VERSABANK FOURTH QUARTER RESULTS DEMONSTRATE OPERATING LEVERAGE OF BUSINESS MODEL: STRONG GROWTH IN RPP ASSETS DRIVES RECORD REVENUE

VersaBank's 2025 annual audited Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") will be available today online at www.versabank.com/investor-relations, SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.shtml. Supplementary Financial Information will also be available on our website at www.versabank.com/investor-relations. All amounts are in Canadian dollars unless otherwise noted. All interim financial information within this earnings release is unaudited and based on interim Consolidated Financial Statements prepared in compliance with International Accounting Standard 34 Interim Financial Reporting, unless otherwise noted. All annual financial information herein was derived from VersaBank's 2025 annual audited Consolidated Financial Statements and MD&A.

LONDON, ON, Dec. 10, 2025 /PRNewswire/ - VersaBank (or the "Bank") (TSX: VBNK) (NASDAQ: VBNK), a North American leader in business-to-business digital banking, as well as technology solutions for cybersecurity, today reported its results for the fourth quarter and fiscal year ended October 31, 2025. All figures are in Canadian dollars unless otherwise stated.

CONSOLIDATED FINANCIAL SUMMARY

(unaudited)

As at or for the three months ended

As at or for the year ended

October 31

July 31

October 31

(thousands of Canadian dollars except per share amounts)

2025

Change

2024

Change

2025

2024

Change

Financial results

Total revenue

$ 35,092

$ 31,583

11 %

$ 27,285

29 %

$ 124,641

$ 111,633

12 %

Cost of funds*

3.15 %

3.33 %

(5 %)

4.11 %

(23 %)

3.37 %

4.04 %

(17 %)

Net interest margin*

2.29 %

2.25 %

2 %

2.12 %

8 %

2.18 %

2.27 %

(4 %)

Net interest margin on credit assets*

2.65 %

2.55 %

4 %

2.34 %

13 %

2.52 %

0 %

Return on average common equity*

3.89 %

4.94 %

(21 %)

5.28 %

(26 %)

6.11 %

10.16 %

(40 %)

Adjusted return on average common equity*

7.81 %

7.24 %

8 %

5.28 %

48 %

7.85 %

10.16 %

(23 %)

Net income

5,204

6,582

(21 %)

5,516

(6 %)

28,458

39,748

(28 %)

Adjusted net income*

10,549

9,670

9 %

5,516

91 %

36,891

39,748

(7 %)

Income per common share basic and diluted

0.16

0.20

(20 %)

0.20

(20 %)

0.90

1.49

(40 %)

Adjusted income per common share basic and diluted*

0.33

0.30

10 %

0.20

65 %

1.17

1.49

(21 %)

Balance sheet and capital ratios**

Total assets

$ 5,808,475

$ 5,477,489

6 %

$ 4,838,484

20 %

$ 5,808,475

$ 4,838,484

20 %

Book value per common share*

16.67

16.42

2 %

15.35

9 %

16.67

15.35

9 %

Common Equity Tier 1 (CET1) capital ratio

12.92 %

13.56 %

(5 %)

11.24 %

15 %

12.92 %

11.24 %

15 %

Total capital ratio

15.72 %

16.50 %

(5 %)

14.48 %

9 %

15.72 %

14.48 %

9 %

Leverage ratio

8.47 %

8.90 %

(5 %)

7.38 %

15 %

8.47 %

7.38 %

15 %

* See definition under 'Non-GAAP and Other Financial Measures' in the 2025 Annual Management's Discussion and Analysis.

** Capital management and leverage measures are in accordance with OSFI's Capital Adequacy Requirements and Basel III Accord.

SEGMENTED FINANCIAL SUMMARY – QUARTERLY

(thousands of Canadian dollars)

for the three months ended

October 31, 2025

Digital Banking

Digital Meteor

DRTC

Eliminations/

Consolidated

Canada

USA

Adjustments

Net interest income

$ 27,399

$ 5,234

$ -

$ 32,633

Non-interest income

250

(15)

673

1,898

(347)

2,459

Total revenue

27,649

5,219

673

1,898

(347)

35,092

Provision for (recovery of) credit losses

1,365

(46)

1,319

26,284

5,265

673

1,898

(347)

33,773

Non-interest expenses:

Salaries and benefits

7,446

1,213

130

1,327

10,116

General and administrative

10,941

924

140

143

(347)

11,801

Premises and equipment

929

323

276

426

1,954

19,316

2,460

546

1,896

(347)

23,871

Income (loss) before income taxes

6,968

2,805

127

9,902

Income tax provision

3,840

806

4,698

Net income (loss)

