Form F-10 - Registration Statement for Securities of certain Canadian Issuers.

As filed with the Securities and Exchange Commission on November 7, 2024

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-10

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

VersaBank

(Exact name of Registrant as specified in its charter)

Canada	6029	Not applicable
(Province or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number (if applicable))	(I.R.S. Employer Identification Number (if applicable))

140 Fullarton Street, Suite 2002

London, Ontario N6A 5P2

Canada

Telephone: (519) 645-1919

(Address and telephone number of Registrant’s principal executive offices)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

Telephone: (800) 221-0102

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)

Copies to:

Shane Tintle, Esq.

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

(212) 450-4000

Brent Hodge

VersaBank

140 Fullarton Street, Suite 2002

London, Ontario N6A 5P2

Canada

(519) 645-1919

Shawn M. Turner, Esq.

Holland & Knight LLP

1801 California Street, Suite 5000

Denver, Colorado 80202

(303) 974-6645

Approximate date of commencement of proposed sale of the securities to the public:

From time to time after the effective date of this Registration Statement.

Province of Ontario, Canada

(Principal jurisdiction regulating this offering (if applicable))

It is proposed that this filing shall become effective (check appropriate box)

A. ☐ upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).

B. ☒ at some future date (check appropriate box below)

1. ☐ pursuant to Rule 467(b) on (date) at (time) (designate a time not sooner than 7 calendar days after filing).

2. ☐ pursuant to Rule 467(b) on (date) at (time) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on (date).

3. ☐ pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.

4. ☒ after the filing of the next amendment to this Form (if preliminary material is being filed).

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box. ☒

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registration Statement shall become effective as provided in Rule 467 under the Securities Act or on such date as the U.S. Securities and Exchange Commission, acting pursuant to Section 8(a) of the Securities Act, may determine.

PART I

INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

A copy of this preliminary short form base shelf prospectus has been filed with the securities regulatory authorities in each of the provinces and territories of Canada, except Quebec, but has not yet become final for the purpose of the sale of securities. Information contained in this preliminary short form base shelf prospectus may not be complete and may have to be amended. The securities may not be sold until a receipt for the short form base shelf prospectus is obtained from the securities regulatory authorities.

This short form prospectus is a base shelf prospectus. This short form prospectus has been filed under legislation in each of the provinces and territories of Canada, except Quebec, that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form base shelf prospectus constitutes a public offering of those securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.

Information has been incorporated by reference in this prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary, VersaBank, Suite 2002, 140 Fullarton Street, London, Ontario N6A 5P2, telephone: (519) 675-4201 and are also available electronically at www.sedarplus.ca.

PRELIMINARY SHORT FORM BASE SHELF PROSPECTUS

New Issue and Secondary Offering

November 7, 2024

VERSABANK

US$200,000,000

Debt Securities (unsubordinated indebtedness)

Debt Securities (subordinated indebtedness)

Common Shares

Preferred Shares

Subscription Receipts

Warrants

VersaBank (the “Bank”) may from time to time offer and issue the following securities: (i) unsecured unsubordinated debt securities (the “Senior Debt Securities”); (ii) unsecured subordinated debt securities (the “Subordinated Debt Securities”); (iii) common shares (“Common Shares”); (iv) preferred shares in series (collectively, the “Preferred Shares”); (v) subscription receipts (“Subscription Receipts”); and (vi) warrants (“Warrants”), or any combination thereof. The Senior Debt Securities, Subordinated Debt Securities, Common Shares, Preferred Shares, Subscription Receipts and Warrants (collectively, the “Securities”) offered hereby may be offered separately or together, in amounts, at prices and on terms to be set forth in an accompanying prospectus supplement (a “Prospectus Supplement”).

All information as to a particular offering that is not included in this preliminary short form base shelf prospectus (the “Prospectus”) will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus. The Bank may sell up to US$200,000,000 in aggregate initial offering price of Securities (or the U.S. dollar equivalent thereof at the time of issuance if any of the Securities are denominated in a foreign currency or currency unit) during the 25-month period that this Prospectus, including any amendments hereto, remains effective. One or more securityholders of the Bank may also offer and sell Securities under this Prospectus. See “The Selling Securityholders”.

An investment in Securities involves significant risks that should be carefully considered by prospective

investors before purchasing Securities. The risks outlined in this Prospectus and in the documents incorporated by reference herein, including the applicable Prospectus Supplement, should be carefully reviewed and considered by prospective investors in connection with any investment in Securities. See “Risk Factors”.

The specific terms of the Securities in respect of which this Prospectus is being delivered will be set forth in the applicable Prospectus Supplement and may include, where applicable: (i) in the case of Senior Debt Securities or Subordinated Debt Securities (collectively, the “Debt Securities”), the specific designation, aggregate principal amount, the currency or the currency unit for which the Debt Securities may be purchased, maturity, interest provisions, authorized denominations, offering price, any terms for redemption at the option of the Bank or the holder, any exchange or conversion terms and any other specific terms; (ii) in the case of Common Shares, the currency or currency unit for which the Common Shares may be purchased, the number of Common Shares offered and the offering price; (iii) in the case of Preferred Shares, the designation of the particular class, series, aggregate principal amount, the currency or currency unit for which the Preferred Shares may be purchased, the number of Preferred Shares offered, the offering price, the dividend rate, the dividend payment dates, any terms for redemption at the option of the Bank or the holder, any exchange or conversion terms and any other specific terms; (iv) in the case of Subscription Receipts, the number of Subscription Receipts being offered, the offering price, the procedures for the exchange of the Subscription Receipts for Debt Securities, Preferred Shares or Common Shares, as the case may be, and any other specific terms; and (v) in the case of Warrants, the designation, number and terms of the Debt Securities, Preferred Shares or Common Shares purchasable upon exercise of the Warrants, any procedures that will result in the adjustment of these numbers, dates and periods of exercise, the currency in which the Warrants are issued and any other specific terms.

The outstanding Common Shares of the Bank are listed on the Toronto Stock Exchange (the “TSX”) and The Nasdaq Global Select Market (the “Nasdaq”). Unless otherwise specified in the applicable Prospectus Supplement, Securities other than Common Shares will not be listed on any securities exchange. There is currently no market through which such Securities other than Common Shares may be sold, and purchasers may not be able to resell any such Securities purchased under this Prospectus and the applicable Prospectus Supplement relating to such Securities. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation. See “Risk Factors”.

The Securities may be sold through underwriters or dealers, by the Bank directly pursuant to applicable statutory exemptions or through agents designated by the Bank from time to time in amounts and at prices and other terms determined by the Bank or any selling securityholders. See “Plan of Distribution”. Each Prospectus Supplement will identify each underwriter, dealer, agent or selling securityholder engaged in connection with the offering and sale of those Securities, and will also set forth the terms of the offering of such Securities including the net proceeds to the Bank and, to the extent applicable, any fees payable to the underwriters, dealers or agents. The offerings are subject to approval of certain legal matters on behalf of the Bank.

The Senior Debt Securities will be direct unsecured unsubordinated obligations that rank equally and rateably with all of the Bank’s other unsecured and unsubordinated debt, including deposit liabilities, other than certain governmental claims in accordance with applicable law.

The Subordinated Debt Securities will be direct unsecured obligations of the Bank constituting subordinated indebtedness for purposes of the Bank Act (Canada) (the “Bank Act”) that rank equally and rateably with, or junior to, other subordinated indebtedness of the Bank from time to time outstanding (other than subordinated indebtedness that has been further subordinated in accordance with its terms).

The Debt Securities will not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (Canada).

All dollar amounts in this Prospectus are expressed in U.S. dollars, unless otherwise indicated. See “Currency Presentation and Exchange Rate Information.”

The Securities have not been approved or disapproved by the U.S. Securities and Exchange Commission (the “SEC”) or any state securities commission or any U.S. regulatory authority, nor have these authorities passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

The Bank is permitted, under a multijurisdictional disclosure system (“MJDS”) adopted by the United States and Canada, to prepare this Prospectus in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements are different from those of the United States. The financial statements incorporated by reference herein have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and may be subject to foreign auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.

Prospective investors should be aware that the acquisition of Securities may have tax consequences both in the United States and in Canada. This Prospectus does not, and any applicable Prospectus Supplement may not fully, describe these tax consequences. Prospective investors should read the tax discussion in any applicable Prospectus Supplement, but note that such discussion may be only a general summary that does not cover all tax matters that may be of importance to a prospective investor. Each prospective investor is urged to consult its own tax advisors about the tax consequences relating to the purchase, ownership and disposition of the Securities in light of the investor’s own circumstances.

The enforcement by investors of civil liabilities under the United States federal securities laws may be affected adversely by the fact that the Bank is a Canadian Schedule I chartered bank governed by the Bank Act, that most of its directors and officers reside principally in Canada, that some or all of the experts named in this Prospectus may be residents of a foreign country, and that all or a substantial portion of the assets of the Bank and said persons may be located outside the United States. See “Enforcement of Civil Liabilities”.

Effective January 1, 2013 in accordance with capital adequacy requirements adopted by the Office of the Superintendent of Financial Institutions Canada (the “Superintendent”), non-common capital instruments issued after January 1, 2013, including Preferred Shares and Subordinated Debt Securities, must include terms providing for the full and permanent conversion of such securities into Common Shares upon the occurrence of certain trigger events relating to financial viability (the “Non-Viability Contingent Capital Provisions”) in order to qualify as regulatory capital. The specific terms of any Non-Viability Contingent Capital Provisions of any such Securities will be described in the Prospectus Supplement applicable to any such issuance.

The head and registered office of the Bank is Suite 2002, 140 Fullarton Street, London, Ontario N6A 5P2.

Table of Contents

TABLE OF CONTENTS

About This Prospectus	5
Cautionary Note Regarding Forward-Looking Statements	6
Currency Presentation and Exchange Rate Information	7
Documents Incorporated by Reference	8
Enforcement of Civil Liabilities	10
Where You Can Find More Information	11
VersaBank	12
The Selling Securityholders	13
Description of Debt Securities	14
Description of Common Shares	16
Description of Preferred Shares	17
Description of Subscription Receipts	18
Description of Warrants	19
Bank Act Restrictions and Approvals	20
Restraints on Bank Shares Under the Bank Act	21
Plan of Distribution	22
Prior Sales and Trading Price and Volume	24
Risk Factors	25
Use of Proceeds	26
Legal Matters	27
Auditors, Registrar and Transfer Agent	28
Documents Filed as Part of the Registration Statement	29

Table of Contents

About This Prospectus

The Bank has not authorized any person to provide readers with any information or to make any representations different from those contained in this Prospectus (or incorporated by reference herein). The Bank takes no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give readers of this Prospectus. The Securities are not being offered in any jurisdiction where the offer or sale is not permitted.

Readers should not assume that the information contained or incorporated by reference in this Prospectus is accurate as of any date other than the date of this Prospectus or the respective dates of the documents incorporated by reference herein, unless otherwise noted herein or as required by law. The business, financial condition, results of operations and prospects of the Bank may have changed since those dates.

This Prospectus shall not be used by anyone for any purpose other than in connection with an offering of Securities as described in one or more Prospectus Supplements. We do not undertake to update the information contained or incorporated by reference herein, except as required by applicable securities laws. Information contained on, or otherwise accessed through, our website shall not be deemed to be a part of this Prospectus or any document incorporated by reference herein, and such information is not incorporated by reference herein.

Table of Contents

Cautionary Note Regarding Forward-Looking Statements

This Prospectus, including the documents that are incorporated by reference in this Prospectus, contains forward-looking statements within the meaning of certain securities laws. All such statements are made pursuant to the “safe harbour” provisions of, and are intended to be forward-looking statements under, applicable Canadian and U.S. securities legislation, including the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements and information concerning: future growth and potential achievements of the Bank; statements relating to the business, future activities of, and developments related to the Bank; the payment of dividends on Common Shares and Preferred Shares; and other events or conditions that may occur in the future. Forward-looking statements are typically (but not always) identified by the words “expects”, “is expected”, “anticipates”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes”, “aims”, “endeavours”, “projects”, “continue”, “predicts”, “potential”, “intends”, or the negative of these terms or variations of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “should” be taken, occur or be achieved.

By their nature, these statements require the Bank to make assumptions and are subject to inherent risks and uncertainties that may be general or specific, including without limitation with respect to the strength of the Canadian and U.S. economies in general and the strength of the local economies within Canada and the U.S. in which the Bank conducts operations; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Bank of Canada and the U.S. Federal Reserve; global commodity prices; the effects of competition in the markets in which the Bank operates; 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 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 the Bank’s anticipation of and success in managing the risks implicated by the foregoing. The foregoing list of important factors is not exhaustive.

A variety of factors, many of which are beyond the Bank’s control, affect the operations, performance and results of the Bank, and could cause actual results to differ materially from the expectations expressed in any of the Bank’s forward-looking statements. These factors include, without limitation: general business, economic, competitive, political, regulatory and social uncertainties; risks related to factors beyond the control of the Bank; risks related to the business of the Bank; risks related to political developments and policy shifts; risks related to amendments to laws; or risks related to the market value of the Bank’s securities.

This list is not exhaustive of the factors that may affect any of the Bank’s forward-looking statements. Additional information about these factors can be found in the “Risk Factors” section of the Annual Information Form (as defined below) and under “Enterprise Risk Management” and “Factors that May Affect Future Results” in the Annual MD&A (as defined below). These and other factors should be considered carefully and readers should not place undue reliance on the Bank’s forward-looking statements. Any forward-looking statements contained in this Prospectus represent the views of management only as of the date hereof. The Bank does not undertake to update any forward-looking statement that is contained in this Prospectus or the documents incorporated by reference in this Prospectus except as required by law.

Table of Contents

Currency Presentation and Exchange Rate Information

All dollar amounts in this Prospectus are in United States dollars, unless otherwise indicated. References to “$” and “US$” are to U.S. dollars and references to “C$” are to Canadian dollars.

The following table sets forth, for the periods indicated, the high, low, average and end of period daily average exchange rates for one U.S. dollar, expressed in Canadian dollars, published by the Bank of Canada during the respective periods.

	Fiscal Quarter Ended July 31,		Year Ended October 31,
	2024		2023		2022		2021
Highest rate during the period		1.3852		1.3871		1.3856		1.3318
Lowest rate during the period		1.3613		1.3128		1.2368		1.2040
Average for the period		1.3696		1.3487		1.2874		1.2579
Period end		1.3809		1.3871		1.3649		1.2384

On November 6, 2024, the Bank of Canada daily average rate of exchange was US$1.00 = C$1.3935 or C$1.00 = US$0.7176.

Table of Contents

Documents Incorporated by Reference

The following documents, filed with the various securities commissions or similar authorities in Canada or with the SEC in the United States, are incorporated by reference into, and form an integral part of, this Prospectus:

the Bank’s Annual Information Form dated December 13, 2023, for the year ended October 31, 2023 (the “Annual Information Form”);

the Bank’s comparative audited consolidated financial statements as at and for the years ended October 31, 2023 and 2022, together with the reports of independent registered public accounting firms thereon, dated December 12, 2023 and December 6, 2022, filed as an exhibit to the Form 40-F filed with the SEC in the United States on December 13, 2023;

the Bank’s Management’s Discussion and Analysis for the year ended October 31, 2023 (the “Annual MD&A”);

the Bank’s comparative unaudited consolidated financial statements as at and for the three- and nine-month periods ended July 31, 2024;

the Bank’s Management’s Discussion and Analysis for the three- and nine-month periods ended July 31, 2024 (the “Interim MD&A”);

the Bank’s Management Proxy Circular regarding the Bank’s annual and special meeting of shareholders held on April 17, 2024; and

the Bank’s material change report dated October 31, 2024, in respect of the redemption of its Series 1 Preferred Shares.

Any document of the type required by National Instrument 44-101 – Short Form Prospectus Distributions to be incorporated by reference into a short form prospectus, including any annual information forms, material change reports (except confidential material change reports), business acquisition reports, interim financial statements, annual financial statements (in each case, including exhibits containing updated earnings coverage information and excluding any independent auditor’s report thereon prepared in accordance with Canadian auditing standards), management’s discussion and analysis and information circulars of the Bank, filed by the Bank with securities commissions or similar authorities in Canada, after the date of this Prospectus and prior to the completion or withdrawal of any offering under this Prospectus, shall be deemed to be incorporated by reference into this Prospectus. In addition, all documents filed on Form 6-K or Form 40-F by the Bank with the SEC on or after the date of this Prospectus shall be deemed to be incorporated by reference into the registration statement on Form F-10 (the “Registration Statement”) of which this Prospectus forms a part, if and to the extent, in the case of any Report on Form 6-K, expressly provided in such document.

The documents incorporated or deemed to be incorporated by reference herein contain meaningful and material information relating to the Bank, and readers should review all information contained in this Prospectus, the applicable Prospectus Supplement and the documents incorporated or deemed to be incorporated by reference herein and therein.

Updated earnings coverage ratios, as required, will be filed quarterly with the applicable securities commissions or similar authorities in Canada, which updates will be deemed to be incorporated by reference into this Prospectus. Where the Bank updates its disclosure of earnings coverage ratios by Prospectus Supplement, the Prospectus Supplement filed with the applicable securities commissions or similar authorities that contains the most recent updated disclosure of earnings coverage ratios will be delivered to all subsequent purchasers of Securities together with this Prospectus.

A Prospectus Supplement containing the specific terms in respect of any Securities will be delivered, together with this Prospectus, to purchasers of such Securities and will be deemed to be incorporated into this Prospectus as of the date of such Prospectus Supplement, but only for the purpose of the distribution of the Securities to which such Prospectus Supplement pertains.

Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded, for purposes of this Prospectus, to the extent that a

Table of Contents

statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus.

When a new annual information form, annual financial statements and related management’s discussion and analysis are filed by the Bank and, where required, accepted by the applicable securities regulatory authorities during the term of this Prospectus, the previous annual information form, the previous annual financial statements and related management’s discussion and analysis, all interim financial statements and related management’s discussion and analysis, material change reports, information circulars and business acquisitions reports filed by the Bank prior to the commencement of the Bank's financial year in which the new annual information form is filed shall be deemed no longer to be incorporated by reference into this Prospectus for purposes of future offers and sales of Securities hereunder.

References to our website in any documents that are incorporated by reference into this Prospectus do not incorporate by reference the information on such website into this Prospectus, and we disclaim any such incorporation by reference.

Copies of the documents incorporated by reference in this Prospectus may be obtained on request without charge from the Corporate Secretary, VersaBank, Suite 2002, 140 Fullarton Street, London, Ontario N6A 5P2, telephone: (519) 675-4201, and are also available electronically on the System for Electronic Document Analysis and Retrieval + (“SEDAR+”) at www.sedarplus.ca and on the Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”) at www.sec.gov.

Table of Contents

ENFORCEMENT OF CIVIL LIABILITIES

The Bank is a Canadian Schedule I chartered bank governed by the Bank Act. Most of the Bank’s directors and officers reside principally in Canada, and the majority of the Bank’s assets and all or a substantial portion of the assets of these persons is located outside the United States. The Bank has appointed an agent for service of process in the United States; however, it may nevertheless be difficult for investors who reside in the United States to effect service of process in the United States upon the Bank or any such persons, or to enforce a U.S. court judgment predicated upon the civil liability provisions of the U.S. federal securities laws against the Bank or any such persons. There is substantial doubt whether an action could be brought in Canada in the first instance predicated solely upon U.S. federal securities laws.

The Bank filed with the SEC, concurrently with the Registration Statement, an appointment of agent for service of process on Form F-X. Under the Form F-X, the Bank appointed Cogency Global Inc. as its agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC and any civil suit or action brought against or involving the Bank in a United States court arising out of or related to or concerning the offering of securities under this Prospectus.

Table of Contents

WHERE YOU CAN FIND MORE INFORMATION

The Bank files certain reports with, and furnishes other information to, each of the SEC and certain securities regulatory authorities of Canada. Under MJDS adopted by the United States and Canada, such reports and other information may be prepared in accordance with the disclosure requirements of the provincial and territorial securities regulatory authorities of Canada, which requirements are different from those of the United States. As a foreign private issuer, the Bank is exempt from the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), prescribing the furnishing and content of proxy statements, and the Bank’s officers and directors are exempt from the reporting and short swing profit recovery provisions contained in Section 16 of the Exchange Act. The Bank’s reports and other information filed or furnished with or to the SEC are available, from EDGAR at www.sec.gov, as well as from commercial document retrieval services. The Bank’s Canadian filings are available on SEDAR+ at www.sedarplus.ca.

The Bank has filed with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), the Registration Statement relating to the Securities being offered hereunder, of which this Prospectus forms a part. This Prospectus does not contain all of the information set forth in the Registration Statement, certain items of which are contained in the exhibits to the Registration Statement as permitted or required by the rules and regulations of the SEC. Items of information omitted from this Prospectus but contained in the Registration Statement will be available on the SEC’s website at www.sec.gov.

Table of Contents

VERSABANK

VersaBank is a Canadian Schedule I chartered bank governed by the Bank Act. VersaBank became one of the world’s first fully digital financial institutions when it adopted its highly efficient business-to-business model using its proprietary state-of-the-art financial technology to profitably address underserved segments of the Canadian banking market. VersaBank obtains all of its deposits and provides the majority of its loans and leases electronically, with innovative deposit and lending solutions for financial intermediaries and others that allow them to excel in their core businesses. In August 2024, VersaBank acquired Stearns Bank Holdingford N.A., which was subsequently renamed VersaBank USA National Association, and launched its Receivable Purchase Program (RPP) funding solution for point-of-sale finance companies in the U.S. market. VersaBank also owns Washington, DC-based DRT Cyber Inc., which provides cyber security services to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities.

Additional information with respect to the Bank’s business is included in the Annual Information Form, the Annual MD&A, and the Interim MD&A, all of which are incorporated by reference into this Prospectus.

Table of Contents

THE SELLING SECURITYHOLDERS

Securities may be sold under this Prospectus by way of one or more secondary offerings by or for the account of certain of the Bank’s selling securityholders. The Prospectus Supplement that the Bank will file in connection with any offering of Securities by selling securityholders will include the following information:

the names of the selling securityholders;

the number or amount of Securities owned, controlled or directed by each selling securityholder;

the number or amount of Securities being distributed for the account of each selling securityholder;

the number or amount of Securities to be owned by the selling securityholders after the distribution and the percentage that number or amount represents of the total number of the Bank’s outstanding Securities;

whether the Securities are owned by the selling securityholders both of record and beneficially, of record only, or beneficially only; and

all other information that is required to be included in the applicable Prospectus Supplement.

Table of Contents

DESCRIPTION OF DEBT SECURITIES

The following describes certain general terms and provisions of the Debt Securities. The particular terms and provisions of Debt Securities offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below may apply to such Debt Securities, will be described in such Prospectus Supplement. Since the terms of a series of Debt Securities may differ from the general information provided in this Prospectus, in all cases an investor should rely on the information in the applicable Prospectus Supplement where it differs from information in this Prospectus.

