founder and president, VersaBank, commented: "The considerable growth and success of our SRP in the U.S. to date has been entirely through funding of point-of-sale loans to the retail consumer sector, resulting in pent-up demand for our SRP for funding of the small business sector -- a sector we have serviced in Canada since 2010 and a major contributor to our growth there. We estimate that making our SRP available to partners for the funding of small business loans and leases more than doubles the size of our market opportunity in the U.S., addressing a need within our current SRP partners, while enabling us to add new partners, all of which supports our target to generate at least $3-billion (U.S.) in additional U.S. SRP fundings next year."

"Once again, VersaBank is leading through innovation, using our sophisticated, proprietary banking technology to address an underserved banking market with a better alternative. Small businesses are a massive and vital part of the U.S. economy and VersaBank is proud to now offer a new and unique reliable, efficient and economical funding solution to point-of-sale companies providing financing to this sector. Our SRP and real-time SRP will better enable U.S. small businesses to do what they do -- invest and grow in their role as the true powerhouses of U.S. economic activity."

About VersaBank's structured receivable program (SRP) and real-time SRP

VersaBank's structured receivable program (SRP) 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 (that is, consumer home improvement/HVAC (heating, ventilation and air conditioning) 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 financing with economically attractive capital designed to maximize return on equity while employing VersaBank's proprietary, state-of-the-art banking technology.

VersaBank's real-time SRP is a revolutionary innovation in funding for point-of-sale financing companies, providing the same reliable, economically attractive funding solution as the bank's existing SRP, with the additional benefit of eliminating the need for SRP partners to warehouse multiple receivables over a period of time (typically from five to 30 or more days). This enables the bank's SRP partners to finance individual loans within just hours, reducing the overall financing cost and the need for warehouse financing. It also further strengthens VersaBank's exceptional risk mitigation capabilities by enabling the bank to better leverage its own, internal AI platform through evaluation of the partner loans underlying the SRP receivables on an individual basis.

About VersaBank

VersaBank is a North American bank with a difference. Federally chartered in both Canada and the United States, VersaBank has a branchless, digital, business-to-business model based on its proprietary technology designed to address underserved segments of the banking industry. VersaBank obtains substantially all of its deposits and undertakes the majority of its funding activities electronically through financial intermediary partners. In August, 2024, VersaBank launched its unique structured receivable program funding solution for point-of-sale finance companies, which has been deployed in Canada for over 15 years, to the U.S. market. VersaBank also owns Minnesota-based DRT Cyber Inc., which provides cybersecurity services to address the rapidly growing volume of cyber threats challenging financial institutions, multinational corporations and government entities. Through DRT Cyber Inc., VersaBank owns proprietary intellectual property and technology designed to enable the next generation of digital assets for the banking and financial community, including the bank's proprietary Real Bank Tokenized Deposits.

VersaBank's shares trade on the Toronto Stock Exchange and Nasdaq under the symbol VBNK.

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