$ 3,128

$ 1,999

$ 94

$ (17)

$ -

$ 5,204

Total assets

$ 5,050,922

$ 759,733

$ 10,207

$ 24,538

$ (36,925)

$ 5,808,475

Total liabilities

$ 4,777,508

$ 498,822

$ 8,006

$ 28,319

$ (36,853)

$ 5,275,802

for the three months ended

July 31, 2025

Digital Banking

Digital Meteor

DRTC

Eliminations/

Consolidated

Canada

USA

Adjustments

Net interest income

$ 26,656

$ 3,123

$ -

$ 29,779

Non-interest income

(37)

(7)

622

1,569

(343)

1,804

Total revenue

26,619

3,116

622

1,569

(343)

31,583

Provision for (recovery of) credit losses

1,201

(20)

1,181

25,418

3,136

622

1,569

(343)

30,402

Non-interest expenses:

Salaries and benefits

7,214

1,174

214

1,497

10,099

General and administrative

8,636

1,163

214

(343)

9,717

Premises and equipment

898

186

373

376

1,833

16,748

2,523

634

2,087

(343)

21,649

Income (loss) before income taxes

8,670

613

(12)

(518)

8,753

Income tax provision

2,150

176

(35)

(120)

2,171

Net income (loss)

$ 6,520

$ 437

$ 23

$ (398)

$ -

$ 6,582

Total assets

$ 5,124,771

$ 348,389

$ 11,543

$ 25,015

$ (32,229)

$ 5,477,489

Total liabilities

$ 4,790,738

$ 155,228

$ 9,491

$ 19,410

$ (25,520)

$ 4,949,347

for the three months ended

October 31, 2024

Digital Banking

Digital Meteor

DRTC

Eliminations/

Consolidated

Canada

USA

Adjustments

Net interest income

$ 23,509

$ 1,392

$ -

$ 24,901

Non-interest income

141

285

2,298

(341)

2,384

Total revenue

23,650

1,393

285

2,298

(341)

27,285

Provision for (recovery of) credit losses

(22)

(134)

(156)

23,672

1,527

285

2,298

(341)

27,441

Non-interest expenses:

Salaries and benefits

9,483

437

134

1,276

11,330

General and administrative

5,874

365

513

(341)

6,446

Premises and equipment

855

105

602

1,589

16,212

907

196

2,391

(341)

19,365

Income (loss) before income taxes

7,460

620

(93)

8,076

Income tax provision

2,429

155

(9)

(15)

2,560

Net income (loss)

$ 5,031

$ 465

$ 98

$ (78)

$ -

$ 5,516

Total assets

$ 4,602,360

$ 226,319

$ 3,434

$ 23,564

$ (17,193)

$ 4,838,484

Total liabilities

$ 4,343,878

$ 90,716

$ 1,371

$ 28,894

$ (25,578)

$ 4,439,281

SEGMENTED FINANCIAL SUMMARY - ANNUAL

(thousands of Canadian dollars)

for the year ended

October 31, 2025

Digital Banking

Digital Meteor

DRTC

Eliminations/

Consolidated

Canada

USA

Adjustments

Net interest income

$ 103,265

$ 12,903

$ -

$ 116,168

Non-interest income

460

(39)

2,206

7,245

(1,399)

8,473

Total revenue

103,725

12,864

2,206

7,245

(1,399)

124,641

Provision for (recovery of) credit losses

4,553

(140)

4,413

99,172

13,004

2,206

7,245

(1,399)

120,228

Non-interest expenses:

Salaries and benefits

25,785

5,015

814

6,370

37,984

General and administrative

29,560

3,484

574

1,508

(1,399)

33,727

Premises and equipment

3,677

722

820

1,805

7,024

59,022

9,221

2,208

9,683

(1,399)

78,735

Income (loss) before income taxes

40,150

3,783

(2)

(2,438)

41,493

Income tax provision

12,538

1,111

(614)

13,035

Net income (loss)

$ 27,612

$ 2,672

$ (2)

$ (1,824)

$ -

$ 28,458

Total assets

$ 5,050,922

$ 759,733

$ 10,207

$ 24,538

$ (36,925)

$ 5,808,475

Total liabilities

$ 4,777,508

$ 498,822

$ 8,006

$ 28,319

$ (36,853)

$ 5,275,802

for the year ended

October 31, 2024

Digital Banking

Digital Meteor

DRTC

Eliminations/

Consolidated

Canada

USA

Adjustments

Net interest income

$ 101,263

$ 1,392

$ -

$ 102,655

Non-interest income

698

1,183

8,455

(1,359)