The Senior Debt Securities will be direct unsubordinated obligations of the Bank that rank equally and rateably with all other unsecured and unsubordinated debt, including deposit liabilities, of the Bank other than certain governmental claims in accordance with applicable law.

The Subordinated Debt Securities will be direct unsecured obligations of the Bank, constituting subordinated indebtedness for the purposes of the Bank Act, that rank equally and rateably with, or junior to, other subordinated indebtedness of the Bank from time to time outstanding (other than subordinated indebtedness that has been further subordinated in accordance with its terms). In the event of the insolvency or winding-up of the Bank, the subordinated indebtedness of the Bank (including any Subordinated Debt Securities issued hereunder if a trigger event has not occurred as contemplated under the specific Non-Viability Contingent Capital Provisions) will be subordinate in right of payment to the prior payment in full of the deposit liabilities of the Bank and all other liabilities of the Bank, including the Senior Debt Securities, except those which by their terms rank equally in right of payment with, or are subordinate to, such subordinated indebtedness. Upon the occurrence of a trigger event under the Non-Viability Contingent Capital Provisions, the subordination provisions of the Subordinated Debt Securities will not be relevant since all Subordinated Debt Securities will be converted into Common Shares which will rank on a parity with all other Common Shares.

Subject to regulatory capital requirements applicable to the Bank, there is no limit on the amount of Senior Debt Securities or Subordinated Debt Securities that the Bank may issue.

If the Bank becomes insolvent, the Bank Act provides that priorities among payments of its deposit liabilities and payments of all of its other liabilities (including payments in respect of Senior Debt Securities and Subordinated Debt Securities) are to be determined in accordance with the laws governing priorities and, where applicable, by the terms of the indebtedness and liabilities. Because the Bank has subsidiaries, its right to participate in any distribution of the assets of its banking or non-banking subsidiaries, upon a subsidiary’s dissolution, winding-up liquidation or reorganization or otherwise, and thus an investor’s ability to benefit indirectly from such distribution, is subject to the prior claims of creditors of that subsidiary, except to the extent that the Bank may be a creditor of that subsidiary and its claims are recognized. There are legal limitations on the extent to which some of the Bank’s subsidiaries may extend credit, pay dividends or otherwise supply funds to, or engage in transactions with, the Bank or some of its other subsidiaries.

The Debt Securities will not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (Canada).

The specific terms of Debt Securities that the Bank issues under this Prospectus will be described in one or more Prospectus Supplements and may include, where applicable: the specific designation, aggregate principal amount, the currency or the currency unit for which such securities may be purchased, maturity, interest provisions, authorized denominations, offering price, any terms for redemption at the Bank’s option or the holder’s option, any exchange or conversion terms and any other specific terms.

In addition, this Prospectus qualifies the issuance of Senior Debt Securities in respect of which the payment of principal and/or interest may be determined or linked, in whole or in part, by reference to one or more underlying interests including, for example, an equity or debt security, a statistical measure of economic or financial performance including, but not limited to, a currency, consumer price or mortgage index, or the price or value of one or more commodities, indices, securities, financial ratios or other items, or other model or formula, or any combination or basket of the foregoing items. The specifics of any such provisions will be described in applicable Prospectus Supplements. In compliance with applicable Canadian securities laws, the Bank will file an undertaking with the applicable securities commissions or similar authorities in Canada that the Bank will not distribute, among

Table of Contents

other things, any Debt Securities that are considered novel specified derivatives or asset-backed securities (as such terms are defined under applicable Canadian securities laws) at the time of distribution without preclearing with such securities commissions or similar authorities the disclosure contained in the prospectus supplement(s) pertaining to such Debt Securities in accordance with applicable Canadian securities laws.

Debt Securities may be issued up to the aggregate principal amount which may be authorized from time to time by the Bank. The Bank may issue Debt Securities under one or more trust indentures (in each case between the Bank and a trustee determined by the Bank in accordance with applicable laws) or pursuant to an issue and paying agency agreement (between the Bank and an agent, which agent may be an affiliate of or otherwise non-arm’s length to the Bank). Any series of Debt Securities may also be created and issued without a trust indenture or an issue and paying agency agreement. The Bank may also appoint a calculation agent in connection with any Debt Securities issued under this Prospectus, which agent may be an affiliate of, or otherwise non-arm’s length to, the Bank. The Bank makes reference to the applicable Prospectus Supplement which will accompany this Prospectus for the terms and other information with respect to the offering of Debt Securities being offered thereby.

Debt Securities may, at the option of the Bank as set out in a Prospectus Supplement, be issued in fully registered form, in bearer form or in “book-entry only” form. Debt Securities in registered form will be exchangeable for other Debt Securities of the same series and tenor, registered in the same name, for the same aggregate principal amount in authorized denominations. No charge will be made to the holder for any such exchange or transfer except for any tax or government charge incidental thereto.

Table of Contents

DESCRIPTION OF COMMON SHARES

The Bank’s authorized common share capital consists of an unlimited number of Common Shares, without nominal or par value, of which 26,002,577 were outstanding as at November 6, 2024.

Holders of Common Shares are entitled to vote at all meetings of shareholders, except for meetings at which only holders of another specified class or series of shares of the Bank are entitled to vote separately as a class or series. Holders of Common Shares are entitled to receive dividends as and when declared by the Board, subject to the preference of the Preferred Shares.

In the event of the dissolution, liquidation or winding-up of the Bank, subject to the prior rights of the holders of Preferred Shares, and after payment of all outstanding debts, the holders of Common Shares will be entitled to receive the remaining property and assets of the Bank.

The outstanding Common Shares are listed on the TSX and the Nasdaq under the symbol “VBNK”.

Table of Contents

DESCRIPTION OF PREFERRED SHARES

The Bank’s authorized Preferred Share capital consists of an unlimited number of non-voting, preferred shares without par value.

The Board has authorized the issuance of an unlimited number of Series 1 Preferred Shares (“Series 1 Preferred Shares”), an unlimited number of non-cumulative floating rate Series 2 Preferred Shares (“Series 2 Preferred Shares”), an unlimited number of Series 3 Preferred Shares (“Series 3 Preferred Shares”), and an unlimited number of non-cumulative floating rate Series 4 Preferred Shares (“Series 4 Preferred Shares”).

As of November 6, 2024, no Series 2 Preferred Shares or Series 4 Preferred Shares have been issued. The Bank redeemed the Series 1 Preferred Shares on October 31, 2024, and there were nil Series 1 Preferred Shares outstanding as at November 6, 2024. The Bank redeemed the Series 3 Preferred Shares on April 30, 2021, and there were nil Series 3 Preferred Shares outstanding as at November 6, 2024.

The following describes certain general terms and provisions of the Preferred Shares. The particular terms and provisions of a series of Preferred Shares offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below may apply thereto, will be described in such Prospectus Supplement.

Priority

Each series of Preferred Shares (including any Preferred Shares issued hereunder if a trigger event has not occurred as contemplated under the specific Non-Viability Contingent Capital Provisions) ranks on a parity basis with every other series of Preferred Shares with respect to dividends and return of capital. The Preferred Shares are entitled to a preference over the Common Shares, and any other shares ranking junior to the Preferred Shares, with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the Bank.

The Preferred Shares of any series may also be given such other preferences not inconsistent with the rights, privileges, restrictions and conditions attached to the Preferred Shares as a class over the Common Shares and any other shares ranking junior to the Preferred Shares as may be determined by the Board in the case of such series of Preferred Shares.

Upon the occurrence of a trigger event under the Non-Viability Contingent Capital Provisions, the priority of the Preferred Shares will not be relevant since all Preferred Shares will be converted into Common Shares which will rank on a parity with all other Common Shares.

Restrictions on Creation of Additional Preferred Shares

Preferred Shares may be issued, at any time or from time to time, in one or more series with such rights, privileges, restrictions and conditions as the Board may determine, subject to the Bank Act, the Bank’s by-laws and any required regulatory approval.

Voting Rights

Except with respect to amendments to the rights, privileges, restrictions or conditions of the Preferred Shares, as required by law or as specified in the rights, privileges, restrictions and conditions attached from time to time to any series of Preferred Shares, the holders of the Preferred Shares as a class shall not be entitled as such to receive notice of, to attend or to vote at any meeting of the shareholders of the Bank.

Table of Contents

DESCRIPTION OF SUBSCRIPTION RECEIPTS

The following sets forth certain general terms and provisions of the Subscription Receipts. The Bank may issue Subscription Receipts that may be exchanged by the holders thereof for Debt Securities, Preferred Shares or Common Shares upon the satisfaction of certain conditions. The particular terms and provisions of the Subscription Receipts offered pursuant to an accompanying Prospectus Supplement, and the extent to which the general terms described below apply to those Subscription Receipts, will be described in such Prospectus Supplement.

Subscription Receipts may be offered separately or together with Debt Securities, Preferred Shares or Common Shares, as the case may be. The Subscription Receipts will be issued under a subscription receipt agreement. Under the subscription receipt agreement, a purchaser of Subscription Receipts will have a contractual right of rescission following the issuance of Debt Securities, Preferred Shares or Common Shares, as the case may be, to such purchaser, entitling the purchaser to receive the amount paid for the Subscription Receipts upon surrender of the Debt Securities, Preferred Shares or Common Shares, as the case may be, if this Prospectus, the relevant Prospectus Supplement, and any amendment thereto, contains a misrepresentation, provided such remedy for rescission is exercised within 180 days of the date the Subscription Receipts are issued.

Any Prospectus Supplement for Subscription Receipts supplementing this Prospectus will contain the terms and conditions and other information with respect to the Subscription Receipts being offered thereby, including:

(i)

the number of Subscription Receipts;

(ii)

the price at which the Subscription Receipts will be offered and whether the price is payable in installments;

(iii)

any conditions to the exchange of Subscription Receipts into Debt Securities, Preferred Shares or Common Shares, as the case may be, and the consequences of such conditions not being satisfied;

(iv)

the procedures for the exchange of the Subscription Receipts into Debt Securities, Preferred Shares or Common Shares, as the case may be;

(v)

the number of Debt Securities, Preferred Shares or Common Shares, as the case may be, that may be exchanged upon exercise of each Subscription Receipt;

(vi)

the designation and terms of any other Securities with which the Subscription Receipts will be offered, if any, and the number of Subscription Receipts that will be offered with each Security, if applicable;

(vii)

the dates or periods during which the Subscription Receipts may be exchanged into Debt Securities, Preferred Shares or Common Shares, as the case may be;

(viii)

whether such Subscription Receipts will be listed on any securities exchange;

(ix)

any other specific terms.

Prior to the exchange of their Subscription Receipts, holders of Subscription Receipts will not have any of the rights of holders of the securities subject to the Subscription Receipts.

Table of Contents

DESCRIPTION OF WARRANTS

The following describes certain general terms and provisions that will apply to the Warrants. The particular terms and provisions of Warrants offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below apply to such Warrants, will be described in such Prospectus Supplement.

The Bank may issue Warrants for the purchase of Debt Securities, Preferred Shares or Common Shares. Warrants may be offered separately or together with Debt Securities, Preferred Shares or Common Shares, as the case may be. Each series of Warrants will be issued under a separate indenture (each, a “Warrant Indenture”) in each case between the Bank and a trustee determined by the Bank. The statements below relating to any Warrant Indenture and the Warrants to be issued thereunder are summaries of certain anticipated provisions thereof, are not complete and are subject to, and qualified by reference to all provisions of the applicable Warrant Indenture. The applicable Prospectus Supplement will include details of the Warrant Indenture with respect to the Warrants being offered. Reference is made to the applicable Prospectus Supplement which will accompany this Prospectus for the terms and other information with respect to the offering of Warrants being offered thereby.

The particular terms and provisions of each issue of Warrants providing for the issuance of Debt Securities, Preferred Shares or Common Shares on exercise of Warrants will be described in the related Prospectus Supplement and may include the designation, number and terms of the Debt Securities, Preferred Shares or Common Shares purchasable upon exercise of the Warrants, any procedures that will result in the adjustment of these numbers, the exercise price, dates and periods of exercise, the currency in which the Warrants are issued and any other specific terms of the Warrants.

Table of Contents

BANK ACT RESTRICTIONS AND APPROVALS

Under the Bank Act, the Bank is prohibited from redeeming or purchasing any of its shares or its subordinated debt, unless the consent of the Superintendent has been obtained. In addition, the Bank Act prohibits the Bank from purchasing or redeeming any shares or paying any dividends if there are reasonable grounds for believing that the Bank is, or the payment would cause the Bank to be, in contravention of the Bank Act requirement to maintain, in relation to the Bank’s operations, adequate capital and appropriate forms of liquidity and to comply with any regulations or directions of the Superintendent in relation thereto.

Table of Contents

RESTRAINTS ON BANK SHARES UNDER THE BANK ACT

Under the Bank Act, no person shall have a significant interest in any class of shares of a bank, including the Bank, unless the person first receives the approval of the Minister of Finance (Canada) (the “Minister”). Ownership, directly or indirectly, of more than 10% of any class of shares of a bank constitutes a significant interest. No person, other than GBH Inc., has a significant interest in any class of shares of the Bank. The Bank monitors the above constraints on shareholdings through various means including through the completion of Declaration of Ownership Forms for shareholder certificate transfer requests. If any person contravenes the above constraints on shareholdings, neither such person, nor any entity controlled by the particular person, may exercise any voting rights until the shares to which the constraint relates are disposed of. Approval from the Minister for GBH Inc. to have a significant interest in the Common Shares was obtained in 2024.

The Bank Act also prohibits the registration of a transfer or issue of any shares of the Bank to, and the exercise, in person or by proxy, of any voting rights attached to any share of the Bank that is beneficially owned by, His Majesty in right of Canada or of a province or any agent or agency of His Majesty in either of those rights, or to the government of a foreign country or any political subdivision, agent or agency of any of them.

Table of Contents

PLAN OF DISTRIBUTION

The Bank may offer and sell Securities directly to one or more purchasers, through agents, or through underwriters or dealers designated by it from time to time. The Bank may distribute the Securities from time to time in one or more transactions at a fixed price or prices (which may be changed from time to time), at market prices prevailing at the times of sale, at prices related to prevailing market prices or at negotiated prices. A description of such pricing will be disclosed in the applicable Prospectus Supplement. The Bank may offer Securities in the same offering, or the Bank may offer Securities in separate offerings.

This Prospectus may also, from time to time, relate to the offering of Securities by certain selling securityholders. The selling securityholders may sell all or a portion of the Securities beneficially owned by them and offered thereby from time to time directly or through one or more underwriters, broker-dealers or agents. The Securities may be sold by the selling securityholders in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices.

A Prospectus Supplement will describe the terms of each specific offering of Securities, including (i) the terms of the Securities to which the Prospectus Supplement relates, including the type of Security being offered; (ii) the name or names of any agents, underwriters or dealers involved in such offering of Securities; (iii) the name or names of any selling securityholders; (iv) the purchase price of the Securities offered thereby and the proceeds to, and the portion of expenses borne by, the Bank from the sale of such Securities; (v) any agents’ commission, underwriting discounts and other items constituting compensation payable to agents, underwriters or dealers; and (vi) any discounts or concessions allowed or re-allowed or paid to agents, underwriters or dealers.

If underwriters are used in an offering, the Securities offered thereby will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions at a fixed public offering price or at varying prices determined at the time of sale. Securities may be either offered to the public through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Only underwriters named in a Prospectus Supplement are deemed to be underwriters in connection with the Securities offered thereby. The obligations of the underwriters to purchase Securities will be subject to the conditions precedent agreed upon by the parties, and the underwriters will be obligated to purchase all Securities under that offering if any are purchased. Any public offering price and any discounts or concessions allowed or re-allowed or paid to agents, underwriters or dealers may be changed from time to time.

The Securities may also be sold: (i) directly by the Bank or the selling securityholders at such prices and upon such terms as agreed to; or (ii) through agents designated by the Bank or the selling securityholders from time to time. Any agent involved in the offering and sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by the Bank and/or selling securityholders to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any agent is acting on a “best efforts” basis for the period of its appointment.

The Bank and/or the selling securityholders may agree to pay the underwriters a commission for various services relating to the issue and sale of any Securities offered under any Prospectus Supplement. Agents, underwriters or dealers who participate in the distribution of the Securities may be entitled under agreements to be entered into with the Bank and/or the selling securityholders to indemnification by the Bank and/or the selling securityholders against certain liabilities, including liabilities under securities legislation, or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof.

Agents, underwriters or dealers may make sales of Securities in privately negotiated transactions and/or any other method permitted by law, including sales deemed to be an “at-the-market” offering as defined in and subject to limitations imposed by applicable Canadian securities laws which includes sales made to or through a market maker other than on an exchange. In connection with any offering of Securities, except with respect to “at-the-market” offerings, underwriters may over-allot or effect transactions which stabilize or maintain the market price of the offered Securities at a level above that which might otherwise prevail in the open market. Such transactions may be commenced, interrupted or discontinued at any time. No underwriter or dealer involved in an “at-the-market” offering, as defined under applicable Canadian securities laws, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an underwriter or dealer may enter into any transaction that is intended to stabilize or maintain the market price of the Securities or Securities of the same class as the Securities

Table of Contents

distributed under the applicable Prospectus Supplement, including selling an aggregate number or principal amount of Securities that would result in the underwriter or dealer creating an over-allocation position in the Securities.

The Bank may authorize agents or underwriters to solicit offers by eligible institutions to purchase Securities from the Bank at the public offering price set forth in the applicable Prospectus Supplement under delayed delivery contracts providing for payment and delivery on a specified date in the future. The conditions to these contracts and the commissions payable for solicitation of these contracts will be set forth in the applicable Prospectus Supplement.

Each class or series of Securities other than Common Shares, that is not a secondary offering will be a new issue of Securities with no established trading market. Unless otherwise specified in the applicable Prospectus Supplement, the Preferred Shares, Debt Securities, Warrants or Subscription Receipts will not be listed on any securities exchange. Unless otherwise specified in the applicable Prospectus Supplement, there is no market through which the Preferred Shares, Debt Securities, Warrants or Subscription Receipts may be sold and purchasers may not be able to resell Preferred Shares, Debt Securities, Warrants or Subscription Receipts purchased under this Prospectus or any Prospectus Supplement. This may affect the pricing of the Preferred Shares, Debt Securities, Warrants or Subscription Receipts in the secondary market, the transparency and availability of trading prices, the liquidity of the securities, and the extent of issuer regulation. Subject to applicable laws, certain dealers may make a market in the Preferred Shares, Debt Securities, Warrants or Subscription Receipts, as applicable, but will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given that any dealer will make a market in the Preferred Shares, Debt Securities, Warrants or Subscription Receipts or as to the liquidity of the trading market, if any, for the Preferred Shares, Debt Securities, Warrants or Subscription Receipts.

Table of Contents

PRIOR SALES AND TRADING PRICE AND VOLUME

Prior sales will be provided as required in a Prospectus Supplement with respect to the issuance of Securities pursuant to such Prospectus Supplement.

Trading prices and volume of the Bank’s Securities will be provided for all of the Bank’s issued and outstanding Common Shares in each Prospectus Supplement to this Prospectus.

Table of Contents

RISK FACTORS

Investment in the Securities is subject to various risks including those risks inherent in conducting the business of a diversified financial institution. Before deciding whether to invest in any Securities, investors should consider carefully the risks set out herein and incorporated by reference in this Prospectus (including subsequently filed documents incorporated by reference) and those described in a Prospectus Supplement relating to a specific offering of Securities.

Table of Contents

USE OF PROCEEDS

Unless otherwise specified in a Prospectus Supplement, the net proceeds to the Bank from the sale of the Securities will be added to the general funds of the Bank. The Bank will not receive any proceeds from any sales of Securities offered by a selling securityholder.

Table of Contents

Legal Matters

Unless otherwise specified in a Prospectus Supplement, certain legal matters relating to the Securities offered by a Prospectus Supplement will be passed upon on behalf of the Bank by Stikeman Elliott LLP with respect to Canadian legal matters and Davis Polk & Wardwell LLP with respect to U.S. legal matters. As at the date hereof, the partners and associates of Stikeman Elliott LLP beneficially owned, directly or indirectly, less than 1% of any issued and outstanding securities of the Bank or any associates or affiliates of the Bank.

Table of Contents

Auditors, Registrar and Transfer Agent

Ernst & Young LLP are the auditors of the Bank and are independent of the Bank within the meaning of the Rules of Professional Conduct of the Institute of Chartered Professional Accountants of Ontario. Ernst & Young LLP replaced KPMG LLP, the Bank’s previous auditors, on December 14, 2022. The Bank’s registrar and transfer agent is Computershare Investor Services Inc., 100 University Avenue, Toronto, Ontario M5J 2Y1.

Table of Contents

Documents Filed As Part Of The Registration Statement

The following documents have been filed or furnished with the SEC as part of the Registration Statement of which this Prospectus forms a part: (i) the documents listed under the heading “Documents Incorporated by Reference”; (ii) powers of attorney from the Bank’s directors and officers, as applicable; (iii) the consent of Ernst & Young LLP; (iv) the consent of KPMG LLP; and (v) the consent of Stikeman Elliott LLP. A copy of the form of indenture, warrant agreement, subscription receipt agreement or statement of eligibility of trustee on Form T-1, as applicable, will be filed by post-effective amendment or by incorporation by reference to documents filed or furnished with the SEC under the Securities Exchange Act of 1934, as amended.

PART II

INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Indemnification of Directors and Officers

Under the Bank Act and the Bank’s by-laws, the Bank indemnifies, (a) any director or officer of the Bank, (b) any former director or officer of the Bank, (c) and any other person who acts or acted at the Bank’s request as a director or an officer of an entity of which the Bank is or was a shareholder or creditor against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred by the person in respect of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a person referred to in any of (a) to (c) above, if (d) the director, officer or person acted honestly and in good faith with a view to the best interests of the Bank, and (e) in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, the director, officer or person had reasonable grounds for believing that the impugned conduct was lawful.

These indemnification provisions could be construed to permit or require indemnification for certain liabilities arising out of United States federal securities laws.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to directors, officers or persons controlling the Bank pursuant to the provisions described above, or otherwise, the Bank has been advised that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

The Bank has purchased, at its expense, a directors’ and officers’ liability insurance policy that covers individual directors and officers in circumstances where the Bank is not able or permitted to indemnify such individuals.

EXHIBITS

Exhibit Number	Description
4.1	Annual Information Form of the Bank in respect of the year ended October 31, 2023, dated December 13, 2023 (incorporated by reference to Exhibit 99.1 of the Bank’s Annual Report on Form 40-F filed with the SEC on December 13, 2023).

4.2	Audited consolidated financial statements of the Bank as at and for the years ended October 31, 2023 and 2022, together with the notes thereto and the reports of independent registered public accounting firms thereon dated December 12, 2023 and December 6, 2022 (incorporated by reference to Exhibit 99.2 of the Bank's Annual Report on Form 40-F filed with the SEC on December 13, 2023).