8,978

Total revenue

101,961

1,393

1,183

8,455

(1,359)

111,633

Provision for (recovery of) credit losses

(134)

(268)

102,095

1,527

1,183

8,455

(1,359)

111,901

Non-interest expenses:

Salaries and benefits

26,523

437

526

5,298

32,784

General and administrative

18,324

365

242

1,597

(1,359)

19,169

Premises and equipment

3,292

105

120

1,638

5,155

48,139

907

888

8,533

(1,359)

57,108

Income (loss) before income taxes

53,956

620

295

(78)

54,793

Income tax provision

14,860

155

(11)

15,045

Net income (loss)

$ 39,096

$ 465

$ 254

$ (67)

$ -

$ 39,748

Total assets

$ 4,602,360

$ 226,319

$ 3,434

$ 23,564

$ (17,193)

$ 4,838,484

Total liabilities

$ 4,343,878

$ 90,716

$ 1,371

$ 28,894

$ (25,578)

$ 4,439,281

MANAGEMENT COMMENTARY

"The fourth quarter was a very strong finish to a transformational fiscal 2025 and indicative of the momentum in our Digital Banking business as we increasingly benefit from the operating leverage in our cloud-based, business-to-business bank, driven by growth in both the United States and Canada," said David Taylor, Founder and President, VersaBank. "The rapidly accelerating ramp up of our Receivable Purchase Program ("RPP") in the US, alongside steady growth of our RPP in Canada, resulted in a very healthy year-over-year increase in credit assets of 20% to a new record, which, combined with a steady expansion of our net interest margin, drove year-over-year revenue growth of 29%, also reaching a new all-time high. With the steady improvement in efficiency, that translated into an 91% increase in adjusted net income, which excludes the one-time costs associated with our reorganization to realign our corporate structure to a standard US bank framework."

"We expect this momentum to continue throughout fiscal 2026 driven by anticipated continued growth in our RPP portfolio both north and south of the border. Notably, in the US, our most significant growth opportunity, we will see the benefit of the higher operating leverage there as growth in the RPP continues to quickly ramp up, with the majority of our cost structure already in place. We expect strong growth in the US to be complemented by continued solid growth in Canada, where spending in the verticals on which we focus remains resilient. We also expect to incrementally benefit from our new Enhanced CHMC Lending Program in Canada, which we launched recently, and which has de minimis operating costs. We expect to capitalize on these growth opportunities with minimal expansion of our non-interest expenses."

"In addition to anticipated growth in our core Digital Banking business next year, early in fiscal 2026 we expect to commercially launch what we believe will be the first tokenized deposit issued in both US and Canadian currencies. VersaBank's proprietary Real Bank Deposit Tokens™, based on the Bank's unique VersaVault® encryption technology, have the potential to both be a new driver of very low-cost deposits for the Bank, as well as an additional source of low-cost revenue as one of the first and most secure of such technologies for banks in both the US and Canada to bring the superior security and operability of the blockchain to conventional deposit and payment functionality, with very clear superiority to non-bank issued stablecoins."

HIGHLIGHTS FOR THE FOURTH QUARTER OF FISCAL 2025

Consolidated (Canadian and US Digital Banking Operations, Digital Meteor and DRTC)

Digital Banking (Combined Canada and US)

Digital Banking Canada

Note: The financial results for Digital Banking Canada contain certain non-interest expenses for general corporate administrative costs.

Digital Banking US

Digital Meteor

DRTC's Cybersecurity Services Operations

HIGHLIGHTS FOR THE FULL FISCAL 2025 YEAR

Consolidated (Canadian and US Digital Banking Operations, Digital Meteor and DRTC)

Digital Banking (Combined Canada and US)

Digital Banking Canada

Note: The financial results for Digital Banking Canada contain certain non-interest expenses for general corporate administrative costs.

Digital Banking US

Digital Meteor

DRTC's Cybersecurity Services Operations

Reorganization (previously referred to as the Proposed Corporate Realignment)

In May 2025, the Bank announced its intention, subject to the approval of VersaBank's shareholders, the U.S. Federal Reserve, the Office of the Superintendent of Financial Institutions (Canada) ("OSFI"), the Minister of Finance (Canada), the Toronto Stock Exchange ("TSX"), the Nasdaq Global Select Market ("Nasdaq"), and other applicable approvals, to implement a series of transactions that would result in, among other things, a new entity (the "Parent"), a newly incorporated Delaware corporation, succeeding VersaBank as the publicly traded entity in which existing shareholders hold their equity interests, thereby domesticating that public company as a U.S. reporting issuer incorporated in Delaware (the "Reorganization"). Under the proposed terms of the Reorganization, among other things, VersaBank will adopt an amendment to its by-laws and effect certain transactions to exchange all of its outstanding common shares for shares of the Parent (the "Share Exchange"). Following the Share Exchange, VersaBank will sell all of its shares of VersaHoldings US Corp. and DRTC to the Parent in exchange for a promissory note equal to the aggregate fair market value of those shares (the "Parent Note"), which will subsequently be distributed to the Parent as a return of capital.

FINANCIAL SUMMARY

(unaudited)

for the three months ended

for the year ended

October 31

($CDN thousands except per share amounts)

2025

2024

2025

2024

Results of operations

Interest income

$ 77,471

$ 73,238

$ 295,680

$ 285,419

Net interest income

32,633

24,901

116,168

102,655

Non-interest income

2,459

2,384

8,473

8,978

Total revenue

35,092

27,285

124,641

111,633

Provision for (recovery of) credit losses

1,319

(156)

4,413

(268)

Non-interest expenses

23,871

19,365

78,735

57,108

Digital banking

21,776

17,119

68,243

49,046

DRTC

1,896

2,391

9,683

8,533

Digital Meteor

546

196

2,208

888

Net income

5,204

5,516

28,458

39,748

Adjusted net income*

10,549

5,516

36,891

39,748

Income per common share:

Basic

$ 0.16

$ 0.20

$ 0.90

$ 1.49

Diluted

$ 0.16

$ 0.20

$ 0.90

$ 1.49

Adjusted income per common share basic and diluted*

$ 0.33

$ 0.20

$ 1.17

$ 1.49

Dividends paid on preferred shares

$ -

$ 247

$ -

$ 988

Dividends paid on common shares

$ 802

$ 650

$ 3,235

$ 2,600

Yield*

5.45 %

6.23 %

5.55 %

6.31 %

Cost of funds*

3.15 %

4.11 %

3.37 %

4.04 %

Net interest margin*

2.29 %

2.12 %

2.18 %

2.27 %

Net interest margin on credit assets*

2.65 %

2.34 %

2.52 %

Return on average common equity*

3.89 %

5.28 %

6.11 %

10.16 %

Adjusted return on average common equity*

7.81 %

5.28 %

7.85 %

10.16 %

Book value per common share*

$ 16.67

$ 15.35

$ 16.67

$ 15.35

Efficiency ratio*

68 %

71 %

63 %

51 %

Adjusted efficiency ratio*

55 %

71 %

55 %

51 %

Return on average total assets*

0.37 %

0.45 %

0.53 %

0.86 %

Provision for (recovery of) credit losses as a % of average credit

assets*

0.11 %

(0.01 %)

0.09 %

(0.01 %)

as at

Balance Sheet Summary

Cash

$ 581,710

$ 225,254

$ 581,710

$ 225,254

Securities

80,923

299,300

80,923

299,300

Credit assets, net of allowance for credit losses

5,066,378

4,236,116

5,066,378

4,236,116

Average credit assets

4,922,347

4,142,783

4,651,247

4,043,260

Total assets

5,808,475

4,838,484

5,808,475

4,838,484

Deposits

4,860,863

4,144,673

4,860,863

4,144,673

Subordinated notes payable

103,516

102,503

103,516

102,503

Shareholders' equity

532,673

399,203

532,673

399,203

Capital ratios**

Risk-weighted assets

$ 3,943,657

$ 3,323,595

$ 3,943,657

$ 3,323,595

Common Equity Tier 1 capital

509,650

373,503

509,650

373,503

Total regulatory capital

619,890

481,176

619,890

481,176

Common Equity Tier 1 (CET1) capital ratio

12.92 %

11.24 %

12.92 %

11.24 %

Tier 1 capital ratio

12.92 %

11.24 %

12.92 %

11.24 %

Total capital ratio

15.72 %

14.48 %

15.72 %

14.48 %

Leverage ratio

8.47 %

7.38 %

8.47 %

7.38 %

* See definition under 'Non-GAAP and Other Financial Measures' in the 2025 Annual Management's Discussion and Analysis.

** Capital management and leverage measures are in accordance with OSFI's Capital Adequacy Requirements

and Basel III Accord.

This news release is intended to be read in conjunction with the Bank's 2025 annual audited Consolidated Financial Statements and MD&A, which are available on VersaBank's website at www.versabank.com, SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.