4.3	Management's discussion and analysis of the Bank for the year ended October 31, 2023 (incorporated by reference to Exhibit 99.3 of the Bank's Annual Report on Form 40-F filed with the SEC on December 13, 2023)

4.4*	Management proxy circular of the Bank distributed in connection with the annual and special meeting of shareholders of the Bank held on April 17, 2024 .

4.5*	Unaudited consolidated financial statements of the Bank as at and for the three- and nine-month periods ended July 31, 2024, together with the notes thereto.

4.6*	Management’s discussion and analysis of the Bank for the three- and nine-month periods ended July 31, 2024.

4.7*	Material change report dated October 31, 2024, in respect of the redemption of the Bank’s Series 1 Preferred Shares.

5.1*	Consent of Ernst & Young LLP.

5.2*	Consent of KPMG LLP.

5.3*	Consent of Stikeman Elliott LLP.

6.1*	Powers of Attorney (included on the signature page of this Registration Statement).

7.1**	Form of Indenture (if debt securities are offered by a supplement to this Registration Statement, the Bank will file a Statement of Eligibility on Form T-1 with the SEC)

107*	Filing Fee Table

* Filed herewith.

** To be filed by amendment.

PART III

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

Item 1. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to the securities registered pursuant to Form F-10 or to transactions in said securities.

Item 2. Consent to Service of Process

(a) At the time of filing this Form F-10, the Registrant shall file with the SEC a written irrevocable consent and power of attorney on Form F-X.

(b) At the time of filing Form F-10, any non-U.S. person acting as trustee with respect to the registered securities shall file with the Commission a written irrevocable consent and power of attorney on Form F-X.

(c) Any change to the name or address of the agent for service of the Registrant or the trustee shall be communicated promptly to the SEC by amendment to Form F-X referencing the file number of the relevant registration statement.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of London, Province of Ontario, Canada on November 7, 2024.

	VERSABANK

	By:	/s/ David R. Taylor
		Name: David R. Taylor
		Title: President & Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints David R. Taylor and John Asma, or either of them, his or her true and lawful attorneys-in-fact and agents, each of whom may act alone, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments to this Registration Statement, and any related registration statements necessary to register additional securities, and to file the same, with all exhibits thereto, and other documents and in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all his or her said attorneys-in-fact and agents or any of them or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

This Power of Attorney may be executed in multiple counterparts (including facsimile and other electronically transmitted counterparts), each of which shall be deemed an original, but which taken together shall constitute one instrument.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

/s/ David R. Taylor	Chief Executive Officer and President (principal executive officer)	November 7, 2024
David R. Taylor

/s/ John Asma	Chief Financial Officer (principal financial and accounting officer)	November 7, 2024
John Asma

/s/ Thomas A. Hockin, P.C.	Director, Chair	November 7, 2024
The Honourable Thomas A. Hockin, P.C.

/s/ Gabrielle Bochyneck	Director	November 7, 2024
Gabrielle Bochyneck

/s/ Robbert-Jan Brabander	Director	November 7, 2024
Robbert-Jan Brabander

/s/ David A. Bratton	Director	November 7, 2024
David A. Bratton

/s/ Peter M. Irwin	Director	November 7, 2024
Peter M. Irwin

/s/ Richard Jankura	Director	November 7, 2024
Richard Jankura

/s/ Arthur R. Linton	Director	November 7, 2024
Arthur R. Linton

/s/ Susan T. McGovern	Director	November 7, 2024
Susan T. McGovern

/s/ Paul G. Oliver	Director	November 7, 2024
Paul G. Oliver

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this Registration Statement, solely in the capacity of the duly authorized representative of VersaBank in the United States, on November 7, 2024.

	COGENCY GLOBAL INC.

	By:	/s/ Colleen A. De Vries
		Name: Colleen A. De Vries
		Title: Senior Vice President

Exhibit 4.4

Notice of Annual and Special Meeting of Shareholders and

Management Proxy Circular

Wednesday, April 17, 2024

London, Ontario

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS APRIL 17, 2024

TAKE NOTICE that the Annual and Special Meeting of Shareholders (the “Meeting”) of VersaBank (the “Bank”) will be held via live webcast and at the VersaBank Innovation Centre of Excellence, 1979 Otter Place, London, Ontario, on Wednesday, April 17, 2024, at 10:30 a.m. (ET) for the following purposes:

to receive the financial statements for the fiscal year ended October 31, 2023, and the report of the auditors thereon;

to re-appoint Ernst & Young LLP, as auditors of the Bank for the ensuing year and to authorize the directors of the Bank to fix their remuneration;

to elect directors for the ensuing year;

to renew the existing Omnibus Long-Term Incentive Plan of the Bank (the “Long-Term Incentive Plan” or “LTIP”); and

to transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.

Particulars of the matters above are set forth in the accompanying Management Proxy Circular.

The Board of Directors of the Bank has fixed February 22, 2024, as the record date for determining Shareholders entitled to receive notice of and to vote at the Meeting.

NOTICE FOR REGISTERED SHAREHOLDERS: You are encouraged to complete the form of proxy accompanying this Notice of Meeting and return it to Odyssey Trust Corporation in accordance with the instructions provided in the form of proxy, whether or not you plan to attend the Meeting. Failure to submit your form of proxy by 10:30 a.m. (ET) on April 15, 2024, may result in your shares not being voted at the Meeting.

If you have received this Notice of Meeting and the Management Proxy Circular from your broker or another intermediary, we encourage you to complete and return the voting instruction form or form of proxy provided to you by your intermediary in accordance with the instructions provided with such form.

Your vote is important!

DATED at the City of London, in the Province of Ontario, this 22^nd day of February 2024.

By order of the Board of Directors,

Brent T. Hodge

General Counsel and Corporate Secretary

MANAGEMENT PROXY CIRCULAR

All information is as of February 22, 2024, and all dollar amounts are expressed in Canadian dollars, unless otherwise stated.

TABLE OF CONTENTS

PART I–VOTING AND PROXY INFORMATION		4
	SOLICITATION OF PROXIES BY MANAGEMENT	4
	APPOINTMENT OF PROXIES	4
	ADVICE TO NON-REGISTERED SHAREHOLDERS	4
	REVOCATION OF PROXIES	5
	EXERCISE OF DISCRETION WITH RESPECT TO PROXIES	6
	QUORUM	6
PART II – VOTING SHARES AND PRINCIPAL HOLDERS OF VOTING SHARES		6
PART III – BUSINESS TO BE TRANSACTED AT THE MEETING		7
	1 FINANCIAL STATEMENTS	7
	2 APPOINTMENT OF AUDITORS	7
	3 ELECTION OF DIRECTORS	7
	4 Renewal of The Bank’s OMNIBUS Long-Term Incentive Plan	11
PART IV – STATEMENT OF EXECUTIVE COMPENSATION		15
	COMPENSATION DISCUSSION & ANALYSIS	15
	PERFORMANCE GRAPH	23
	SUMMARY COMPENSATION TABLE	24
	TERMINATION AND CHANGE OF CONTROL BENEFITS	26
PART V – STATEMENT OF DIRECTOR COMPENSATION		29
PART VI – SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS		31
	INCENTIVE PLAN AWARDS	31
PART VII – INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS		33
	AGGREGATE INDEBTEDNESS OUTSTANDING	33
	INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS	33
PART VIII – INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS		34
PART IX – AUDIT COMMITTEE		34
PART X – CORPORATE GOVERNANCE		34
PART XI – ADDITIONAL INFORMATION		39
	SHAREHOLDER PROPOSALS	39
	ADDITIONAL INFORMATION	39
	DIRECTORS’ APPROVAL	39
SCHEDULE A – LONG-TERM INCENTIVE PLAN		40
SCHEDULE B – MANDATE OF THE BOARD OF DIRECTORS		41

MANAGEMENT PROXY CIRCULAR

PART I – VOTING AND PROXY INFORMATION

SOLICITATION OF PROXIES BY MANAGEMENT

This Management Proxy Circular is furnished to holders (“Shareholders”) of common shares (“Shares”) of VersaBank (the “Bank”) in connection with the solicitation of proxies by or on behalf of the management of the Bank for use at the Annual and Special Meeting of Shareholders, and any adjournment or postponement thereof (the “Meeting”). The Meeting will be held via live webcast and at the VersaBank Innovation Centre of Excellence, 1979 Otter Place, London Ontario, on Wednesday, April 17, 2024, at 10:30 a.m. (ET) for the purposes set forth in the accompanying Notice of Annual and Special Meeting of Shareholders (the “Notice”). It is expected that management will solicit proxies electronically and by mail. Proxies may also be solicited personally or by telephone by officers and directors and other representatives of the Bank, as the case may be. The cost of solicitation by or on behalf of management will be borne by the Bank.

This Management Proxy Circular and other proxy-related materials are being sent to both Registered and Non- Registered Shareholders (each as defined below). The Bank is not sending proxy-related materials directly to Non- Registered Shareholders and is not relying on the notice-and-access provisions of applicable securities laws for the delivery of proxy-related materials to either Registered or Non-Registered Shareholders. Instead, the Bank will deliver proxy-related materials to intermediaries (as defined below under the heading “Voting and Proxy Information – Advice to Non-Registered Shareholders”) and they will be asked to promptly forward the proxy-related materials to Non-Registered Shareholders. If you are a Non-Registered Shareholder, your intermediary should send you a voting instruction form or form of proxy with this Management Proxy Circular. The Bank has elected to pay for the delivery of the proxy-related materials to objecting Non-Registered Shareholders.

APPOINTMENT OF PROXIES

The persons named in the enclosed form of proxy and voting instruction forms are directors and/or officers of the Bank. AS A SHAREHOLDER, YOU HAVE THE RIGHT TO APPOINT A PERSON, WHO NEED NOT BE A SHAREHOLDER, AS YOUR NOMINEE TO ATTEND AND ACT ON YOUR BEHALF AT THE MEETING OTHER THAN THE PERSONS DESIGNATED IN THE ENCLOSED FORM OF PROXY. This right may be exercised by inserting such person’s name in the blank space provided in the form of proxy. Proxies are to be returned to Odyssey Trust Corporation in accordance with the instructions provided in the enclosed form of proxy. A proxy is only valid at the Meeting or any adjournment or postponement thereof.

Shareholders who are recorded on the Bank’s share register as the registered owners of their Shares (“Registered Shareholders”) and who plan to attend and vote their Shares in person at the Meeting should not complete or return the enclosed form of proxy. Their votes will be taken and counted at the Meeting. Such Registered Shareholders are to register with the Bank’s transfer agent, Odyssey Trust Corporation, upon their arrival at the Meeting.

ADVICE TO NON-REGISTERED SHAREHOLDERS

The information in this section is of significant importance to a substantial number of Shareholders who do not hold their Shares in their own name, but who hold their Shares indirectly through a bank, trust company, securities

broker, trustee or other entity (an “intermediary”). Shareholders that do not hold their Shares in their own name are referred to in this document as “Non-Registered Shareholders.”

As Shares held by intermediaries on behalf of their clients can only be voted for or against resolutions upon the instructions of the applicable Non-Registered Shareholder, each intermediary is required to seek instructions from such Non-Registered Shareholders as to how their Shares are to be voted at the Meeting. For that reason, if you are a Non-Registered Shareholder, you will have received this Management Proxy Circular from your intermediary along with a form of proxy or a voting instruction form.

Every intermediary has its own mailing procedures and provides its own return instructions, which Non-Registered Shareholders should follow closely in order to ensure that their Shares are voted at the Meeting. A Non-Registered Shareholder may have received from the intermediary either a request for voting instructions or a form of proxy that is identical to the form of proxy provided to Registered Shareholders; however, the purpose of any such form of proxy is limited to instructing the intermediary how to vote on behalf of the Non-Registered Shareholder. A Non- Registered Shareholder must return the voting instruction form or the form of proxy to its intermediary well in advance of the Meeting in order to have his, her or its Shares voted.

A Non-Registered Shareholder that receives a form of proxy or voting instruction form from an intermediary cannot use that form of proxy or voting instruction form to vote shares directly at the Meeting. Non-Registered Shareholders who wish to vote in person at the Meeting or appoint a person as their nominee to attend and vote on their behalf at the Meeting must provide their intermediary with the appropriate documentation in order to be appointed as proxyholder. A Non-Registered Shareholder should contact its intermediary to determine what documentation the intermediary requires in order for such Non-Registered Shareholder or its nominee to be appointed proxyholder, and to attend and vote their Shares at the Meeting. Only after the intermediary appoints a Non-Registered Shareholder or its nominee as a proxyholder can that Non-Registered Shareholder or its nominee vote shares directly at the Meeting.

The majority of intermediaries now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”). Broadridge typically prepares a special voting instruction form, mails those forms to Non-Registered Shareholders and asks for appropriate instructions respecting the voting of Shares to be represented at the Meeting. Non-Registered Shareholders are requested to complete and return the voting instruction form to Broadridge by mail in the envelope provided. Alternatively, Non-Registered Shareholders can call a toll-free telephone number or access Broadridge’s dedicated voting website (each as noted on the voting instruction form) to deliver their voting instructions and vote the Shares held by them. Broadridge then tabulates the results of all voting instructions received and provides appropriate instructions respecting the voting of Shares to be represented at the Meeting. A Non-Registered Shareholder receiving a voting instruction form from Broadridge must complete and return such form in accordance with the instructions set out thereon well in advance of the Meeting in order to have his, her or its Shares voted. Further, a Non-Registered Shareholder receiving a voting instruction form from Broadridge cannot use that form to vote his, her or its Shares in person at the Meeting. If you are a Non-Registered Shareholder receiving a Broadridge voting instruction form and you wish to vote your Shares in person at the Meeting, you should contact your intermediary and follow their instructions for completion and return of the form of proxy or voting instruction form provided directly by them, once received.

REVOCATION OF PROXIES

Registered Shareholders

A Registered Shareholder may revoke a proxy:

(a)

by an instrument in writing executed by the Shareholder or by an attorney in writing or, if the Shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized, and deposited:

at the registered office of the Bank (Suite 2002, 140 Fullarton Street, London, Ontario N6A 5P2) at any time up to and including the last business day preceding the day of the Meeting or any adjournment or postponement thereof; or

ii.

with the chair of the Meeting at the Meeting; or

(b)

in any other manner permitted by law.

Non-Registered Shareholders

If you are a Non-Registered Shareholder and wish to revoke your voting instructions, follow the instructions provided by your intermediary in your voting instruction form or contact your intermediary.

EXERCISE OF DISCRETION WITH RESPECT TO PROXIES

Shares represented by proxies will be voted or withheld from voting by the persons designated in the form of proxy or voting instruction form in accordance with the direction of the Shareholders appointing them. Other than with respect to the election of directors which is addressed below, in the event that no specifications are made in the form of proxy or voting instruction form designating management’s nominees as proxyholders, the Shares represented by the proxies will be voted by such proxyholders FOR the matters identified in the Notice to be voted upon at the Meeting.

As described below under the heading “Business to be Transacted at the Meeting – Election of Directors”, voting for the election of nominees to the Bank’s board of directors (the “Board”) must be done by cumulative voting. Unless a Shareholder giving a proxy or voting instructions specifies that the Shares represented by such proxy or voting instructions be withheld from voting on the election of all or any of the directors, or specifies how the Shareholder wishes to distribute the votes represented by the proxy or voting instructions among the candidates, the persons named in the enclosed form of proxy or voting instruction form intend to vote the Shares represented by such proxy or voting instructions FOR the election of the nominees listed herein (or any replacements thereof) and to distribute votes among such nominees in such manner as in their discretion is most likely to cause such nominees to be duly elected as the directors of the Bank at the Meeting.

The enclosed form of proxy and/or voting instruction form confers discretionary authority upon the persons named therein as proxyholders with respect to amendments and variations to matters identified in the Notice to be voted upon at the Meeting, and with respect to other matters that may properly come before the Meeting. At the time of the preparation of this Management Proxy Circular, management of the Bank knows of no such amendments, variations or other matters to come before the Meeting. If, however, amendments, variations or other matters which are not now known to management of the Bank should properly come before the Meeting, the Shares represented by any proxy or voting instructions will be voted by the persons named in the form of proxy and voting instruction form in accordance with their best judgment.

QUORUM

A quorum is present at the Meeting if the holders of at least twenty-five percent (25%) of the Shares who are entitled to vote at the Meeting are present in person or represented by proxyholders.

PART II – VOTING SHARES AND PRINCIPAL HOLDERS OF VOTING SHARES

As of February 22, 2024, there were 25,964,424 Shares issued and outstanding. Each Share carries the right to one vote in respect of each of the matters properly coming before the Meeting, except for the election of directors, for which cumulative voting is used (for additional details with respect to cumulative voting, please refer to the information set out below under the heading “Business to be Transacted at the Meeting – Election of Directors”).

The Board has fixed February 22, 2024, as the record date for determining Shareholders entitled to receive notice of and to vote at the Meeting. Each Registered Shareholder as of the close of business on February 22, 2024, shall be entitled to vote the Shares in his, her or its name on that date, except to the extent that the person has transferred the ownership of any of his, her or its Shares after February 22, 2024, and the transferee of those Shares produces properly endorsed share certificates or otherwise establishes that he, she or it owned such Shares as of February 22, 2024, and demands, not later than ten (10) days before the Meeting, that his, her or its name be included in the list of Shareholders entitled to receive notice of and to vote at the Meeting, in which event the transferee shall be entitled to vote such Shares at the Meeting.

To the knowledge of the Bank, as of February 22, 2024, no person or company beneficially owned, or exercised control or direction, directly or indirectly, over more than 10% of the Shares, other than 340268 Ontario Limited, which owned 8,511,652 Shares, being approximately 32.78% of the issued and outstanding Shares.

PART III – BUSINESS TO BE TRANSACTED AT THE MEETING

FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Bank for the fiscal years ended October 31, 2023 (“Fiscal 2023”), and 2022 (“Fiscal 2022”), have been mailed to Shareholders with this Management Proxy Circular. Shareholders and proxyholders will have an opportunity to review and discuss the Bank’s Fiscal 2023 results with management at the Meeting.

APPOINTMENT OF AUDITORS

The directors propose Ernst & Young LLP for re-appointment as auditors of the Bank to hold office until the close of the Bank’s next annual meeting of Shareholders. This proposal is supported by the comprehensive review of proposals from qualified external auditors in Fiscal 2022, and the annual review of the external auditor that was carried out in January 2024 by the Board’s Audit Committee (the “Audit Committee”) in keeping with our commitment to follow best practices in corporate governance.

In the past, the Board has fixed the remuneration of the auditors of the Bank. Such remuneration has been based upon the complexity of the matters dealt with and time spent in providing services to the Bank. The Board is satisfied that the remuneration negotiated in the past with the auditors of the Bank has been reasonable under the circumstances and reflective of the audit quality and performance of the auditors. Information concerning the audit- related fees paid to Ernst & Young LLP during Fiscal 2023 and to KPMG LLP during Fiscal 2022 is provided on page 22 of the Bank’s Annual Information Form for Fiscal 2023, which is available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.

It is recommended that Shareholders vote FOR the resolutions relating to the appointment of auditors and the authorization of the directors to fix the remuneration of the auditors. In the absence of contrary instructions, the persons named in the enclosed form of proxy or voting instruction form intend to vote FOR the appointment of the auditors and the authorization of the directors to fix the remuneration of the auditors.

ELECTION OF DIRECTORS

Shareholders of the Bank will be asked to elect ten (10) nominees as directors of the Bank by cumulative voting to hold office until the close of the next annual general meeting of the Bank or until his or her successor is duly elected, unless his or her office is earlier vacated and a replacement director is appointed in accordance with the by-laws of the Bank. As required under the Bank Act (Canada), where directors are to be elected by cumulative voting, each Shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the Shares held by the Shareholder multiplied by the number of directors to be elected, and the Shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any

manner. If a Shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the Shareholder is deemed to have distributed the votes equally among the candidates for whom the Shareholder voted. If the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes will be eliminated until the number of candidates remaining equals the number of positions to be filled.

All of the individuals nominated by the Conduct Review, Governance & HR Committee (the “HR Committee”) for election to the Board at the Meeting are currently directors of the Bank. All directors were elected to the Board at the Bank’s annual meeting of Shareholders on April 19, 2023, for a term expiring at the close of the Meeting.

Unless a Shareholder giving a proxy or voting instructions specifies that their Shares be withheld from voting on the election of all or any of the director nominees, or specifies how the Shareholder wishes to distribute the votes represented by his, her or its proxy or voting instructions among the nominees, the persons named in the enclosed form of proxy or voting instruction form intend to cast the votes represented by such proxy FOR the election of the nominees named herein (or any replacements thereof) and to distribute votes among such nominees in such manner as in their discretion is most likely to cause such nominees to be duly elected as the directors of the Bank at the Meeting.

The Board recommends that Shareholders vote FOR the following director nominees.

The Honourable Thomas A. Hockin

David A. Bratton

Susan T. McGovern

David R. Taylor

Peter M. Irwin

Paul G. Oliver

Gabrielle Bochynek

Robbert-Jan Brabander

Richard H. L. Jankura

Arthur Linton

The following table sets forth the record of attendance at Board and committee meetings held during Fiscal 2023 for each director who is standing for re-election at the Meeting. Additional information respecting the Bank’s current Board and its committees is contained in the Bank’s Annual Information Form for Fiscal 2023, which can be found under the Bank’s profile on SEDAR+ at www. sedarplus.ca and EDGAR at www.sec.gov/edgar.

Summary of Attendance of Directors

Director⁽¹⁾	Number of meetings attended
Director⁽¹⁾	Board	Audit Committee	HR Committee	Risk Oversight Committee	Innovation and Technology Committee
T. Hockin	10 of 10	n/a	n/a	n/a	n/a
D. Taylor	10 of 10	n/a	n/a	n/a	n/a
G. Bochynek	10 of 10	n/a	7 of 7	n/a	n/a
R. J. Brabander	10 of 10	n/a	n/a	11 of 11	4 of 4
D. Bratton	9 of 10	n/a	7 of 7	n/a	n/a
P. Irwin	10 of 10	7 of 7	n/a	11 of 11	n/a
R. Jankura	10 of 10	7 of 7	n/a	11 of 11	n/a
A. Linton	10 of 10	n/a	n/a	n/a	4 of 4
S. McGovern	10 of 10	n/a	7 of	n/a	4 of 4
P. Oliver	10 of 10	7 of 7	n/a	n/a	n/a

Notes:

(1)

At the invitation of the Chair of a committee, directors regularly attend committee meetings to which they are not a member, as observers. This table does not include instances of directors attending any such meetings in an observer capacity.

The information set forth in the table below, not being within the knowledge of the Bank, has been furnished by the respective director nominees individually and is current to February 22, 2024.