Conference Call

VersaBank will host a conference call and webcast today, Wednesday, December 10, 2025, at 9:00 a.m. (ET) to discuss its fourth quarter results, featuring a presentation by David Taylor, President & CEO and John Asma, CFO, followed by a question-and-answer period. To join the conference call by telephone without operator assistance, you may register and enter your phone number in advance at: https://emportal.ink/480WpuV to receive an instant automated call back. Alternatively, you may also dial direct and be entered into the call by an Operator at: 1-416-945-7677 or 1-888-699-1199 (toll free).

For those preferring to listen to the presentation via the Internet, a live webcast will be available at https://app.webinar.net/k3oyjD7RKPQ or on the Bank's web site at: https://www.versabank.com/investor-relations/events-presentations/. The slide presentation management will use during the conference call/webcast will be available on the Bank's web site at: https://www.versabank.com/investor-relations/financial-results/.

The archived webcast presentation will be available for 90 days following the live event at

https://app.webinar.net/k3oyjD7RKPQ and on the Bank's web site at: https://www.versabank.com/investor-relations/events-presentations/. Replay of the teleconference will be available until January 10, 2026 by calling 289-819-1450 or 1-888-660-6345 (toll free) and the passcode is: 70234#

About VersaBank

VersaBank is a North American bank with a difference. Federally chartered in both Canada and the US, VersaBank has a branchless, digital, business-to-business model based on its proprietary state-of-the-art technology that enables it to profitably address underserved segments of the banking industry in a significantly risk mitigated manner. Because VersaBank obtains substantially all of its deposits and undertakes the majority of its funding activities electronically through financial intermediary partners, it benefits from significant operating leverage that drives efficiency and return on common equity. In August 2024, VersaBank launched its unique Receivable Purchase Program funding solution for point-of-sale finance companies, which has been highly successful in Canada for over 15 years, to the underserved multi-trillion-dollar US market. VersaBank also owns Minnesota-based DRT Cyber Inc., a North America leader in the provision of cyber security services to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities. Through its wholly owned subsidiary, DBG Inc., VersaBank owns proprietary intellectual property and technology to enable the next generation of digital assets for the banking and financial community, including the Bank's revolutionary and proprietary Real Bank Deposit Tokens™).

VersaBank's Common Shares trade on the Toronto Stock Exchange and NASDAQ under the symbol VBNK.

Forward-Looking Statements

This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws ("forward-looking statements") including statements regarding the ability to obtain shareholder, regulatory and other approvals of the Reorganization; the expected realization of additional shareholder value, the simplification of the regulatory structure and the reduction of costs as a result of the Reorganization; the key elements of the Reorganization; the ability to obtain inclusion on stock indices, including the Russell 2000; the ability to continue to grow the US Receive Purchase Program; the ability to expand our net interest margin; and the ability to continue to grow the CMHC residential construction loan program. Forward-looking statements of this type are included in this document and may be included in other filings and with Canadian securities regulators or the US Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the "safe harbor" provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. The statements in this press release that relate to the future are forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, many of which are out of VersaBank's control. Risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the Canadian and US economies in general and the strength of the local economies within Canada and the US in which VersaBank conducts operations; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Bank of Canada and the US Federal Reserve; global commodity prices; the effects of competition in the markets in which VersaBank operates; changes in trade laws and tariffs; inflation; capital market fluctuations; the timely development and introduction of new products in receptive markets; the impact of changes in the laws and regulations pertaining to financial services; changes in tax laws; technological changes; unexpected judicial or regulatory proceedings; unexpected changes in consumer spending and savings habits; the impact of wars or conflicts and the impact of both on global supply chains and markets; the impact of outbreaks of disease or illness that affect local, national or international economies; the possible effects on our business of terrorist activities; natural disasters and disruptions to public infrastructure, such as transportation, communications, power or water supply; and VersaBank's anticipation of and success in managing the risks implicated by the foregoing.

Completion of VersaBank's plan to realign its corporate structure to a standard US bank framework is subject to numerous factors, many of which are beyond the Bank's control, including but not limited to, the failure to obtain required shareholder, regulatory and other approvals, and other important factors disclosed previously and from time to time in the Bank's filings with the SEC and the securities commissions or similar securities regulatory authorities in each of the provinces or territories of Canada.

The foregoing list of important factors is not exhaustive. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The forward-looking information contained in the management's discussion and analysis is presented to assist VersaBank shareholders and others in understanding VersaBank's financial position and may not be appropriate for any other purposes.

For a detailed discussion of certain key factors that may affect VersaBank's future results, please see VersaBank's annual MD&A for the year ended October 31, 2025. Except as required by securities law, VersaBank does not undertake to update any forward-looking statement that is contained in this press release or made from time to time by VersaBank or on its behalf.

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SOURCE VersaBank