Name, City, Province or State and Country, and Shares⁽¹⁾		Office held and date first became a director	Principal Occupation
	The Honourable Thomas A. Hockin⁽²⁾ Rancho Mirage, California, USA Shares – 29,655 Series 1 Preferred Shares⁽⁴⁾ – 3,500	Chair Director since August 21, 2014	Retired, former Executive Director of the International Monetary Fund
	Susan T. McGovern ^(3)(6)(7) Aurora, Ontario, Canada Shares – 36,000 Series 1 Preferred Shares⁽⁴⁾ – Nil	Vice-Chair Director since May 6, 2011	Executive Advisor in the Ontario Ministry of Finance
	David R. Taylor Ilderton, Ontario, Canada Shares – 1,284,406 Series 1 Preferred Shares⁽⁴⁾ – Nil	President & Chief Executive Officer Director since January 18, 1993	President & Chief Executive Officer of VersaBank
	Gabrielle Bochynek⁽⁷⁾ Stratford, Ontario, Canada Shares – 12,480 Series 1 Preferred Shares⁽⁴⁾ – Nil	Director since April 24, 2019	Principal, Human Resources and Labour Relations, The Osborne Group
	Robbert-Jan Brabander⁽⁵⁾⁽⁶⁾ Richmond Hill, Ontario, Canada Shares – 77,670 Series 1 Preferred Shares⁽⁴⁾ – 935	Director since November 4, 2009	Managing Director of Bells & Whistles Communications, Inc. and former Chief Financial Officer & Treasurer of General Motors of Canada Limited

David A. Bratton⁽⁷⁾ London, Ontario, Canada Shares – 31,300 Series 1 Preferred Shares⁽⁴⁾ – Nil	Director since September 23, 1993	Retired, former President of Bratton Consulting Inc.
Peter M. Irwin⁽⁵⁾⁽⁸⁾ Toronto, Ontario, Canada Shares – 22,500 Series 1 Preferred Shares⁽⁴⁾ – Nil	Director since January 1, 2021	Retired, former Managing Director, CIBC World Markets Inc.
Richard H. L. Jankura⁽⁵⁾⁽⁸⁾ London, Ontario, Canada Shares – 2,900 Series 1 Preferred Shares⁽⁴⁾ – Nil	Director since May 6, 2022	Retired, former Chief Financial Officer, Jones Healthcare Group
Arthur Linton⁽⁶⁾ Kitchener, Ontario, Canada Shares – 7,000 Series 1 Preferred Shares⁽⁴⁾ – Nil	Director since April 22, 2020	Barrister and Solicitor
Paul G. Oliver⁽⁸⁾ Markham, Ontario, Canada Shares – 56,920 Series 1 Preferred Shares⁽⁴⁾ – 1,400	Director since June 2, 2005	Retired, former senior partner of PricewaterhouseCoopers LLP

Notes:

(1)

Number of Shares includes the number of Shares beneficially owned or controlled or directed, directly or indirectly, by each director nominee.

(2)

Current and proposed Chair of the Board.

(3)

Current and proposed Vice-Chair of the Board.

(4)

Holders of Series 1 Preferred Shares are entitled to receive, as and when declared by the Board, fixed non-cumulative preferential cash dividends at the rate of $0.6772 per share per annum, or $0.1693 per share per quarter. Such dividends are paid quarterly on the last day of January, April, July and October in each year.

(5)

Current and proposed member of the Risk Oversight Committee.

(6)

Current and proposed member of the Innovation and Technology Committee.

(7)

Current and proposed member of the HR Committee.

(8)

Current and proposed member of the Audit Committee.

Majority Voting

The Bank has a majority voting policy for the election of directors, which is applicable at any meeting of Shareholders where an uncontested election of directors is held. A director nominee in an uncontested election who receives more “withheld” votes than votes in his or her favour is expected to promptly tender his or her resignation to the Chair of the Board for consideration; however, such resignation is not effective until it is accepted by the Board. The Board will submit the nominee’s resignation to the HR Committee for consideration. The HR Committee will then recommend to the Board whether or not to accept the resignation. A director who tenders his or her resignation will not participate in any meetings of the Board or the HR Committee to consider whether the resignation shall be accepted. Within 90 days of receiving the final voting results in respect of the uncontested election, the Board will issue a press release announcing whether it has accepted the director nominee’s resignation or explaining its reasons for not accepting the resignation; absent extenuating circumstances, the Board expects that such resignations will be accepted.

RENEWAL OF THE BANK’S OMNIBUS LONG-TERM INCENTIVE PLAN

At the Meeting, Shareholders will be asked to approve the resolution set forth below (the “LTIP Renewal Resolution”) to renew the Bank’s Omnibus Long Term Incentive Plan (the “LTIP”). The complete text of the LTIP is set out in Schedule “A” to this Management Proxy Circular and a summary of its material terms is provided below.

Any existing options that were granted prior to the effective date of the LTIP pursuant to the stock option plan of Pacific & Western Bank (the “Bank Stock Option Plan”) and the stock option plan of PWC (the “PWC Stock Option Plan” and, together with the Bank Stock Option Plan, the “Previous Stock Option Plans”) will continue in accordance with their terms. The Previous Stock Option Plans were not re-approved by the Shareholders at the Annual Meeting of Shareholders held on April 24, 2019 and the Bank has not granted any further options under either plan.

The LTIP will allow for a variety of equity based awards that provide different types of incentives to be granted to certain of our officers, employees and consultants (in the case of options (“Options”), performance share units (“PSUs”) and restricted share units (“RSUs”)) and non-employee directors (in the case of deferred share units (“DSUs”)). Options, PSUs, RSUs and DSUs are collectively referred to herein as “Awards”. Each Award will represent the right to receive Shares, or in the case of PSUs, RSUs and DSUs, Shares or cash, in accordance with the terms of the LTIP. The following discussion is qualified in its entirety by the text of the LTIP.

Under the terms of the LTIP, our Board, or if the Board by resolution so decides, a committee of the Board and/or any member of the Board, may grant Awards to eligible participants, as applicable. Participation in the LTIP is voluntary and, if an eligible participant agrees to participate, the grant of Awards will be evidenced by a grant agreement with each such participant. The interest of any participant in any Award is not assignable or transferable, whether voluntary, involuntary, by operation of law or otherwise, other than by will or the laws of descent and distribution.

The LTIP will provide that appropriate adjustments, if any, will be made by our Board in connection with a reclassification, reorganization or other change of our Shares, share split or consolidation, distribution, merger or amalgamation, in the Shares issuable or amounts payable to preclude a dilution or enlargement of the benefits under the LTIP.

The maximum number of Shares reserved for issuance, in the aggregate, under the Bank’s LTIP or pursuant to awards under any other established share compensation arrangement, will not exceed 10% of the aggregate number of Shares issued and outstanding from time to time. As of the date of this Management Proxy Circular, there are 25,964,424 Shares issued and outstanding, and the Bank has options outstanding under the LTIP to purchase up to 874,393 common shares (representing approximately 3.367% of the current issued and outstanding Shares), leaving unallocated options with respect to an aggregate of 1,195,945 Shares available for future grants (representing approximately 4.60% of the outstanding Shares), based on the number of currently outstanding Shares. For the purposes of calculating the maximum number of Shares reserved for issuance under the LTIP, any issuance from

treasury by the Bank that is issued in reliance upon an exemption under applicable stock exchange rules applicable to share compensation arrangements used as an inducement to person(s) or company(ies) not previously employed by and not previously an insider of the Bank shall not be included. All of the Shares covered by the exercised, cancelled or terminated Awards will automatically become available Shares for the purposes of Awards that may be subsequently granted under the LTIP. As a result, the LTIP is considered an “evergreen” plan, which requires shareholder approval every three years pursuant to the rules of the Toronto Stock Exchange (“TSX”). The LTIP was last approved by Shareholders at the Annual and Special Meeting of Shareholders held on April 21, 2021.

The maximum number of Shares that may be: (i) issued to insiders of the Bank within any one-year period, and (ii) issuable to insiders of the Bank at any time, in each case, under the LTIP alone, or when combined with all of the Bank’s other security-based compensation arrangements, cannot exceed 10% of the aggregate number of Shares issued and outstanding from time to time determined on a non-diluted basis. The LTIP does not provide for a maximum number of shares which may be issued to an individual pursuant to the LTIP or any other share compensation arrangement (expressed as a percentage or otherwise).

An Option shall be exercisable during a period established by our Board which shall commence on the date of the grant and shall terminate no later than ten years after the date of the granting of the Option or such shorter period as the Board may determine. The minimum exercise price of an Option will be determined based on the closing price of the Shares on the TSX on the last trading day before the date such Option is granted. The LTIP will provide that the exercise period shall automatically be extended if the date on which it is scheduled to terminate shall fall during a black-out period. In such cases, the extended exercise period shall terminate 10 business days after the last day of the black-out period. In order to facilitate the payment of the exercise price of the Options, the LTIP has a cashless exercise feature pursuant to which a participant may elect to undertake either a broker assisted ‘‘cashless exercise’’ or a ‘‘net exercise’’ subject to the procedures set out in the LTIP, including the consent of our Board, where required. If a participant elects to exercise Options under the “net exercise” procedures, the participant would receive a number of Shares equal to (a) the number of Shares underlying the Options multiplied by (b) the market value of the Shares at such date less the exercise price of such Options, (c) divided by the market value of the Shares at such date, subject to acceptance by the Board and provided that satisfactory arrangements have been made to pay any applicable withholding taxes.

The following table describes the impact of certain events upon the rights of holders of Options under the LTIP, including termination for cause, resignation, retirement, termination other than for cause, and death or disability, subject to the terms of a participant’s employment agreement, grant agreement and the change of control provisions described below:

Event Provisions	Provisions
Termination for cause	Immediate forfeiture of all vested unvested and options.
Resignation, retirement and termination other than for cause	Forfeiture of all unvested options and the earlier of the original expiry date and 90 days after resignation to exercise vested options or such longer period as our Board may determine in its sole discretion.
Death or disability	Forfeiture of all unvested options and the earlier of the original expiry date and 12 months after date of death or disability to exercise vested options or such longer period as our Board may determine in its sole discretion.

The terms and conditions of grants of RSUs, PSUs and DSUs, including the quantity, type of award, grant date, vesting conditions, vesting periods, settlement date and other terms and conditions with respect to these Awards, will be set out in the participant’s grant agreement. Impact of certain events upon the rights of holders of these types of Awards, including termination for cause, resignation, retirement, termination other than for cause and death or disability, will be set out in the participant’s grant agreement. For each PSU awarded under the LTIP, the Board will establish (i) the applicable performance criteria and other vesting conditions, and (ii) the period of time in which such performance criteria and other vesting conditions must be met, in order for a participant to be entitled to receive Shares in exchange for his or her PSUs. Subject to the provisions of any award agreement and the provisions of the LTIP, all vested RSUs and PSUs will be settled as soon as practicable following the date on which the Board determines that the performance criteria and/or other vesting conditions with respect to the RSU and/or PSU have been met, but in all cases RSUs and PSUs will be settled prior to (i) three years following the date of grant of the RSU or PSU, if settled by payment of cash equivalent or through purchases by the Bank on the participant’s behalf on the open market, or (ii) ten years following the date of grant of the RSU or PSU, if the RSU or PSU will be settled by the issuance of Shares from treasury.

Non-employee directors may elect to receive all or a portion of their annual retainer fees in the form of a grant of DSUs in each fiscal year. The number of DSUs will be calculated as the amount of the non-employee director’s annual retainer fee elected to be paid in DSUs divided by the market value (as defined in the LTIP). Each non-employee director will be entitled to redeem his or her DSUs during the period commencing on the business day immediately following his or her termination date and ending on the date that is not later than the 90th day following such termination date, or such shorter redemption period as set out in the relevant DSU agreement.

Pursuant to the LTIP, when dividends (other than stock dividends) are paid on Shares, participants will receive additional DSUs, RSUs and/or PSUs (“Dividend Share Units”), as applicable, as of the dividend payment date. The number of Dividend Share Units to be granted to a participant will be determined by multiplying the aggregate number of DSUs, RSUs and/or PSUs, as applicable, held by the participant on the relevant record date by the amount of the dividend paid by the Bank on each Share, and dividing the result by the market value (as defined in the LTIP) on the dividend payment date. Any Dividend Share Units granted to a participant will be subject to the same vesting conditions and settlement terms as applicable to the related DSUs, RSUs and/or PSUs in accordance with the applicable award agreement.

In connection with a change of control of the Bank, our Board will take such steps as are reasonably necessary or desirable to cause the conversion or exchange or replacement of outstanding Awards into, or for, rights or other securities of substantially equivalent (or greater) value in the continuing entity, provided that our Board may accelerate the vesting of Awards if: (i) the required steps to cause the conversion or exchange or replacement of Awards are impossible or impracticable to take or are not being taken by the parties required to take such steps (other than the Bank); or (ii) the Bank has entered into an agreement which, if completed, would result in a change of control and the counterparty or counterparties to such agreement require that all outstanding Awards be exercised immediately before the effective time of such transaction or terminated on or after the effective time of such transaction. If a participant is terminated without cause during the 12 month period following a change of control, or after the Bank has signed a written agreement to effect a change of control but before the change of control is completed, then any unvested Awards (based on the performance achieved up to the termination date in respect of PSUs) will immediately vest and may be exercised within 30 days of such date.

Our Board may, in its sole discretion, suspend or terminate the LTIP at any time, or from time to time, amend, revise or discontinue the terms and conditions of the LTIP or of any securities granted under the LTIP and any grant agreement relating thereto, subject to any required regulatory and TSX approval, provided that such suspension, termination, amendment, or revision will not adversely alter or impair any Award previously granted except as permitted by the terms of the LTIP or as required by applicable laws.

Our Board may amend the LTIP or any securities granted under the LTIP at any time without the consent of a participant provided that such amendment shall: (i) not materially adversely alter or impair any Award previously granted except as permitted by the terms of the LTIP or upon the consent of the applicable participant(s); and (ii) be

in compliance with applicable law and with prior approval if required, of the shareholders of the Bank and of the TSX or any other stock exchange upon which the Bank has applied to lists its shares, provided however that shareholder approval shall not be required for the following amendments and our Board may make any changes which may include but are not limited to:

any amendment to the vesting provisions of the LTIP and any Award granted under the LTIP;

any amendment regarding the provisions governing the effect of termination of a participant’s employment, contract or office;

any amendment which accelerates the date on which any Award may be exercised under the LTIP;

any amendment necessary to comply with applicable law or the requirements of the TSX or any other regulatory body;

any amendment of a ‘‘housekeeping’’ nature, including, without limitation, to clarify the meaning of an existing provision of the LTIP, correct or supplement any provision of the LTIP that is inconsistent with any other provision of the LTIP, correct any grammatical or typographical errors or amend the definitions in the LTIP;

any amendment regarding the administration of the LTIP; and

any other amendment, fundamental or otherwise, not requiring shareholder approval under applicable laws or the applicable rules of the TSX or any other stock exchange upon which the Bank has applied to list its Shares.

provided that the alteration, amendment or variance does not:

increase the maximum number of Shares issuable under the LTIP, other than an adjustment pursuant to a change in capitalization;

reduce the exercise price of Awards benefitting including cancellation and reissuance of an Award, except in the case of an adjustment pursuant to a change in capitalization;

extend expiration date of an Award, except in the case of an extension due to black-out period;

remove or exceed the insider participation limits;

amend the transfer provisions of the Awards;

amend the definition of eligible participant that would permit the issuance of Options, RSUs or PSUs to non- employee directors; or

amend the amendment provisions of the LTIP.

The above summary is qualified in its entirety by the full text of the LTIP, which is set out in Schedule “A” to this Management Proxy Circular. The Board encourages Shareholders to read the full text of the LTIP before voting on the LTIP Renewal Resolution.

The Board and management of the Bank recommend the approval of the LTIP Renewal Resolution. To be effective, the LTIP Renewal Resolution, which is set out below must be approved by not less than a majority of the votes cast by the holders of Shares present in person or represented by proxy at the Meeting.

SHARES REPRESENTED BY PROXIES IN FAVOUR OF MANAGEMENT WILL BE VOTED IN FAVOUR OF THE LTIP RENEWAL RESOLUTION, UNLESS A SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS, HER, OR ITS SHARES ARE TO BE VOTED AGAINST THE LTIP RENEWAL RESOLUTION.

The LTIP Renewal Resolution to be passed is set out below:

WHEREAS:

The Board of Directors of the VersaBank (the “Bank”) adopted an omnibus long-term incentive plan (the “LTIP”) on February 23, 2021, which does not have a fixed maximum number of common shares issuable;

the shareholders of the Bank approved the LTIP at the Annual and Special Meeting of Shareholders held on April 21, 2021;

the rules of the Toronto Stock Exchange provide that all unallocated options, rights or other entitlements under a compensation arrangement which does not have a fixed number of maximum securities issuable, be approved every three years;

“BE IT RESOLVED THAT:

the renewal of the LTIP dated April 21, 2021, set out in Schedule A to the Management Information Circular of the Bank is hereby approved;

all unallocated options, rights or other entitlements under the LTIP be and are hereby approved;

the Bank shall have the ability to continue granting options, rights or other entitlements under the LTIP until April 17, 2027, which is the date that is 3 years from the date of the shareholder meeting at which shareholder approval is being sought; and

any officer or director of the Bank be, and hereby is, authorized and empowered to make all such arrangements, to do and perform all such acts and things, and to execute and deliver all such documents, in the name and on behalf of the Bank, or otherwise, as such officer and director deems desirable or necessary in order to effectuate fully the purposes of each and all of the foregoing resolutions.

PART IV – STATEMENT OF EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION & ANALYSIS

The following Compensation Discussion & Analysis provides a description of the strategy, processes and decisions made pertaining to the oversight, design and payout of the Bank’s compensation for its Named Executive Officers (“NEOs”) for Fiscal 2023. The NEOs as of October 31, 2023, were David Taylor, President & Chief Executive Officer (“President & CEO”); Shawn Clarke, Chief Financial Officer (“CFO”) and each of the next three most highly compensated executive officers of the Bank being Michael Dixon, Senior Vice President, Point-of-Sale Financing, Nick Kristo, Chief Credit Officer and John Asma, Treasurer & SVP, Deposit Services. Please note, effective December 13, 2023, Shawn Clarke was appointed as Chief Operating Officer and John Asma was appointed as Chief Financial Officer.

Compensation Governance

The Board has delegated the responsibility for oversight of the Bank’s compensation program to the HR Committee, which reports regularly to the Board.

The HR Committee is comprised of independent directors within the meaning of National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”). They are currently David A. Bratton (Chair), Susan T. McGovern and Gabrielle Bochynek. No member of the HR Committee has ever been an officer or employee of the Bank or any of its affiliates, and no member is an active chief executive officer with a publicly traded company.

Mr. Bratton has been a member of the Board since 1993. Mr. Bratton has over 30 years of human resource management experience. He holds Master of Business Administration, Fellow Certified Management Consultant, and Certified Human Resources Leader designations. Mr. Bratton was an affiliate professor at the Rotman School of Business for 18 years.

Ms. McGovern has been a member of the Board since 2011. She has more than 30 years of experience in the federal government, the Ontario government, the broader public sector, private corporations and the not-for-profit sector. Currently, she is an Executive Advisor in the Ontario Ministry of Finance. As a senior leader, her strengths include corporate development and governance, human resource management, strategic communications, stakeholder engagement, public policy development, philanthropic advancement and political acuity.

Ms. Bochynek has been a member of the Board since 2019. She holds a Bachelor of Arts degree and Certified Human Resources Leader designation and has over 30 years of human resources experience. Her background includes expertise in executive compensation, employee and labor relations, change management and organizational restructuring. She is Principal, Human Resources & Labor Relations, with the Osbourne Group and formerly Chief Human Resources Officer at North York General Hospital.

The Board believes that the members of the HR Committee have the qualifications and experience in human resources governance matters and, in particular, executive compensation to fulfill their responsibilities.

The HR Committee held 7 meetings during Fiscal 2023. The President & CEO and the Chief Human Resources Officer attend HR Committee meetings but do not have the right to vote. The HR Committee regularly holds in-camera sessions without management present. The HR Committee may also engage the services of an independent compensation consultant at their discretion.

Currently, the HR Committee’s responsibilities with respect to human resources matters include the following:

(a)

Annually review the Bank’s overall compensation plan and the policies pertaining thereto to ensure that they are consistent with the Bank’s goals of attracting and retaining the best people, aligning executive interests with those of the Bank, and paying for performance. Survey information is obtained from the Chief Human Resources Officer, as well as from compensation consulting companies and other external independent sources, to ensure that compensation paid to executives is appropriate and competitive.

(b)

Consider the implications of risks associated with the Bank’s compensation policies and practices.

(c)

Approve, at the beginning of each fiscal year, performance measurements for calculating the annual incentive award of the President & CEO.

(d)

Review the compensation of the President & CEO, and recommend same to the Board for approval.

(e)

Report to the full Board on a timely basis as to the actual calculations of total compensation of the President & CEO.

(f)

Review staff compensation, including ranges and benefit programs.

(g)

Review staff incentive awards.

(h)

Recommend to the Board for approval the annual incentive award pool for executives.

(i)

Review a report from the Chief Internal Auditor on the alignment of the Bank’s compensation policies with the Financial Stability Board’s Principles for Sound Compensation Practices.

With regard to the HR Committee’s consideration of the implications of risks associated with the Bank’s compensation policies and practices and compliance with Financial Stability Board Principles for Sound Compensation Practices, the Board, through the HR Committee, monitors and manages any such risks by taking actions that include the following:

(a)

Actively overseeing the Bank’s compensation systems, and monitoring and reviewing compensation policies and procedures to ensure they are operating as intended.

(b)

Recommending the amount of the annual incentive award pool for executives to the Board for approval.

(c)

Reviewing decisions made by the President & CEO concerning executive compensation and providing input.

(d)

Establishing appropriate performance measures for the President & CEO at the beginning of the fiscal year and assessing overall performance and recommending compensation decisions to the Board at the end of the fiscal year.

(e)

Ensuring that the performance measures assigned to the President & CEO, which are derived from the Bank’s Business Plan, are within the Bank’s tolerance for risk.

(f)

Ensuring the compensation decisions for employees in control functions (finance, risk, compliance, and internal audit) are based on enterprise and individual performance, and are not based on the performance of the specific businesses supported by the control function.

VersaBank retained the services of MNP LLP on September 18, 2023 to conduct an external market analysis of VersaBank’s Director Compensation Program. The mandate included the collection of compensation and program structure data to develop considerations aligned with the Bank’s compensation philosophy. The Bank has previously engaged MNP LLP in its capacity as a leading professional service firm in the areas of accounting, consulting, tax and digital services. The Board of directors regularly review and approve other services that MNP LLP provides to the Bank at the request of Management.

VersaBank retained the services of Korn Ferry on June 29, 2022 to conduct an assessment of the Bank’s compensation structure and current job descriptions for senior executives, management and staff to develop a pay equity plan to align with the Pay Equity Act which establishes a proactive pay equity regime for federally regulated workplaces. The mandate included the collection of job descriptions, assessment and determination of job grades within the Bank and recommendations for any instances of pay equity. Korn Ferry also provided training to Bank staff members on the Pay Equity Committee to complete job evaluations and determining pay grades going forward.

Executive Compensation-Related Fees

Executive Compensation-Related fees paid to MNP LLP by the Bank during the year ended October 31, 2023, were $5,933. Executive Compensation-Related fees paid to MNP LLP by the Bank during the year ended October 31, 2022, were $0. Executive Compensation-Related fees were for professional services rendered by MNP LLP related to determining compensation for the company’s directors.

Executive Compensation-Related fees paid to Korn Ferry by the Bank during the year ended October 31, 2023, were $51,068. Executive Compensation-Related fees paid to Korn Ferry during the year ended October 31, 2022, were $45,005. Executive Compensation-Related fees were for professional services rendered by Korn Ferry for services related to determining pay equity compliance compensation for executive officers, management and staff.

All Other Fees

All other fees paid to MNP LLP by the Bank during the year ended October 31, 2023, were $131,000. All other fees paid to MNP LLP during the year ended October 31, 2022, were $149,921. All other fees were for professional services rendered by MNP LLP for services in the areas of internal audit, information technology, digital services, and consulting.

No other fees were paid to Korn Ferry during the years ended October 31, 2023 and October 31, 2022.

Executive Compensation Philosophy

The key components of the Bank’s compensation plan for NEOs are base salary, short-term (annual) incentive awards, and long-term incentives. NEOs are also entitled to certain employee benefits, including a pension supplement payment.

The Bank’s compensation plan is designed to attract and retain highly qualified individuals, while creating an incentive to align efforts with shareholder interests and motivate NEOs to deliver company performance that will create real long-term shareholder value.

The Bank’s overall objective is to set total compensation at approximately the seventy-fifth percentile of the total compensation paid for comparable positions at comparable companies, being Home Capital Group Inc., Equitable Group Inc., Canadian Western Bank and Sagen MI Canada Inc. (the “Comparable Companies”). The Bank considers compensation information of these entities as a frame of reference in determining NEO compensation due to

management’s belief that the Comparable Companies are the Canadian financial institutions that are similar to the Bank. In particular, the Comparable Companies represent mid-sized, federally regulated financial institutions that may raise deposits solely or partly through a brokerage network. However, since the Comparable Companies vary from the Bank in terms of business model, asset size, and organization structure, compensation data from the Comparable Companies is used as a frame of reference only, and not a definitive target for NEO compensation. Other elements that are considered when determining total compensation for NEOs are set forth below.

More detail on each component of the Bank’s compensation plan and its purpose within total compensation is described in the table under the heading “Statement of Executive Compensation – Compensation Discussion and Analysis – Type of Compensation” below, and in subsequent sections of this Management Proxy Circular.

Decision Making Process

The Board, through the HR Committee, actively oversees the Bank’s overall compensation plan and monitors and reviews the Bank’s compensation practices to ensure they operate as intended.

The Chief Human Resources Officer provides the HR Committee with market data, as required, including information concerning compensation paid at the Comparable Companies, to assist the HR Committee in its deliberations.

In conjunction with the President & CEO, the HR Committee establishes performance measurements for the President & CEO at the beginning of the fiscal year, and the Board monitors progress against the performance measures throughout the year. At the end of the year, the HR Committee receives a report from the Chair of the Board on the results of the President & CEO’s performance appraisal; the HR Committee, in turn, reports on such results to the Board.

The HR Committee recommends to the Board for approval any changes to salary and incentive awards payable to the President & CEO.

The President & CEO has final approval for all compensation decisions concerning NEOs and other staff, other than himself and other than the total amount of the annual incentive award pool for executives, which is reviewed and recommended by the HR Committee to the Board for approval. The HR Committee reviews the balance of the compensation decisions after the fact and provides comment and advice for consideration regarding future compensation decisions.

Type of Compensation

Description	Form	Eligibility	Performance Period
Base Salary	Cash	All employees	Reviewed annually
Short-Term (Annual) Incentive Awards	Cash	All employees	One year
Long-Term Incentive Awards	Chief Executive Officer Share Purchase Program	President & CEO	5 years
	Employee Share Purchase Plan	All employees (except the President & CEO)	One year
	Executive Share Award Program	All employees at the position of vice president or above	5 years
	Stock Options	All employees	7 years
Other – Pension Supplement	Cash	All employees	Not applicable

Base Salary

NEOs are paid a base salary that is commensurate with each NEO’s position and level of responsibility within the Bank. The actual base salary paid is determined with consideration to past and current performance, internal equity, salaries paid at the Comparable Companies, salary surveys including Mercer’s Executive, Management and Professional Survey, and the potential impact of the position on the Bank’s performance. Base salaries for executives who report directly to the President & CEO are approved by the President & CEO, upon recommendation of the Chief Human Resources Officer and are reviewed after the fact by the HR Committee.

Short-Term (Annual) Incentive Awards

NEOs and other executives are eligible to participate in the Bank’s short-term incentive award program. The key goals of the short-term incentive award program are to align executive efforts to achieve the objectives set out in the Bank’s Business Plan, to encourage the effective management of risk, to pay for performance, and to encourage teamwork.

Factors considered in determining whether and in what amount short-term incentive awards are paid to the NEOs and certain other executives of the Bank (other than the President & CEO) include: (i) individual results against the predetermined performance objectives; (ii) the executive’s business unit results; and (iii) the Bank’s overall results. For NEOs and executives, other than the President & CEO, individual performance objectives that reflect the executive’s key responsibility areas are set at the beginning of each fiscal year and are intended to align executive efforts with the business, financial, risk management and strategic objectives of the Bank as set out in its Business Plan. Periodically throughout the year, the performance objectives are re-visited to monitor results to date, and to determine if the stated objectives require modification based on factors that may include a change in job responsibilities or a change in business priorities. At the end of each fiscal year, the actual results achieved by the executive, their business unit and the Bank are reviewed and any extenuating circumstances are considered. The HR Committee reviews and recommends to the Board for approval the annual short-term incentive award pool for the NEOs and other executives, excluding the President & CEO. The final decision on allocating short-term incentive award payments from the approved award pool among the NEOs and other executives (other than the President & CEO) is made by the President & CEO. The HR Committee reviews the President & CEO’s decisions after the fact.

With respect to the President & CEO, performance measurements derived from the Board approved Business Plan for his short-term incentive award are approved by the HR Committee at the beginning of each fiscal year. At the end of the fiscal year, a determination is made by the Board on the advice of the HR Committee as to the amount of any short-term incentive award payable to the President & CEO in respect of such fiscal year. In determining the amount of the short-term incentive award (if any), the Board has discretion to consider subjective measures, including the implementation of the Bank’s philosophy with respect to risk, enterprise risk management and corporate reputation, and the Board may also consider any extraordinary circumstances.

For Fiscal 2023, the President & CEO’s key performance measures were established in three main categories. Under the performance objectives, financial metrics related to shareholder value have been attributed a 70% weighting in the assessment, financial metrics related to operational results have been attributed a 20% weighting, and the remaining 10% was attributed to individual performance in key management areas that have a significant impact on the Bank’s results, including (i) the development/execution of strategic vision, (ii) communication, and (iii) leadership development. The financial metrics used to determine the President & CEO’s performance as it relates to shareholder value and operational results are key business targets derivable directly from the Bank’s Fiscal 2023 Business Plan and are as outlined in the following charts:

Shareholder Value Performance Measures

Notes:

(1)

This is a non-GAAP financial measure. Return on average common equity for the Bank is defined as annualized net income of the Bank less amounts relating to preferred share dividends, divided by average common shareholders’ equity (which is average shareholders’ equity less amounts relating to preferred shares recorded in equity). For further details regarding non-GAAP financial measures and a reconciliation to their most comparable GAAP measure, please see the Bank’s Management’s Discussion & Analysis for Fiscal 2023, available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.

(2)

Net interest margin or spread is defined as net interest income as a percentage of average total assets. For further details regarding non- GAAP financial measures and a reconciliation to their most comparable GAAP measure, please see the Bank’s Management’s Discussion & Analysis for Fiscal 2023, available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar

Operational Results Performance Measures

Note:

(1)

The efficiency ratio is calculated as non-interest expenses, excluding restructuring charges, as a percentage of total revenue. For further details regarding non-GAAP financial measures and a reconciliation to their most comparable GAAP measure, please see the Bank’s Management’s Discussion & Analysis for Fiscal 2023, available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar

The extent to which each performance category target is met multiplied by its weighting determines the number of points earned. The total number of points earned is then multiplied by 85% of the President & CEO’s base salary to arrive at the short-term incentive award amount payable to the President & CEO (subject to any adjustments that

the Board considers appropriate after considering applicable subjective measures). The target annual incentive award for the President & CEO is 85% of base salary with a maximum cap of 135% of base salary.

Further details respecting the performance metrics considered in determining the payments made to NEOs under the short-term incentive award program in respect of Fiscal 2023 and the payments made to NEOs thereunder in respect of each of the last three fiscal years of the Bank can be found below under the headings “Statement of Executive Compensation – Compensation Discussion and Analysis – Fiscal 2023 Incentive Awards Paid” and “Statement of Executive Compensation – Summary Compensation Table”, respectively.

Long-Term Incentive Awards

Under the Bank’s long-term incentive award program, NEOs (excluding the President & CEO) are eligible to participate in the Bank’s Employee Share Purchase Plan (the “ESPP”) and Executive Share Award Program (the “ESAP”), and the President & CEO participates in Chief Executive Officer Share Purchase Program (“CEOSPP”). Each of these programs is discussed in greater detail below.

Employee Share Purchase Program

The Bank maintains the ESPP, in which all employees of the Bank (excluding the President & CEO) are eligible to participate. The ESPP encourages ownership of the Bank’s securities and aligns the interests of employees, including NEOs (but excluding the President & CEO), more closely with those of Shareholders. Pursuant to the ESPP, employees can purchase Common Shares on the open market with up to an aggregate amount of twenty percent (20%) of their base salary and are eligible for a fifty percent (50%) reimbursement for the cost of such Common Shares. All Common Shares purchased by employees under the ESPP are to be held for a minimum of one year from the date of purchase. Reimbursement amounts paid to employees under the ESPP are a taxable benefit.

Executive Share Award Program

The Bank’s employees at the vice president level and above (excluding the President & CEO) are eligible to participate in the ESAP. The objective of the ESAP is to encourage ownership of the Bank’s securities and to provide a long-term incentive that aligns the participant’s interests with those of Shareholders. At the end of each fiscal year, the President & CEO determines the number of Common Shares to be awarded to each participant as a long-term incentive. Such Share award will be determined by considering the results the Bank achieved relative to its long- term targets in the previous fiscal year and the results the participant obtained relative to his or her long-term incentive objectives. The participant will purchase a number of Shares equal to his or her Shares award on the open market and will be fully reimbursed for the cost of such Common Shares. All Common Shares purchased under the ESAP are to be held for a minimum of five years from the date of purchase, unless otherwise agreed in writing. Additionally, the Common Shares may be sold in the event of the participant’s death, retirement, resignation or termination. Reimbursement amounts paid to participants under the ESAP are a taxable benefit.

Stock Option Incentive Plan

The Corporation has a common share Stock Option Incentive Plan (“Stock Option Plan”), the purpose of which is to align the interests of the participants with the longer-term interests of the shareholders of the Bank. All NEOs are entitled to participate in the Stock Option Plan.

The Stock Option Plan provides a compensation opportunity that encourages share ownership. The Bank’s officers, employees and consultants are eligible to participate. As of February 22, 2024, there are 874,393 stock options outstanding pursuant to the Stock Option Plan.

Factors considered prior to granting additional stock options are an individual’s past and current performance, level of responsibility, internal equity, stock options previously granted, the cost of the stock options, stock options granted by Comparable Companies, and compensation survey information.

An aggregate of 1,500 stock options in the Bank were granted in Fiscal 2023.

Chief Executive Officer Share Purchase Program

The objective of the CEOSPP is to encourage ownership of the Bank’s securities, and to provide a long-term incentive that aligns the President & CEO’s interests with those of Shareholders. Under the CEO Compensation Policy and Procedures, performance measurements for the long-term incentive award are approved by the HR Committee at the beginning of each fiscal year and each performance measure is assigned a weighting to reflect its relative importance to the Bank’s long-term success. At the end of each fiscal year, the Board on the advice of the HR Committee will determine the number of Shares to be awarded to the President & CEO as a long-term incentive. Such award will be determined by considering the results the Bank achieved relative to the performance measurements in respect of such fiscal year. In making this determination, the Board has discretion to adjust the long-term incentive award payable to the President & CEO on the basis of subjective measures, including the implementation of the Bank’s philosophy with respect to risk, enterprise risk management and corporate reputation, and the Board may also take into account any extraordinary circumstances.

The performance measures and relative weighting in respect of Fiscal 2023 are as outlined in the following chart:

Long-Term Incentive Award Performance Measures

The extent to which each performance category target has been met multiplied by its weighting determines the number of points earned. The total number of points earned is divided by 100 and multiplied by 30,000 to determine the number of Shares awarded to the President & CEO (subject to any adjustments that the Board considers appropriate after considering applicable subjective measures). The President & CEO will purchase such number of Shares awarded to him under the CEOSPP on the open market and will be reimbursed for the full cost of such Shares. All Shares purchased under the CEOSPP are to be held for a minimum of five years from the date of purchase, unless otherwise agreed in writing. Additionally, such Shares may be sold in the event of death, retirement, resignation or termination (including termination as a result of a change of control). Reimbursement amounts paid to the President & CEO under the CEOSPP are a taxable benefit.

See “Statement of Executive Compensation – Summary Compensation Table” below for additional information concerning the long-term incentive awards paid to the NEOs in respect of each of the last three fiscal years of the Bank.

Other – Pension Supplement

Although the Bank does not have a formal pension plan, all employees of the Bank, including NEOs, are entitled to an annual cash payment in lieu of pension contributions. A pension supplement is considered a normal component of a competitive executive compensation arrangement. The pension supplement payment calculation for NEOs is based on a variety of factors, which may include age, life expectancy, current interest rates and inflation rates. The pension supplement amounts paid to each NEO in the previous fiscal year is described in the notes to the table found under “Statement of Executive Compensation – Summary Compensation Table” below.

Incentive Award Deferral and Compensation Recoupment Policy

All or a portion of any incentive-based compensation payable to the Bank’s executive officers may be deferred in accordance with the Compensation Recoupment Policy approved and adopted by the Board of Directors on December 1, 2023.

Changes to NEO Compensation

There were no significant changes to executive compensation in Fiscal 2023.

Purchase of Financial Instruments to Offset a Decrease in the Market Value of Equity Securities

The Bank’s NEOs and directors are not permitted to purchase financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities of the Bank granted as compensation or held, directly or indirectly, by the NEO or director.

PERFORMANCE GRAPH

The following chart compares the cumulative Bank total shareholder return (“TSR”) on $100 invested in shares of Pacific & Western Bank (a predecessor by amalgamation to the Bank) on November 1, 2016, with the equivalent cumulative value invested in the TSX composite index for the same period.

Summary:
	31-Oct-18	31-Oct-19	31-Oct-20	31-Oct-21	31-Oct-22	31-Oct-23
VB(1)	$100.00	$93.19	$93.48	$209.65	$131.77	$146.10
S&P/TSX Composite Index	$100.00	$109.69	$103.68	$139.99	$129.27	$125.59

Note:

(1)

The TSR return in respect of the Bank contemplates an investment in shares of Pacific & Western Bank on November 1, 2016, and the exchange of such shares for Shares in connection with the Amalgamation.

During the period November 1, 2016, to October 31, 2023, the Bank’s trend in total executive compensation, defined as base salary and incentive awards paid, increased to reflect the success of initiatives such as the Point-of-Sale Financing program, the Insolvency Trustee Integrated Banking (“TIB”) Services initiative and the overall Bank’s financial results.

While the Bank believes TSR has an influence on total executive compensation, it does not expect a direct correlation will always exist between TSR and total executive compensation since other factors are considered when making executive compensation decisions. Those factors include changes to NEO responsibilities and corresponding increases in compensation, adjustments to compensation necessary to reflect changes in market conditions, and compensation paid to reward NEOs for results that may not be reflected immediately in TSR.

SUMMARY COMPENSATION TABLE

The following table sets forth all compensation earned by the Bank’s NEOs, for services to the Bank in Fiscal 2023.

Name and principal position⁽¹⁾	Year	Salary ($)	Share- based awards ($)	Option- based awards ($)	Non-equity incentive plan compensation ($)		Pension value ($)	All other compensation ($)	Total compensation ($)
Name and principal position⁽¹⁾	Year	Salary ($)	Share- based awards ($)	Option- based awards ($)	Annual incentive plans ($)	Long- term incentive plans ($)	Pension value ($)	All other compensation ($)	Total compensation ($)
David Taylor President & CEO (Avstar Inc.)⁽³⁾	2023 2022 2021	750,000 700,000 650,000	17,295⁽²⁾ nil nil	nil nil nil	0⁽⁴⁾ 756,067 670,000	509,255⁽⁵⁾ 461,999 651,633	nil nil nil	397,266⁽⁶⁾ 645,073 499,201	1,656,522 2,563,140 2,470,834
Shawn Clarke Chief Financial Officer	2023 2022 2021	366,000 350,000 315,000	nil nil nil	Nil 97,650 nil	0⁽⁴⁾ 350,000 300,000	29,800⁽⁷⁾ 20,000 29,831	nil nil nil	176,538⁽⁸⁾ 317,033 275,026	572,338 1,134,683 919,857
Nick Kristo	2023	285,000	nil	nil	110,000⁽⁴⁾	29,807⁽⁷⁾	nil	142,449⁽⁹⁾	567,256
Chief Credit Officer	2022	271,500	nil	80,135	190,000	20,401	nil	251,716	813,753
	2021	258,500	nil	nil	170,000	30,142	nil	223,395	682,037
Michael Dixon Senior Vice President, Point-of-Sale Financing	2023 2022 2021	285,000 271,500 258,500	nil nil nil	nil 80,135 nil	135,000⁽⁴⁾ 230,000 180,000	29,520⁽⁷⁾ 20,000 29,791	Nil nil nil	145,713⁽⁹⁾ 249,911 206,220	595,233 851,546 674,511
John Asma Treasurer & SVP, Deposit Services	2023 2022	285,000 250,000	nil nil	nil nil	100,000⁽⁴⁾ 55,000	28,080⁽⁷⁾ 24,100	nil nil	172,956⁽¹⁰⁾ 32,049	586,036 361,149

Notes:

(1)

Name and Principal Position as at October 31, 2023.

(2)

This amount reflects a convertible preferred share issued to David Taylor in DRT Cyber Inc. Such share would convert to a 10% common share interest in DRT Cyber Inc. upon a change in control event.

(3)

Avstar Inc. is David Taylor’s personal holding company.

(4)

See section below entitled “Fiscal 2023 Incentive Awards Paid”.

(5)

This amount is the cost of Shares acquired pursuant to the terms of the CEOSPP. The Shares must be held for a period not less than five years, subject to certain exceptions.

(6)

Of this amount, $336,843 was the amount of pension supplement paid to David Taylor.

(7)

This amount was paid as a reimbursement for the cost of Shares acquired pursuant to the terms of the EASP. The Shares much be held for a period not less than five years, subject to certain exceptions.

(8)

Of this amount, $156,047 was the amount of pension supplement paid to Shawn Clarke.

(9)

Of this amount, $121,758 was the amount of pension supplement paid to Nick Kristo and Michael Dixon.

(10)

Of this amount, $151,940 was the amount of pension supplement paid to John Asma.

Fiscal 2023 Incentive Awards Paid

The following summarizes key rationale for the incentive award paid to each NEO for Fiscal 2023:

David Taylor, President & CEO

Short-Term Incentive Award

While David Taylor met or exceeded many key performance targets in Fiscal 2023 he did not receive a short-term incentive award for Fiscal 2023. The delay in obtaining the US Bank license was one factor in this decision. His incentive award will be reconsidered in Fiscal 2024 based on performance achieved including the approval of the bank’s ability to operate in USA.

Shawn Clarke, Chief Financial Officer

While Shawn Clarke met or exceeded many key performance targets in Fiscal 2023 he did not receive a short-term incentive award for Fiscal 2023. The delay in obtaining the US Bank license was one factor in this decision. His incentive award will be reconsidered in Fiscal 2024 based on performance achieved including the approval of the bank’s ability to operate in USA.

Michael Dixon, Senior Vice President, Point-of-Sale Financing

In his role as Senior Vice President, Point-of-Sale Financing Mr. Dixon is responsible for the strategic management, oversight and overall performance of the Bank’s Point-of-Sale Financing activities, including the Bank’s Receivable Purchase Program both in Canada and the US.

Over the course of Fiscal 2023, the Point-of-Sale Financing team successfully navigated through an increasingly competitive and economically stressed marketplace, including rising interest rates and inflation. Despite these challenges, the Point-of-Sale Financing team substantially exceeded all of its objections for asset growth, income, expenses and portfolio risk management.

Under Mr. Dixon’s leadership, Point-of-Sale Financing increased its receivable purchase volume by more than 30% over the previous year, which led to the group’s overall asset growth of 30%%, despite a large portfolio sale, all while maintaining nil delinquencies and losses throughout the year. As at October 31, 2023, Point-of-Sale Financing assets equated to more than 75% of the Bank’s total lending assets.

Through Fiscal 2023, Point-of-Sale Financing added new vendor partners, both in Canada and the US, and Mr. Dixon led the successful restructuring of several existing partner programs including minimum volume agreements, all of which provide the opportunity for continued material organic growth within the Point-of-Sale Financing group. In addition, Mr. Dixon has been tasked with further expanding the bank’s Point-of-Sale Financing products into the US, which will assist in obtaining the long-term objectives of the Bank.

Nick Kristo, Chief Credit Officer

In his role as Chief Credit Officer, Mr. Kristo is responsible for the credit risk management of the Bank’s lending portfolio. Over the course of fiscal 2023, Mr. Kristo played a key role with the Bank’s loan growth in an increasingly challenging economic environment through efficient management of loan provisions and increased risk monitoring and client relief programs.

Credit policy, risk monitoring and risk management frameworks continue to evolve to assist in the support of the growth of both the Commercial Banking and Point-of-Sale loan portfolios. VersaBank had achieved record loan levels during the fiscal period while maintaining a loan portfolio that benefited with limited delinquency and no credit losses.

Mr. Kristo continues to promote the credit risk culture to staff and ensures that the Bank operates within the tolerances established within VersaBank’s credit risk appetite.

John Asma, Treasurer & SVP, Deposit Services

In his current role as Chief Financial Officer, Mr. Asma leads the Finance & Accounting Department and maintains oversight of the Deposit Services and Treasury functions.

Under Mr. Asma’s leadership as Treasurer and SVP, Deposit Services, the Trustee Insolvency Banking (TIB) Program had another successful year and made a significant contribution with the TIB book growing by 8% in 2023. In addition, over $2.1 billion in broker deposits were raised during the year, efficiently and at competitive rates to fund the asset growth.

Mr. Asma steered the Bank’s relationships with its deposit broker and interbank counterparty network and was instrumental in establishing new relationships and deepening existing ones.

Mr. Asma continues to steer the Finance and Accounting Department towards excellence and his leadership will play a crucial role in driving financial strategy and ensuring operational efficiency across the organization. In addition, Mr. Asma will drive the branch integration and laying down of the deposit network in the US post the Bank’s acquisition of a US Bank.

TERMINATION AND CHANGE OF CONTROL BENEFITS

The following table sets out the estimated amount of potential payments to the NEOs if their termination or change of control clauses or retirement clauses were triggered on October 31, 2023. Further detail regarding the termination clauses in each NEO’s employment agreement is set out under “Termination and Change of Control Benefits – Employment Contracts” below.

Name	Entitlement ($)
Name	Termination	Change of control	Retirement
David Taylor(1)	$5,122,491	$5,122,491	$1,000,000
Shawn Clarke(2)	$1,244,580	nil	nil
Michael Dixon(2)	$1,131,074	nil	nil
Nick Kristo(2)	$1,200,623	nil	Nil
John Asma (2)	$34,409	nil	nil

Notes:

(1)

In the case of termination without cause or in the case of change of control, whereby the employment agreement will be deemed to be terminated, any outstanding unvested stock options shall also become exercisable at the date of termination. In addition, all stock options

held by Mr. D. Taylor shall expire on the earlier of the expiry date and two years from such date of termination. Further, at the option of Mr. D. Taylor, any stock options are to be redeemed by the Bank at a price calculated as the difference between the stock option exercise price and the average price of the Shares for the four trading days prior to the date of termination and the termination date.

(2)

In the case of termination without cause.

Employment Contracts

At October 31, 2023, each of David Taylor, Shawn Clarke, Michael Dixon, Nick Kristo and John Asma had an Executive Employment Agreement with the Bank. The following tables outline the key terms of such agreements.

David Taylor
Position	President & CEO
Annual salary	$750,000
Annual short-term incentive awards	Discretionary
Annual long-term incentive awards	Entitled to participate in the CEOSPP.
Other benefits	Entitled to usual benefits provided to executives.
Retirement	Entitled to receive an annual pension supplement payment (the Bank does not have a pension plan). Entitled to receive a retirement allowance of $1,000,000.
Termination	If Mr. D. Taylor’s employment with the Bank is terminated without cause, he is to receive an amount equal to 24 months total compensation less any withholding taxes and other required deductions. Mr. D. Taylor is to immediately receive this amount if the Bank is sold, subject to a change of control, merged or liquidated, or if its normal operations are changed in such a manner so as to eliminate Mr. D. Taylor’s services or the President & CEO position. For the purpose of this termination clause ‘total compensation’ is to include annual salary and allowances and shall include incentive awards and pension supplement paid or approved to be paid in each case during the 24 months immediately preceding the termination date. In addition, all options to purchase shares of the Bank held by Mr. D. Taylor shall become exercisable on the date of termination and expire on the earlier of the original expiry date of the options or two years after the termination date. Alternatively, at Mr. D. Taylor’s discretion, these options are to be repurchased by the Bank at a price calculated as the difference between the option exercise price and the average price of the Shares for the four trading days prior to the termination date and the termination date.

Shawn Clarke
Position	Chief Financial Officer
Annual salary	$366,000
Annual short-term incentive awards	Discretionary
Annual long-term incentive awards	Entitled to participate in the ESPP and the ESAP.
Other benefits	Entitled to usual benefits provided to executives.
Retirement	Entitled to receive an annual pension supplement payment (the Bank does not have a pension plan).

Termination

If Mr. Clarke’s employment is terminated without cause, he is to receive an amount equal to one month’s total compensation for each completed year of service, with a minimum of 12 months and a maximum of 24 months total compensation, less any withholding taxes and other required deductions. For the purpose of this termination clause ‘total compensation’ is to include Mr. Clarke’s then current base salary, an amount equivalent to the most recent incentive award paid, benefits, vehicle benefit, pension supplement and all allowances paid.

Nick Kristo
Position	Chief Credit Officer
Annual salary	$285,000
Annual short-term incentive awards	Discretionary
Annual long-term incentive awards	Entitled to participate in the ESPP and the ESAP.
Other benefits	Entitled to usual benefits provided to executives.
Retirement	Entitled to receive an annual pension supplement payment (the Bank does not have a pension plan).
Termination	If Mr. Kristo’s employment is terminated without cause, he is to receive an amount equal to one month’s total compensation for each completed year of service, with a minimum of 12 months and a maximum of 24 months total compensation, less any withholding taxes and other required deductions. For the purpose of this termination clause ‘total compensation’ is to include Mr. Kristo’s then current base salary, an amount equivalent to the most recent incentive award paid, benefits, vehicle benefit, pension supplement and any and all allowances paid.

Michael Dixon
Position	Senior Vice President, Point-of-Sale Financing
Annual salary	$285,000
Annual short-term incentive awards	Discretionary
Annual long-term incentive awards	Entitled to participate in the ESPP and the ESAP.
Other benefits	Entitled to usual benefits provided to executives.
Retirement	Entitled to receive an annual pension supplement payment (the Bank does not have a pension plan).
Termination	If Mr. Dixon’s employment is terminated without cause, he is to receive an amount equal to one month’s total compensation for each completed year of service, with a minimum of 12 months and a maximum of 24 months total compensation, less any withholding taxes and other required deductions. For the purpose of this termination clause ‘total compensation’ is to include Mr. Dixon’s then current base salary, an amount equivalent to the most recent incentive award paid, benefits, vehicle benefit, pension supplement and any and all allowances paid.

John Asma
Position	Treasurer & SVP Deposit Services
Annual salary	$285,000
Annual short-term incentive awards	Discretionary
Annual long-term incentive awards	Entitled to participate in the ESPP and the ESAP.
Other benefits	Entitled to usual benefits provided to executives.
Retirement	Entitled to receive an annual pension supplement payment (the Bank does not have a pension plan).
Termination	If Mr. Asma’s employment is terminated without cause, he is to receive an amount equal to one month’s total compensation for each completed year of service (commencing June 27, 2022) to a maximum of 24 months total compensation, less any withholding taxes and other required deductions. For the purpose of this termination clause ‘total compensation’ is to include Mr. Asma’s then current base salary, an amount equivalent to the most recent incentive award paid, benefits, vehicle benefit, pension supplement and any and all allowances paid

PART V – STATEMENT OF DIRECTOR COMPENSATION

In Fiscal 2023, non-management directors were compensated for acting as directors of the Bank through a combination of methods including: base retainer; Chair and director Board retainers; Committee member and Committee Chair annual retainers; excess meeting fees; and a director share purchase program (the “DSPP”). The director compensation fees set out in the tables below reflect those in place as at October 31, 2023. Annual retainers were paid to directors, excluding the President & CEO, on the following basis for Fiscal 2023. Remuneration paid to the President & CEO of the Bank, Mr. D. Taylor, is included in the Summary Compensation Table above. Mr. D. Taylor is not compensated as a director of the Bank.

Base Retainer

	Retainer ($)
Director (including Chair and Vice Chair of the Board)	15,900

Board Retainer

	Retainer ($)
Chair of the Board	151,400
Vice Chair of the Board	39,850
Director	24,850

Committee Retainers

	Retainer ($)
Audit Committee Chair	35,650
Risk Oversight Committee Chair	31,000
HR Committee Chair	31,000
Innovation and Technology Committee Chair	31,000

Audit Committee Member	23,850
Risk Oversight Committee Member	21,200
HR Committee Member	21,200
Innovation and Technology Committee Member	21,200

Excess Meeting Fees

The retainers outlined were based on the assumption of a fixed number of meetings occurring during the fiscal year. If the fixed number of meetings were exceeded during the year, directors, excluding the President & CEO, were paid meeting attendance fees as follows:

	Per Meeting Fee ($)
Board > 10 Board meetings during the year	1,435
Audit Committee > 6 meetings during the year	1,985
Risk Oversight Committee > 6 meetings during the year	1,655⁽¹⁾
HR Committee > 6 meetings during the year	1,655
Innovation and Technology Committee > 6 meetings during the year	1,655
Directors – Attendance at special meetings such as the Meeting and with the Office of the Superintendent of Financial Institutions (OSFI)	1,435

Note:

(1)

Meeting attendance fees are $995 per meeting for credit review only meetings.

In addition, for Fiscal 2023, the DSPP provided that directors of the Bank, other than the President & CEO, were eligible for reimbursement for the purchase of Shares and/or preferred shares of the Bank. Reimbursement under the DSPP is equal to 50% for Shares and preferred shares of the Bank purchased on the open market, up to a total annual maximum reimbursement amount of $10,950.00. All securities purchased under the DSPP are required to be held for a minimum of one year from the date of purchase.

The Bank pays the membership costs for each of its directors to belong to the Institute of Corporate Directors, and customary payments for mileage and travel time for attending meetings and expense reimbursements for out-of- pocket travel costs incurred in connection with attending meetings. Each director is also entitled to a reimbursement of up to $5,000 annually toward a relevant training and development program of their choice, in accordance with the Director Orientation and Professional Development Program (see “Corporate Governance – Orientation and Continuing Education” below).

The following table sets out the compensation provided to directors for Fiscal 2023:

Name	Fees earned ($)	Share-based awards ($)	All other compensation ($)	Total ($)
Hon. Thomas A. Hockin	168,735	nil	2,700⁽¹⁾	171,435
Gabrielle Bochynek	65,040	nil	930⁽¹⁾ 10,950⁽²⁾	76,920
Robbert-Jan Brabander	99,360	nil	1,240⁽¹⁾ 10,950⁽²⁾	111,550
David A. Bratton	73,404	nil		73,404

Peter M. Irwin	94,195	nil	620⁽¹⁾ 10,950⁽²⁾	105,765
Richard H. L. Jankura	103,995	nil	620⁽¹⁾ 10,950⁽²⁾ 6,000⁽³⁾	121,565
Arthur Linton	63,385	nil	1,395⁽¹⁾	64,780
Susan T. McGovern	96,240	nil	620⁽¹⁾ 10,950⁽²⁾	107,810
Paul G. Oliver	79,819	nil	1,240¹⁾ 10,950⁽²⁾	92,009

Notes:

(1)

This is an amount representing travel time.

(2)

This is an amount reimbursed pursuant to the DSPP.

(3)

This is an amount that was paid to Mr. Jankura as a consulting fee for services provided as member of the Auditor Selection Committee of the Bank in F2023.

PART VI – SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

INCENTIVE PLAN AWARDS

Stock Option Incentive Plan

As a result of the Amalgamation, the Bank maintained two stock option plans, consisting of the stock option plan of Pacific & Western Bank and the stock option plan of PWC (collectively, the “Predecessor Stock Option Plans”). As of October 31, 2023, there were no remaining options outstanding under the Predecessor Stock Option Plans. On April 24, 2019, the Shareholders were not asked to re-approve the Predecessor Stock Option Plans at the annual meeting of Shareholders. Accordingly, the Bank is no longer able to grant any further options under either plan.

On April 21, 2021, the shareholders approved a new Omnibus Long-Term Incentive Plan (the “LTIP”) which allows for Shares to be issued up to a maximum of 10% of the then outstanding Shares. As of October 31, 2023, 874,393 shares had been issued under the LTIP.

The following table lists the number of Shares to be issued upon the exercise of outstanding stock options, the weighted-average exercise price of the outstanding stock options, and the number of Shares remaining for future issuance under equity compensation plans of the Bank as at October 31, 2023. No preferred shares of the Bank are issuable pursuant to any of the Bank’s equity compensation plans. Additional information on the Stock Option Plans can be found above under “Statement of Executive Compensation – Stock Option Incentive Plan”.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights ($)	Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by Shareholders	874,393⁽¹⁾	15.90	1,195,945⁽²⁾
Equity compensation plans not approved by Shareholders	n/a	n/a	n/a
Total	874,393	15.90	1,195,945

Notes:

(1)

This figure is as of October 31, 2023 and represents 3.36% of the issued and outstanding Shares as of such date.

(2)

The maximum number of options available for issuance under the Stock Option Plan is a rolling 10% of issued and outstanding Shares. As of October 31, 2023, options to acquire 2,596,442 Shares is the maximum number of options that could be outstanding under the Stock Option Plan.

The following table sets outs the burn rate percentage in respect of equity securities under the Stock Option Plans for the fiscal years ended 2023, 2022, and 2021.

	Stock Option Plans
	2023	2022	2021
Burn Rate⁽¹⁾	0.006%	3%	0%

Note:

(1)

The number of awards granted each year, expressed as a percentage of the weighted average number of outstanding Shares at the end of the fiscal year.

The following tables set out for each NEO the stock options outstanding at October 31, 2023, and the value of compensation paid to each NEO under the Stock Option Plans in Fiscal 2023.

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the- money options ($)	Number of Shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested ($)	Market or payout value of vested share-based awards not paid out or distributed ($)
David Taylor⁽¹⁾	0	0	n/a	$0	n/a	n/a	n/a
Shawn Clarke	31,500	15.90	December 31, 2026	$0	n/a	n/a	n/a
Michael Dixon	25,850	15.90	December 31, 2026	$0	n/a	n/a	n/a
Nick Kristo	25,850	15.90	December 31, 2026	$0	n/a	n/a	n/a
John Asma	n/a	n/a	n/a	n/a	n/a	n/a	n/a

Notes:

(1)

Mr. Taylor exercised his 40,000 options on September 15, 2023 at $7.00 per share.

Name	Option-based awards – Value vested during the year ($)	Non-equity incentive plan compensation – Value earned during the year ($)
David Taylor	nil	n/a
Shawn Clarke	nil	n/a
Michael Dixon	nil	n/a
Nick Kristo	nil	n/a
John Asma	n/a	n/a

Name	Number of Options vested during Fiscal 2023	Expiry Date	Vesting date during Fiscal 2023	Exercise price at time of vesting ($)	Market price of Shares at time of vesting ($)
David Taylor	n/a	n/a	n/a	n/a	n/a
Shawn Clarke	10,500	December 31, 2026	January 1, 2023	$15.90	$10.44
Michael Dixon	8,616	December 31, 2026	January 1, 2023	$15.90	$10.44
Nick Kristo	8,616	December 31, 2026	January 1, 2023	$15.90	$10.44
John Asma	n/a	n/a	n/a	n/a	n/a

PART VII – INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

AGGREGATE INDEBTEDNESS OUTSTANDING

The table below shows the aggregate indebtedness to the Bank or its subsidiaries of all officers, directors, employees and former officers, directors and employees as at February 22, 2024.

AGGREGATE INDEBTEDNESS ($)⁽¹⁾⁽²⁾
Purpose	To the Bank or its subsidiaries	To another entity
Share purchases	1,537,667⁽³⁾⁽⁴⁾	n/a
Other	6,182,608	n/a

Notes:

(1)

Routine indebtedness, as defined under Canadian securities laws, has not been reported.

(2)

Subject to restrictions under applicable laws, employees are eligible for loans at an interest rate of 50 basis points over cost of funds to assist them with home purchases and to assist with other credit requirements. Lending limits for employees are, like those for other customers, based on household income and risk profile.

(3)

To the knowledge of the Bank, the amount shown represents loans in connection with the purchase of securities of the Bank.

(4)

Of this amount, $500,000 was previously a loan extended for an “other” purpose, which was subsequently combined and is now included in the aggregate indebtedness total attributable to share purchases.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Name and principal Position⁽¹⁾⁽²⁾	Involvement of the Bank	Largest amount outstanding during Fiscal 2023 ($)	Amount outstanding as at February 22, 2024 ($)	Financially assisted securities purchases during Fiscal 2023 (#)	Security for indebtedness	Amount forgiven during Fiscal 2023 ($)
Securities purchase programs
David Taylor President & CEO	Bank as Lender	1,500,000	1,500,000⁽³⁾	nil	n/a	nil
Jonathan Taylor Chief Human Resources Officer	Bank as Lender	37,666.67	37,666.67 ⁽⁴⁾	nil	n/a	nil
Other programs
David Taylor (Avstar Inc.) President & CEO	Bank as Lender	3,600,000	3,600,000⁽⁵⁾	nil	n/a	nil

Notes:

(1)

Under applicable Canadian securities laws, “executive officer” means an individual who is: a chair, vice chair or president; a vice president in charge of a principal business unit, division or function; or, performing a policy-making function in respect of the Bank.

(2)

Routine indebtedness, as defined under Canadian securities laws, has not been reported in this table.

(3)

A loan of $1,300,000 is provided at the Bank’s 5 year rate plus 0.50% fixed at 2.62%, repayable on demand. The loan is evidenced by an unsecured promissory note. An additional loan in the amount of $200,000 was granted to Mr. Taylor on February 6, 2023 at the fixed rate of 3.81% for a term of 5 years and is evidenced by an unsecured promissory note. Mr. D. Taylor is currently a director and he is nominated for re-election to the Board at the Meeting.

(4)

This amount represents a loan originally funded in the amount of $160,000 in February 2007 for the purchase of shares. It was renewed in March 2022 for a 5 year term at a fixed rate of 2.62%

(5)

This amount represents loans to a related party; one at the Bank’s 5 year rate plus 0.50% fixed at 2.51% for a tern of 5 years, and the second at the rate of 4.94% for a term of 5 years. The loans are secured by a fixed charge collateral mortgage.

PART VIII – INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of the Bank, no informed person (as defined in NI 51-102) of the Bank, no proposed director or executive officer of the Bank, nor any associate or affiliate of any informed person or any proposed director or executive officer of the Bank, has any interest, direct or indirect, in: (i) any transaction since the commencement of the Bank’s most recently completed financial year or in any proposed transaction which has materially affected or would materially affect the Bank or any of its subsidiaries; or (ii) by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, other than the election of directors.

PART IX – AUDIT COMMITTEE

Audit Committee Information & Disclosure is provided on pages 21 to 28 of the Bank’s Annual Information Form for Fiscal 2023, which is available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.

PART X – CORPORATE GOVERNANCE

Board of Directors

A director is considered to be independent where the Board determines that the director has no direct or indirect material relationship to the Bank or its subsidiaries. “Material relationship” is defined in National Instrument 52-110 – Audit Committees as any relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director’s independent judgment. Annually, the Board, in consultation with the HR Committee, reviews a director’s relationship with the Bank in order to determine whether the director is or continues to be independent.

Every member of the Board, with the exception of Mr. D. Taylor, is independent. Mr. D. Taylor is the President & CEO of the Bank, and, by virtue of his executive officer position, he has a material relationship to the Bank and is not independent.

The current Chair of the Board, The Honourable Mr. Hockin, is an independent director. The roles and responsibilities of the Chair are set out in the Mandate of the Chair of the Board (a copy of which can be found on the Bank’s website). The Chair is to exemplify the Board responsibility for the stewardship of the Bank. Among other duties, the Chair is to liaise with management of the Bank for the purpose of setting meetings of the Board and is to lead the meetings, and he is to ensure that the responsibilities of the Board and management, and the boundaries between them, are well understood and respected. The Chair is also to ensure the Board works as a cohesive team and is to provide the leadership to achieve this, and he is to encourage the active participation of all members. The Chair is to ensure that there are adequate resources available to support the work of the Board, and to ensure that procedures are adopted to ensure that the Board can conduct its work effectively and efficiently. Further, the Chair is to ensure that a process is in place by which the effectiveness of the Board, and the contribution of individual directors, is assessed, and to ensure that where functions are delegated to committees, the functions are carried out and results are reported to the Board.

During Fiscal 2023, the Bank continued its practice of concluding each quarterly Board meeting with the independent directors of the Bank and each meeting of the committees by holding an in-camera session without the non- independent director or any other member of management present. In addition, in order for independent directors of the Board and each committee to have a forum in which to address issues or concerns, the Board and each committee has discretion to conclude all Board meetings and each meeting of the committees with an in-camera session without management and non-independent directors present. During the year, the Board held seven such in-camera meeting sessions, including the four regularly scheduled quarterly meetings. Each committee is required to hold in-camera sessions at quarterly meetings, as stipulated in their respective mandate. During the year each committee held five such in-camera meeting sessions, with the exception of the Risk Oversight Committee and the Innovation and Technology Committee which held four in-camera meeting sessions.

Position Descriptions and Mandates

The Bank has Board approved Mandates for the Chair of the Board, Vice Chair of the Board and for the Chair of each Board committee and for each committee (copies of which can be found on the Bank’s website). The Board has also approved written job descriptions for various senior management roles, including the President & CEO. The job description of the President & CEO outlines his responsibilities, both generally and with respect to business planning and marketing, human resource policies and human resource management, enterprise risk management, legal and regulatory environment, and reporting to the Board. Also attached to the President & CEO’s job description is a detailed chart of authorities that outlines the approval process for various control and strategic requirements and proposals.

Level of Share Ownership Required

Within five years of the later of May 1, 2017, or the date of appointment, directors are expected to accumulate Shares and/or preferred shares equivalent to five times the Board retainer. The Chair is expected to accumulate Shares and/or preferred shares equivalent to three times his respective Board retainer within the same time frame. For purposes of determining compliance with this requirement, the director’s Shares are valued at the higher of cost or market value at October 31 annually.

Ethical Business Conduct

The Board has adopted a written Code of Conduct for the directors, officers, and employees of the Bank. The Code of Conduct is available with the Bank’s other publicly disclosed documents at www.sedarplus.ca and on the Bank’s website at www.versabank.com/codes-and-commitments. A copy may also be requested by contacting the Bank’s Corporate Secretary at the registered office of the Bank (Suite 2002, 140 Fullarton Street, London, Ontario N6A 5P2).

The Board has delegated compliance oversight to the Chief Compliance Officer. On a quarterly basis, the Board receives a Compliance Report from the Chief Compliance Officer. Any matters of non-compliance form part of the report. The Board also receives an annual confirmation from the Chief Human Resources Officer with respect to compliance with the Code of Conduct during the preceding year.

A primary element within the Code of Conduct is a section with respect to conflicts of interest. This section provides a definition of conflict of interest, including a cross-reference to the Bank’s Related Party Transactions Policy & Procedures. The conflict of interest section within the Code of Conduct provides details on the procedure to be followed if a conflict of interest situation arises, with the basic premise being the elevation of notice respecting the situation up to the Board. A list of conflict of interest matters is maintained by the legal department, and each director and officer of the Bank is required to annually attest that he or she is not a party to a material contract or proposed material contract, and is not a director or officer of any entity who is, and does not have a material interest in any person who is, a party to a material contract or proposed material contract with the Bank.

The Bank has also adopted anonymous employee reporting procedures which allows employees and officers of the Bank to anonymously and confidentially report, in writing, suspected unethical or improper conduct in violation of

the Code of Conduct to the Chair of the HR Committee, as well as concerns regarding accounting or auditing matters to the Chair of the Audit Committee.

Nomination of Directors

Currently, the HR Committee, comprised entirely of independent directors, sets criteria for the selection of directors to ensure that the competencies, skills and personal qualities of the Board members allows the Board to discharge its duties and adds value to the Bank. In that regard, the HR Committee has developed a Directors Skill and Competencies Matrix (“Skills Matrix”). The Skills Matrix is reviewed and updated at least annually. The Skills Matrix below shows the principal areas of experience and expertise that each of the nominees brings to the Board.

	Bochynek	Brabander	Bratton	Hockin	Irwin	Jankura	Linton	McGovern	Oliver	Taylor
Audit/Accounting		√		√	√	√	√		√	√
CEO/Sr. Executive Experience	√	√	√	√	√	√	√	√	√	√
Credit Risk		√		√	√	√	√		√	√
Executive Compensation/Human Resources	√	√	√	√			√	√	√	√
Financial Knowledge	√	√	√	√	√	√	√	√	√	√
Financial Service Industry Experience		√	√	√	√	√	√	√	√	√
Governance/Board	√	√	√	√	√	√	√	√	√	√
Government Relations/Public Policy	√		√	√			√	√		√
Innovation & Technology		√	√		√	√	√	√	√	√
Legal/Regulatory	√	√		√	√	√	√	√	√	√
Marketing/Branding/Communications	√	√		√		√	√	√		√
Risk Management		√	√	√	√	√	√	√	√	√
Strategic Planning	√	√	√	√	√	√	√	√	√	√

From time to time it is both necessary and desirable for new director candidates to be identified and appointed to the Board. The HR Committee, with input from the President & CEO, evaluates the needs of the Board in accordance with the Skills Matrix and seeks out candidates with suitable backgrounds and strengths to fill those needs. The credentials of the identified candidate(s) are reviewed and discussed by the HR Committee, and are compared against the current needs of the Board. Any conflicts or impediments, as well as the time expected and required of directors, are addressed. The Chair of the HR Committee reports the HR Committee’s recommendation to the full Board. If thought advisable, the full Board approves the appointment of the identified candidate as a director, subject to a positive result on background checks as required by the Bank’s Assessment Policy for Responsible Persons.

Director Term Limits and Other Mechanisms of Board Renewal

While the Board recognizes the objective of term limits in encouraging director independence, preventing entrenchment and promoting diverse perspectives, the Board is of the view that the adoption of arbitrary term limits unreasonably discounts the value, skills and insights offered by retaining experienced board members. Accordingly, the Board believes the Bank and its shareholders are better served through the employment of a measured approach to Board renewal, including a focus on the board competencies required to support the achievement of the Business Plan and the use of a rigorous annual Board and director performance assessment process.

Diversity on the Board and in Senior Management Positions

Board

The Bank’s Board recognizes the value of having a diverse roster of directors for effective decision making, and views diversity at the board level as an important element in strong corporate governance. Although diversity has always been a factor considered in the nomination of directors, the Board adopted the Board and Senior Management Diversity Policy (the “Diversity Policy”) with the goal of increasing the number of women who serve as directors on the Board.

In accordance with the Diversity Policy, in reviewing Board composition the HR Committee is to consider all aspects of diversity, including skills, experience, gender, age, ethnicity and geographic background. The HR Committee also considers the balance of skills background, experience and knowledge on the Board and the diversity representation of the Board as part of the annual performance and effectiveness evaluations of the Board and committees.

The Diversity Policy has set a target that at least 25% of independent directors on the Bank’s Board be women. As at October 31, 2023, the Board had two female directors, representing 20% of independent directors (20% in Fiscal 2022). The Board recognizes a number of directors may retire in the next few years which will present an opportunity to further increase the number of women on the board and exceed the policy objective.

Senior Management

The Bank and its Board recognize and embrace the benefits of having a diverse senior management team for effective decision making, and view diversity at the senior management level as an important element in the effective management of the Bank’s activities. A diverse senior management team will include and make use of differences in skills, experience, gender, age, ethnicity and geographic background. In this regard, the Bank considers the representation of women in senior management when identifying potential candidates.

The Diversity Policy has set a target that at least 25% of the senior management team be women. As at October 31, 2023, 5 of 20 members of senior management (25%) were women (26% in Fiscal 2022). The Board, through recommendations by the HR Committee, annually reviews the Diversity Policy objectives and targets as set out in the Diversity Policy.

Compensation

As noted above, the Bank currently has an HR Committee comprised entirely of independent directors. As part of its Mandate, this Committee is to assess the level and nature of directors’ fees, as well as other compensation.

The HR Committee recently engaged MNP LLP to provide an independent report on the competitiveness of current Board compensation.

In addition, the HR Committee annually reviews the compensation of the President & CEO and recommends the compensation to be set for the President & CEO to the Board for approval. The Committee annually approves, at the beginning of the fiscal year, performance measurements for calculating the annual incentive award of the President

& CEO, and recommends to the Board any incentive award payable to the President & CEO. The HR Committee also recommends the executive incentive award pool to the Board for approval.

In addition, part of the HR Committee’s mandate is to review officer and management appointments to ensure that the Bank has enough experienced and skilled personnel to carry out its business activities in a prudent manner, and to assess the suitability and integrity of officers in accordance with the Bank’s Assessment Policy for Responsible Persons. The HR Committee reviews employee, including officers’, compensation ranges and benefit programs and aggregate employee incentive awards. Additional information on this subject can be found above, including in the sections titled “Executive Compensation Philosophy” and “Decision Making Process”. The HR Committee is also responsible for an annual review of a number of human resources related Board approved policies, including the Compensation Plan for all employees. The Compensation Plan addresses the base salary component of the total compensation package and other significant benefits and programs.

Other Board Committees

In addition to the Audit Committee and the HR Committee, the Bank also has a Risk Oversight Committee and an Innovation and Technology Committee.

The Risk Oversight Committee is currently comprised of three independent directors: Richard Jankura (Chair), Robbert-Jan Brabander, and Peter Irwin. The Risk Oversight Committee is responsible for oversight of the Bank’s Enterprise Risk Management Framework and Risk Appetite Framework, and reviewing policies developed and implemented for identifying, evaluating, measuring and managing the significant risks to which the Bank is exposed, and ensuring that those policies remain appropriate and prudent. It is responsible for recommending and reviewing, at least annually, all policies governing management of credit risk, market risk, structural risk, and liquidity and funding management risk, to ensure that they remain prudent and appropriate and are being adhered to.

The Innovation and Technology Committee is comprised of three independent directors: Robbert-Jan Brabander (Chair), Art Linton and Susan McGovern. The Innovation and Technology Committee is responsible for assisting the Board in operational risk management by monitoring the development and implementation of the Bank’s Operational Risk Management Framework to manage against operational risks to which the Bank is exposed. The Innovation and Technology Committee assists in ensuring that management has effective policies, processes and procedure to manage information technology risks.

Assessments

The Mandate of the HR Committee provides that the members of the Board are required to complete an annual confidential assessment whereby each director is asked to complete a Board and committee performance assessment survey. The Board utilizes the services of an independent consultant to conduct the board assessment process. The consultant utilizing an online survey tool, circulated the assessment materials and the assessments were returned directly to the consultant. The Board members were given the opportunity to have a telephone interview with the consultant to discuss any concerns. The consultant then compiled the information and prepared a report on the results of the assessments which was then discussed by the HR Committee and the full Board. The HR Committee follows up on recommendations that arise from the assessment process.

In addition, and in accordance with the Mandate of the Chair of the Board, the Chair of the Board conducts an annual assessment of the performance of the President & CEO of the Bank, and the results of that assessment are reviewed by the full Board.

Orientation and Continuing Education

The Director Orientation and Professional Development Program is designed to enhance the directors’ knowledge of, and ability to execute their responsibilities to, the Bank. All new directors are assigned an existing board member as a mentor and are provided with a package of information, including information respecting Board and committee

composition, management information, and other relevant policies and procedures. New Audit Committee members receive additional information pertinent to his or her role on that committee.

In order to keep the directors up-to-date on operations and those matters that affect the business of the Bank, directors receive written material and presentations from management, and may receive presentations from outside experts, on various aspects of the Bank’s operations as well as on emerging issues. This process may be initiated at the request of the Board, a committee, an individual director, or management. In addition, each committee has the authority to engage independent counsel and other advisors as determined to be necessary to permit them to carry out their duties.

Directors are encouraged to enroll in a relevant professional development program, and the expenses incurred are reimbursed to a fixed maximum amount. Where applicable, directors are required to keep their professional accreditations current.

Mandate

A copy of the Mandate of the Board of Directors is attached hereto as Schedule B.

PART XI – ADDITIONAL INFORMATION

SHAREHOLDER PROPOSALS

There were no shareholder proposals submitted for consideration at this Meeting. The final date for submitting shareholder proposals for inclusion in the Management Proxy Circular for next year’s annual shareholder meeting is November 30, 2024, and such submissions must comply with the requirements of the Bank Act (Canada) and the Bank’s by-laws.

ADDITIONAL INFORMATION

The Bank’s Consolidated Financial Statements and Management’s Discussion & Analysis for Fiscal 2023 contain additional financial information about the Bank. Information pertaining to the Bank’s Audit Committee can be found in the Bank’s Annual Information Form for Fiscal 2023. These documents and other additional information about the Bank are available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar. Copies of the information referred to above can be obtained free of charge upon request in writing to the Corporate Secretary at the registered office of the Bank (Suite 2002, 140 Fullarton Street, London, Ontario N6A 5P2).

The Bank’s auditor is Ernst & Young LLP, and Odyssey Trust Corporation is the Bank’s transfer agent.

DIRECTORS’ APPROVAL

This Management Proxy Circular has been approved by the Board.

By Order of the Board,

Brent T. Hodge

General Counsel and Corporate Secretary

February 22, 2024

London, Ontario

SCHEDULE A – LONG-TERM INCENTIVE PLAN

OMNIBUS LONG-TERM INCENTIVE PLAN

TABLE OF CONTENTS

Article 1 —DEFINITIONS.		1

Section 1.1	Definitions.	1

Article 2 —PURPOSE AND ADMINISTRATION OF THE PLAN; GRANTING OF AWARDS.		6

Section 2.1	Purpose of the Plan.	6
Section 2.2	Implementation and Administration of the Plan.	6
Section 2.3	Eligible Participants.	6
Section 2.4	Shares Subject to the Plan.	7
Section 2.5	Participation Limits.	7

Article 3 -OPTIONS		7

Section 3.1	Nature of Options.	7
Section 3.2	Option Awards.	7
Section 3.3	Exercise Price.	8
Section 3.4	Expiry Date; Blackout Period.	8
Section 3.5	Option Agreement.	8
Section 3.6	Exercise of Options.	8
Section 3.7	Method ouf Exercise and Payment of Purchase Price.	8
Section 3.8	Termination of Employment.	9

Article 4 —DEFERRED SHARE UNITS		10

Section 4.1	Nature of DSUs.	10
Section 4.2	DSU Awards.	10
Section 4.3	Redemption of DSUs.	11

Article 5 -SHARE UNITS		12

Section 5.1	Nature of Share Units.	12
Section 5.2	Share Unit Awards.	12
Section 5.3	Performance Criteria and Performance Period Applicable to PSU Awards.	13
Section 5.4	Share Unit Vesting Determination Date.	13

Article 6 —GENERAL CONDITIONS.		13

Section 6.1	General Conditions applicable to Awards.	13
Section 6.2	Dividend Share Units.	14
Section 6.3	Unfunded Plan.	14

Article 7 —ADJUSTMENTS AND AMENDMENTS.		14

Section 7.1	Adjustment to Shares Subject to Outstanding Awards.	14
Section 7.2	Amendment or Discontinuance of the Plan.	15
Section 7.3	Change of Control.	16

Article 8 —MISCELLANEOUS		17

Section 8.1	Currency.	17
Section 8.2	Sub-Plans.	17
Section 8.3	Compliance and Award Restrictions.	17

Section 8.4	Use of an Administrative Agent and Trustee.	18
Section 8.5	Tax Withholding.	18
Section 8.6	Reorganization of the Company.	19
Section 8.7	Governing Laws.	19
Section 8.8	Successors and Assigns.	19
Section 8.9	Severability.	19
Section 8.10	No Liability.	19
Section 8.11	Effective Date of the Plan.	19

OMNIBUS LONG-TERM INCENTIVE PLAN

VersaBank (the “Company”) hereby establishes an Omnibus Long-Term Incentive Plan for certain qualified directors, officers, employees and Consultants (as defined herein), providing ongoing services to the Company and/or its Subsidiaries (as defined herein) that can have a significant impact on the Company's long-term results.

ARTICLE 1—DEFINITIONS

Section 1.1

Definitions.

Where used herein or in any amendments hereto or in any communication required or permitted to be given hereunder, the following terms shall have the following meanings, respectively, unless the context otherwise requires:

“active employment” means the period in which a Participant who is an employee of the Company or an Affiliate performs work for the Company or an Affiliate. For certainty, “active employment” shall be deemed to only include any period constituting the minimum notice of termination period that is required to be provided to an employee Participant pursuant to applicable employment standards legislation but shall exclude any other period that follows the later of the end of the statutory notice period or the employee Participant's last day of performing work for the Company or an Affiliate;

“Affiliates” has the meaning given to this term in the Securities Act (Ontario), as such legislation may be amended, supplemented or replaced from time to time;

“Associate”, where used to indicate a relationship with a Participant, means (i) any partner of that Participant, and (ii) the spouse of that Participant and that Participant's children, as well as that Participant's relatives and that Participant's spouse's relatives, if they share that Participant's residence;

“Award Agreement” means, individually or collectively, an Option Agreement, RSU Agreement, PSU Agreement and/or DSU Agreement, as the context requires;

“Awards” means Options, RSUs, PSUs and/or DSUs granted to a Participant pursuant to the terms of the Plan;

“Black-Out Period” means the period of time during which, pursuant to any policies or determinations of the Company or applicable law, securities of the Company may not be traded by Insiders or other specified persons;

“Board” means the board of directors of the Company as constituted from time to time; “Broker” has the meaning ascribed thereto in Section 3.7(1) hereof;

“Business Day” means a day other than a Saturday, Sunday or statutory holiday, when banks are generally open for business in London, Ontario, Canada for the transaction of banking business;

“Cancellation” has the meaning ascribed thereto in Section 2.4(1) hereof;

“Cash Equivalent” means:

(a)

in the case of Share Units, the amount of money equal to the Market Value multiplied by the number of vested Share Units in the Participant's Account, net of any applicable taxes in accordance with Section 8.5, on the Share Unit Settlement Date;

(b)

in the case of DSU Awards, the amount of money equal to the Market Value multiplied by the whole number of DSUs then recorded in the Participant's Account which the Non- Employee Director requests to redeem pursuant to the DSU Redemption Notice, net of any applicable taxes in accordance with Section 8.5, on the date the Company receives, or is deemed to receive, the DSU Redemption Notice;

“Change of Control” means unless the Board determines otherwise, the happening, in a single transaction or in a series of related transactions, of any of the following events:

(a)

any transaction (other than a transaction described in clause (b) below) pursuant to which any person or group of persons acting jointly or in concert acquires the direct or indirect beneficial ownership of securities of the Company representing 50% or more of the aggregate voting power of all of the Company's then issued and outstanding securities entitled to vote in the election of directors of the Company, other than any such acquisition that occurs upon the exercise or settlement of options or other securities granted by the Company under any of the Company's equity incentive plans.

(b)

there is consummated an arrangement, amalgamation, merger, consolidation or similar transaction involving (directly or indirectly) the Company and, immediately after the consummation of such arrangement, amalgamation, merger, consolidation or similar transaction, the shareholders of the Company immediately prior thereto do not beneficially own, directly or indirectly, either (i) outstanding voting securities representing more than 50% of the combined outstanding voting power of the surviving or resulting entity in such amalgamation, merger, consolidation or similar transaction, or (ii) more than 50% of the combined outstanding voting power of the parent of the surviving or resulting entity in such arrangement, amalgamation merger, consolidation or similar transaction, in each case in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Company immediately prior to such transaction;

(c)

(i) the sale, lease, exchange, license or other disposition of all or substantially all of the Company's assets to a person other than a person that was an Affiliate of the Company at the time of such sale, lease, exchange, license or other disposition, or (ii) a sale, lease, exchange, license or other disposition to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are beneficially owned by shareholders of the Company in substantially the same proportions as their beneficial ownership of the outstanding voting securities of the Company immediately prior to such sale, lease, exchange, license or other disposition;

(d)

the passing of a resolution by the Board or shareholders of the Company to substantially liquidate the assets of the Company or wind up the Company's business or significantly rearrange its affairs in one or more transactions or series of transactions or the commencement of proceedings for such a liquidation, winding-up or re-arrangement (except where such re-arrangement is part of a bona fide reorganization of the Company in circumstances where the business of the Company is continued and the shareholdings remain substantially the same following the re-arrangement);

(e)

individuals who, on the Effective Date, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election)

of any new Board member was approved or recommended by a majority vote of the members of the Incumbent Board then still in office, such new member will, for purposes of the Plan, be considered as a member of the Incumbent Board; or

(f)

any other matter determined by the Board to be a Change of Control.

“Code of Conduct” means any code of ethics adopted by the Company, as modified from time to time;

"Company” means VersaBank, a Schedule I bank governed by the Bank Act (Canada);

“Consultant” means a Person (including an individual whose services are contracted for through another Person) with whom the Company or a Subsidiary has a written contract for services for an initial, renewable or extended period of twelve months or more;

“disability” has the meaning attributed thereto in the Participant's Employment Agreement or written agreement with the Company or an Affiliate and if there is no such defined term or agreement, means the Participant's inability to substantially fulfil his or her duties on behalf of the Company as a result of illness or injury for a continuous period of nine (9) months or more or for an aggregate period of twelve (12) months or more during any consecutive twenty-four (24) month period.

“Dividend Share Units” has the meaning ascribed thereto in Section 6.2 hereof;

“DSU” means a deferred share unit, which is a bookkeeping entry equivalent in value to a Share credited to a Participant's Account in accordance with Article 4 hereof;

“DSU Agreement” means a written notice from the Company to a Participant evidencing the grant of DSUs and the terms and conditions thereof, substantially in the form set out in Schedule "A", or such other form as the Board may approve from time to time;

“DSU Redemption Deadline” has the meaning ascribed thereto in Section 4.3(1) hereof;

“DSU Redemption Notice” has the meaning ascribed thereto in Section 4.3(1) hereof; "Eligible Participants" has the meaning ascribed thereto in Section 2.3(1) hereof;

“Employment Agreement” means, with respect to any Participant, any written employment agreement between the Company or a Subsidiary and such Participant;

“Exercise Notice” means a notice in writing signed by a Participant and stating the Participant's intention to exercise or settle a particular Award, if applicable;

“Exercise Price” has the meaning ascribed thereto in Section 3.2 hereof; "Expiry Date" has the meaning ascribed thereto in Section 3.4 hereof;

“Insider” means a "reporting insider" of the Company as defined in National Instrument 55-104 — Insider Reporting Requirements and Exemptions and the TSX Company Manual in respect of the rules governing security-based compensation arrangements, as amended from time to time;

"Market Value" means at any date when the market value of Shares of the Company is to be determined, the closing price of the Shares on the trading day prior to such date on the TSX, or, if the Shares are not listed on the TSX at the relevant time, such other stock exchange upon which the Shares are then listed, or if the Shares of the Company are not listed on any stock exchange,

the value as is determined solely by the Board, acting reasonably and in good faith based on the reasonable application of a reasonable valuation method not inconsistent with Canadian tax law;

“Non-Employee Directors” means members of the Board who, at the time of execution of an Award Agreement, if applicable, and at all times thereafter while they continue to serve as a member of the Board, are not officers or employees of the Company or a Subsidiary;

“Option” means an option granted by the Company to a Participant entitling such Participant to acquire one Share from treasury at the Exercise Price, but subject to the provisions hereof;

“Option Agreement” means a written notice from the Company to a Participant evidencing the grant of Options and the terms and conditions thereof, substantially in the form set out in Schedule “B”, or such other form as the Board may approve from time to time;

“Participants” means Eligible Participants that are granted Awards under the Plan;

“Participant's Account” means an account maintained to reflect each Participant's participation in RSUs, PSUs and/or DSUs under the Plan;

“Performance Criteria” means criteria established by the Board which, without limitation, may include criteria based on the Participant's personal performance, the financial performance of the Company and/or of its Subsidiaries and/or achievement of corporate goals and strategic initiatives, and that may be used to determine the vesting of the Awards, when applicable;

“Performance Period” means the period determined by the Board pursuant to Section 5.3 hereof;

“Person” means, without limitation, an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate and a trustee executor, administrator, or other legal representative, and pronouns which refer to a Person shall have a similarly extended meaning;

“Plan” means this Omnibus Long-Term Incentive Plan, as amended and restated from time to time, including, for greater certainty, any sub-plan adopted by the Board in accordance with Section 8.2 hereof;

“PSU” means a right awarded to a Participant to receive a payment in the form of Shares (or the Cash Equivalent) as provided in Article 4 hereof and subject to the terms and conditions of the Plan;

“PSU Agreement” means a written notice from the Company to a Participant evidencing the grant of PSUs and the terms and conditions thereof, substantially in the form set out in Schedule “C”, or such other form as the Board may approve from time to time;

“Regulatory Authorities” means the TSX and all securities commissions or similar securities regulatory bodies having jurisdiction over the Corporation;

“RSU” means a restricted share unit awarded to a Participant to receive a payment in the form of Shares (or the Cash Equivalent) as provided in Article 5 hereof and subject to the terms and conditions of the Plan;

“RSU Agreement” means a written notice from the Company to a Participant evidencing the grant of RSUs and the terms and conditions thereof, substantially in the form set out in Schedule “C”, or such other form as the Board may approve from time to time;

“Share Compensation Arrangement” means a stock option, employee stock purchase plan, long-term incentive plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Shares to one or more Eligible Participants of the Company or a Subsidiary, including this Plan. For greater certainty, a “Share Compensation Arrangement” does not include a security-based compensation arrangement used as an inducement to person(s) or company(ies) not previously employed by and not previously an Insider of the Company;

“Shares” means the common shares in the capital of the Company;

“Share Unit” means a RSU and/or PSU, as the context requires;

“Share Unit Settlement Notice” means a notice by a Participant to the Company electing the desired form of settlement of vested RSUs or PSUs;

“Share Unit Vesting Determination Date” has the meaning described thereto in Section 5.4 hereof;

“Subsidiary” means a company, partnership or other body corporate that is controlled, directly or indirectly, by the Company;

“Surrender” has the meaning ascribed thereto in Section 3.7(3); “Surrender Notice” has the meaning ascribed thereto in Section 3.7(3);

“Tax Act” means the Income Tax Act (Canada) and its regulations thereunder, as amended from time to time;

“Termination Date” means (i) with respect to a Participant who is an employee or officer of the Company or a Subsidiary, such Participant's last day of active employment, (ii) with respect to a Participant who is a Consultant, the date such Consultant ceases to provide services to the Company or a Subsidiary, and (iii) with respect to a Participant who is a Non-Employee Director, the date such Person ceases to be a director of the Company or Subsidiary, effective on the last day of the Participant's actual and active Board membership whether such day is selected by agreement with the individual, unilaterally by the Corporation and whether with or without advance notice to the Participant, provided that if a Non-Executive Director becomes an employee of the Company or any of its Subsidiaries, such Participant's Termination Date will be such Participant's last day of active employment, and “Terminate” and “Terminated” have corresponding meanings.

“Trading Day” means any day on which the TSX is opened for trading;

“transfer” includes any sale, exchange, assignment, gift, bequest, disposition, mortgage, lien, charge, pledge, encumbrance, grant of security interest or any arrangement by which possession, legal title or beneficial ownership passes from one Person to another, or to the same Person in a different capacity, whether or not voluntary and whether or not for value, and any agreement to effect any of the foregoing and “transferred”, “transferring” and similar variations have corresponding meanings.

“TSX” means the Toronto Stock Exchange; and

ARTICLE 2—PURPOSE AND ADMINISTRATION OF THE PLAN; GRANTING OF AWARDS

Section 2.1

Purpose of the Plan.

The purpose of the Plan is to advance the interests of the Company by: (i) providing Eligible Participants with additional incentives; (ii) encouraging share ownership by such Eligible Participants; (iii) increasing the proprietary interest of Eligible Participants in the success of the Company; (iv) promoting growth and profitability of the Company; (v) encouraging Eligible Participants to take into account long- term corporate performance; (vi) rewarding Eligible Participants for sustained contributions to the Company and/or significant performance achievements of the Company; and (vii) enhancing the Company's ability to attract, retain and motivate Eligible Participants.

Section 2.2

Implementation and Administration of the Plan.

(1)

The Plan shall be administered and interpreted by the Board or, if the Board by resolution so decides, by a committee of the Board and/or any member of the Board. In such circumstances, all references to the term “Board" in this Plan will be deemed to be references to the such committee and/or member of the Board, except as may otherwise be determined by the Board.

(2)

Subject to the terms and conditions set forth in the Plan, the Board shall have the sole and absolute discretion to: (i) designate Participants; (ii) determine the type, size, and terms, and conditions of Awards to be granted; (iii) determine the method by which an Award may be settled, exercised, canceled, forfeited, or suspended; (iv) determine the circumstances under which the delivery of cash with respect to an Award may be deferred either automatically or at the Participant's or the Board's election; (v) interpret and administer, reconcile any inconsistency in, correct any defect in, and supply any omission in the Plan and any Award granted under, the Plan; (vi) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Board shall deem appropriate for the proper administration of the Plan; (vii) accelerate the vesting, delivery, or exercisability of, or payment for or lapse of restrictions on, or waive any condition in respect of, Awards; and (viii) make any other determination and take any other action that the Board deems necessary or desirable for the administration of the Plan or to comply with any applicable law.

(3)

No member of the Board will be liable for any action or determination taken or made in good faith in the administration, interpretation, construction or application of the Plan, any Award Agreement or other document or any Awards granted pursuant to the Plan.

(4)

The day-to-day administration of the Plan may be delegated to such officers and employees of the Company as the Board determines.

(5)

Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions regarding the Plan or any Award or any documents evidencing any Award granted pursuant to the Plan shall be within the sole discretion of the Board, may be made at any time, and shall be final, conclusive, and binding upon all persons or entities, including, without limitation, the Company, any Subsidiary, any Participant, any holder or beneficiary of any Award, and any shareholder of the Company.

Section 2.3

Eligible Participants.

(1)

The Persons who shall be eligible to receive Options, RSUs and PSUs shall be the officers, employees or Consultants of or to the Company or a Subsidiary, providing ongoing services to the Company and/or its Subsidiaries, and the Persons who shall be eligible to receive DSUs shall be the Non-Employee Directors (collectively, “Eligible Participants”).

(2)

Participation in the Plan shall be entirely voluntary and any decision not to participate shall not affect an Eligible Participant's relationship, employment or appointment with the Company or a Subsidiary.

(3)

Notwithstanding any express or implied term of the Plan to the contrary, the granting of an Award pursuant to the Plan shall in no way be construed as a guarantee of employment or appointment by the Company or a Subsidiary.

Section 2.4

Shares Subject to the Plan.

(1)

Subject to Section 2.4(2) and to adjustment pursuant to provisions of Article 7 hereof, the total number of Shares reserved and available for grant and issuance pursuant to Awards under the Plan or pursuant to awards under any other established Share Compensation Arrangement, shall not exceed ten percent (10%) of the total issued and outstanding Shares from time to time, or such other number as may be approved by the TSX and the shareholders of the Company from time to time. For the purposes of this Section 2.4(1), in the event that the Company cancels or purchases to cancel any of its issued and outstanding Shares (“Cancellation”) and as a result of such Cancellation, the Company exceeds the limit set out in this Section 2.4(1), no approval of the Company's shareholders will be required for the issuance of Shares on the exercise of any Options which were granted prior to such Cancellation. The Plan is considered an “evergreen” plan, since the Shares covered by Awards which have been exercised shall be available for subsequent grants under the Plan and the number of Awards available to grant increases as the number of issued and outstanding Shares increases from time to time.

(2)

For greater certainty, any issuance from treasury by the Company that is or was issued in reliance upon an exemption under applicable stock exchange rules applicable to security based compensation arrangements used as an inducement to Persons not previously employed by and not previously an Insider of the Company shall not be included in determining the maximum Shares reserved and available for grant and issuance under Section 2.4(1).

(3)

Shares in respect of which an Award is exercised, granted under the Plan (or any other Share Compensation Arrangement) but not exercised prior to the termination of such Award, not vested or settled prior to the termination of such Award due to the expiration, termination, cancellation or lapse of such Award, or settled in cash in lieu of settlement in Shares, shall, in each case, be available for Awards to be granted thereafter pursuant to the provisions of the Plan. All Shares issued from treasury pursuant to the exercise or the vesting of the Awards granted under the Plan shall, when the applicable Exercise Price, if any, is received by the Company in connection therewith, be so issued as fully paid and non-assessable Shares.

Section 2.5

Participation Limits.

Subject to adjustment pursuant to provisions of Article 7 hereof, the aggregate number of Shares (i) issued to Insiders under the Plan or any other proposed or established Share Compensation Arrangement within any one-year period, and (ii) issuable to Insiders at any time under the Plan or any other proposed or established Share Compensation Arrangement, shall in each case not exceed ten percent (10%) of the total issued and outstanding Shares from time to time determined on a non-diluted basis. Any Awards granted pursuant to the Plan to a Participant prior to the Participant becoming an Insider, shall be excluded for the purposes of the limits set out in this Section 2.5.

ARTICLE 3—OPTIONS

Section 3.1

Nature of Options.

Each Option is an option granted by the Company to a Participant entitling such Participant to acquire one Share from treasury at the Exercise Price, subject to the provisions hereof.

Section 3.2

Option Awards.

(1)

The Board shall, from time to time, in its sole discretion, (i) designate the Eligible Participants who may receive Options under the Plan, (ii) determine the number of Options, if any, to be granted to each Eligible Participant and the date or dates on which such Options shall be granted,

(iii) determine the price per Share to be payable upon the exercise of each such Option (the “Exercise Price”), (iv) determine the relevant vesting provisions (including Performance Criteria, if applicable) and (v) determine the Expiry Date, the whole subject to the terms and conditions prescribed in the Plan, in any Option Agreement and any applicable rules of the TSX and any other stock exchange on which the Shares are listed or posted for trading.

(2)

All Options granted herein shall vest in accordance with the terms of the resolutions of the Board approving such Options and the terms of the Option Agreement entered into in respect of such Options.

Section 3.3

Exercise Price.

The Exercise Price for any Option shall be fixed by the Board when such Option is granted, but shall not be less than the Market Value of the Shares underlying the Option at the time of the grant.

Section 3.4

Expiry Date; Blackout Period.

Subject to Section 7.2, each Option must be exercised no later than ten (10) years after the date the Option is granted or such shorter period as set out in the Participant's Option Agreement, at which time such Option will expire (the “Expiry Date”). Notwithstanding any other provision of the Plan, each Option that would expire during or within ten (10) Business Days immediately following a Black-Out Period shall expire on the date that is ten (10) Business Days immediately following the expiration of the Black-Out Period. Where an Option will expire on a date that falls immediately after a Black-Out Period, and for greater certainty, not later than ten (10) Business Days after the Black-Out Period, then the date such Option will expire will be automatically extended by such number of days equal to ten (10) Business Days less the number of Business Days after the Black-Out Period that the Option expires.

Section 3.5

Option Agreement.

Each Option must be confirmed by an Option Agreement. The Option Agreement shall contain such terms that may be considered necessary in order that the Option will comply with any provisions respecting options in the income tax or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or the rules of any Regulatory Authority.

Section 3.6

Exercise of Options.

(1)

Subject to the provisions of the Plan, a Participant shall be entitled to exercise an Option granted to such Participant, subject to vesting limitations which may be imposed by the Board at the time such Option is granted and set out in the Option Agreement.

(2)

Prior to its expiration or earlier termination in accordance with the Plan, each Option shall be exercisable as to all or such part or parts of the optioned Shares and at such time or times and/or pursuant to the achievement of such Performance Criteria and/or other vesting conditions as the Board may determine in its sole discretion.

(3)

No fractional Shares will be issued upon the exercise of Options granted under the Plan and, accordingly, if a Participant would become entitled to a fractional Share upon the exercise of an Option, or from an adjustment pursuant to Section 7.1, such Participant will only have the right to acquire the next lowest whole number of Shares, and no payment or other adjustment will be made with respect to the fractional interest so disregarded.

Section 3.7

Method of Exercise and Payment of Purchase Price.

(1)

Subject to the provisions of the Plan and the alternative exercise procedures set out herein, an Option granted under the Plan may be exercisable (from time to time as provided in Section 3.6 hereof) by the Participant (or by the liquidator, executor or administrator, as the case may be, of the estate of the Participant) by delivering an exercise notice substantially in the form appended to the Option Agreement (an “Exercise Notice”) to the Company in the form and manner

determined by the Board from time to time, together with a bank draft, certified cheque, wire transfer or other form of payment acceptable to the Company in an amount equal to the aggregate Exercise Price of the Shares to be purchased pursuant to the exercise of the Options and any applicable tax withholdings.

(2)

Pursuant to the Exercise Notice, and subject to the approval of the Board, a Participant may choose to undertake a “cashless exercise” with the assistance of a broker (the “Broker”) in order to facilitate the exercise of such Participant's Options. The “cashless exercise” procedure may include a sale of such number of Shares as is necessary to raise an amount equal to the aggregate Exercise Price for all Options being exercised by that Participant under an Exercise Notice and any applicable tax withholdings. Pursuant to the Exercise Notice, the Participant may authorize the Broker to sell Shares on the open market by means of a short sale and forward the proceeds of such short sale to the Company to satisfy the Exercise Price and any applicable tax withholdings, promptly following which the Company shall issue the Shares underlying the number of Options as provided for in the Exercise Notice.

(3)

In addition, in lieu of exercising any vested Option in the manner described in this Section 3.7(1) or Section 3.7(2), and pursuant to the terms of this Section 3.7(3) but subject to Section 3.6(3), a Participant may, by surrendering an Option (“Surrender”) with a properly endorsed notice of Surrender to the Corporate Secretary of the Company, substantially in the form appended to the Option Agreement (a “Surrender Notice”), elect to receive that number of Shares calculated using the following formula, subject to acceptance of such Surrender Notice by the Board and provided that arrangements satisfactory to the Company have been made to pay any applicable withholding taxes:

X = (Y * (A-B)) / A

Where:

X = the number of Shares to be issued to the Participant upon exercising such Options; provided that if the foregoing calculation results in a negative number, then no Shares shall be issued;

Y = the number of Shares underlying the Options to be Surrendered;

A = the Market Value of the Shares as at the date of the Surrender; and

B = the Exercise Price of such Options.

(4)

No share certificates shall be issued and no person shall be registered in the share register of the Company as the holder of Shares until actual receipt by the Company of an Exercise Notice and payment for the Shares to be purchased.

(5)

Upon the exercise of an Option pursuant to Section 3.7(1) or Section 3.7(3), the Company shall, as soon as practicable after such exercise but no later than ten (10) Business Days following such exercise, forthwith cause the transfer agent and registrar of the Shares to deliver to the Participant (or as the Participant may otherwise direct) such number of Shares as the Participant shall have then paid for and as are specified in such Exercise Notice.

Section 3.8

Termination of Employment.

(1)

Subject to a written Employment Agreement of a Participant or Option Agreement and as otherwise determined by the Board, each Option shall be subject to the following conditions:

(a)

Termination for Cause. Upon a Participant ceasing to be an Eligible Participant for “cause”, all unexercised vested or unvested Options granted to such Participant shall

terminate on the Termination Date as specified in the notice of termination. For the purposes of the Plan, the determination by the Company that the Participant was discharged for cause shall be binding on the Participant. Subject to the terms of the Employment Agreement, “cause” shall include, among other things, gross misconduct, theft, fraud, breach of confidentiality or breach of the Code of Conduct and any reason determined by the Company to be cause for termination; provided that, in respect of a termination for cause, in the event that an Ontario employee Participant's conduct or actions giving rise to cause does not constitute wilful misconduct, disobedience or wilful neglect of duty, in each case, that is not trivial and has not been condoned by the Company or an applicable Affiliate, the Ontario employee Participant shall be entitled to such minimum statutory entitlements in respect of the incentive compensation or any other applicable rights pursuant to this Plan to the end of the statutory notice period as may be required by applicable employment standards legislation.

(b)

Resignation, Retirement and Termination other than for Cause. In the case of a Participant ceasing to be an Eligible Participant due to such Participant's resignation, retirement or termination other than for “cause”, as applicable, subject to any later expiration dates determined by the Board, all Options shall expire on the earlier of ninety (90) days after the effective date of such Termination Date or the expiry date of such Option, to the extent such Option was vested and exercisable by the Participant on the effective date of such Termination Date, and all unexercised unvested Options granted to such Participant shall terminate on the effective date of such resignation, retirement or termination.

(c)

Death or Disability. In the case of a Participant ceasing to be an Eligible Participant due to death or disability, as applicable, subject to any later expiration dates determined by the Board, all Options shall expire on the earlier of twelve (12) months after the effective date of such death or disability, or the expiry date of such Option, to the extent such Option was vested and exercisable by the Participant on the effective date of such death or disability, and all unexercised unvested Options granted to such Participant shall terminate on the effective date of such death or disability.

(2)

For the avoidance of doubt, subject to applicable employment standards legislation, a Participant shall have no entitlement to damages or other compensation whatsoever arising from, in lieu of, or related to not receiving any awards or compensation which would have vested or been granted after the Termination Date including but not limited to damages in lieu of notice at common law.

ARTICLE 4—DEFERRED SHARE UNITS

Section 4.1

Nature of DSUs.

A DSU is a unit granted to Non-Employee Directors representing the right to receive a Share or the Cash Equivalent, subject to restrictions and conditions as the Board may determine at the time of grant. Conditions may be based on continuing service as a Non-Employee Director (or other service relationship), vesting terms and/or achievement of pre-established Performance Criteria.

Section 4.2

DSU Awards.

(1)

Subject to the Company's director compensation policy determined by the Board from time to time, each Non-Employee Director may elect to receive all or a portion his or her annual retainer fee in the form of a grant of DSUs in each fiscal year. The number of DSUs shall be calculated as the amount of the Non-Employee Director's annual retainer fee elected to be paid by way of DSUs divided by the Market Value. At the discretion of the Board, fractional DSUs will not be issued and any fractional entitlements will be rounded down to the nearest whole number.

(2)

Each DSU must be confirmed by a DSU Agreement that sets forth the terms, conditions and limitations for each DSU and may include, without limitation, the vesting and terms of the DSUs and the provisions applicable on a Termination Date, and shall contain such terms that may be considered necessary in order that the DSU will comply with any provisions respecting DSUs in the income tax or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or the rules of any Regulatory Authority.

(3)

Any DSUs that are awarded to a Non-Employee Director who is a resident of Canada or employed in Canada (each for purposes of the Tax Act) shall be structured so as to be considered to be a plan described in section 7 of the Tax Act or to meet requirements of paragraph 6801(d) of the Income Tax Regulations adopted under the Tax Act (or any successor to such provisions).

(4)

Subject to vesting and other conditions and provisions set forth herein and in the DSU Agreement, the Board shall determine whether each DSU awarded to a Non-Employee Director shall entitle the Non-Employee Director: (i) to receive one Share issued from treasury; (ii) to receive the Cash Equivalent of one Share; (iii) to receive either one Share from treasury, the Cash Equivalent of one Share or a combination of cash and Shares, as the Board may determine in its sole discretion on redemption; or (iv) to entitle the Non-Employee Director to elect to receive either one Share from treasury, the Cash Equivalent of one Share or a combination of cash and Shares.

Section 4.3

Redemption of DSUs.

(1)

Each Non-Employee Director shall be entitled to redeem his or her DSUs during the period commencing on the Business Day immediately following the Termination Date and ending on the date that is not later than the 90*^ day following the Termination Date, or such shorter redemption period set out in the relevant DSU Agreement (the “DSU Redemption Deadline”), by providing a written notice of settlement to the Company setting out the number of DSUs to be settled and the particulars regarding the registration of the Shares issuable upon settlement, if applicable (the “DSU Redemption Notice”). In the event of the death of a Non-Employee Director, the Notice of Redemption shall be filed by the administrator or liquidator of the estate of the Non-Employee Director.

(2)

If a DSU Redemption Notice is not received by the Company on or before the DSU Redemption Deadline, the Non-Employee Director shall be deemed to have delivered a DSU Redemption Notice on the DSU Redemption Deadline and, if not otherwise set out in the DSU Agreement, the Board shall determine the number of DSUs to be settled by way of Shares, the Cash Equivalent or a combination of Shares and the Cash Equivalent and delivered to the Non-Employee Director, administrator or liquidator of the estate of the Non-Employee Director, as applicable.

(3)

Subject to Section 8.5 and the DSU Agreement, settlement of DSUs shall take place promptly following the Company's receipt or deemed receipt of the DSU Redemption Notice through:

(a)

in the case of settlement DSUs for their Cash Equivalent, delivery of bank draft, certified cheque, wire transfer or other acceptable form of payment to the Non-Employee Director representing the Cash Equivalent;

(b)

in the case of settlement of DSUs for Shares, delivery of a Share to the Non-Employee Director; or

(c)

in the case of settlement of DSUs for a combination of Shares and the Cash Equivalent, a combination of (a) and (b) above.

ARTICLE 5—SHARE UNITS

Section 5.1

Nature of Share Units.

A Share Unit is an Award entitling the recipient to acquire Shares, at such purchase price (which may be zero) as determined by the Board, subject to such restrictions and conditions as the Board may determine at the time of grant. Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives.

Section 5.2

Share Unit Awards.

(1)

Subject to the provisions herein set forth and any shareholder or regulatory approval which may be required, the Board shall, from time to time, in its sole discretion, (i) designate the Eligible Participants who may receive RSUs and/or PSUs under the Plan, (ii) fix the number of RSUs and/or PSUs, if any, to be granted to each Eligible Participant and the date or dates on which such RSUs and/or PSUs shall be granted, and (iii) determine the relevant conditions and vesting provisions (including, in the case of PSUs, the applicable Performance Period and Performance Criteria, if any) and Restriction Period of such RSUs and/or PSUs, the whole subject to the terms and conditions prescribed in the Plan and in any RSU Agreement or PSU Agreement, as applicable.

(2)

Each RSU must be confirmed by an RSU Agreement that sets forth the terms, conditions and limitations for each RSU and may include, without limitation, the vesting and terms of the RSUs and the provisions applicable in the event employment or service terminates, and shall contain such terms that may be considered necessary in order that the RSUs will comply with any provisions respecting RSUs in the income tax or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or the rules of any Regulatory Authority.

(3)

Each PSU must be confirmed by a PSU Agreement that sets forth the terms, conditions and limitations for each PSU and may include, without limitation, the applicable Performance Period and Performance Criteria, vesting and terms of the PSUs and the provisions applicable in the event employment or service terminates, and shall contain such terms that may be considered necessary in order that the PSUs will comply with any provisions respecting PSUs in the income tax or other laws in force in any country or jurisdiction of which the Participant may from time to time be a resident or citizen or the rules of any Regulatory Authority.

(4)

Any RSUs or PSUs that are awarded to an Eligible Participant who is a resident of Canada or employed in Canada (each for purposes of the Tax Act) shall be structured so as to be considered to be a plan described in section 7 of the Tax Act or in such other manner to ensure that such award is not a “salary deferral arrangement” as defined in the Tax Act (or any successor to such provisions).

(5)

Subject to the vesting and other conditions and provisions set forth herein and in the RSU Agreement and/or PSU Agreement, the Board shall determine whether each RSU and/or PSU awarded to a Participant shall entitle the Participant: (i) to receive one Share issued from treasury; (ii) to receive the Cash Equivalent of one Share; (iii) to receive either one Share from treasury, the Cash Equivalent of one Share or a combination of cash and Shares, as the Board may determine in its sole discretion on settlement; or (iv) to elect to receive either one Share from treasury, the Cash Equivalent of one Share or a combination of cash and Shares.

(6)

The applicable settlement period in respect of a particular Share Unit shall be determined by the Board. Except as otherwise provided in the Award Agreement or any other provision of the Plan, all vested RSUs and PSUs shall be settled as soon as practicable following the Share Unit Vesting Determination Date (as defined in Section 5.4) but in all cases prior to (i) three (3) years following the date of grant of Share Unit, if such Share Unit are settled by payment of Cash Equivalent or through purchases by the Company on the Participant's behalf on the open market,

or (ii) ten (10) years following the date of grant of Share Unit, if such Share Unit are settled by issuance of Shares from treasury. Following the receipt of such settlement, the PSUs and RSUs so settled shall be of no value whatsoever and shall be removed from the Participant's Account.

Section 5.3

Performance Criteria and Performance Period Applicable to PSU Awards.

(1)

For each award of PSUs, the Board shall establish the period in which any Performance Criteria and other vesting conditions must be met in order for a Participant to be entitled to receive Shares in exchange for all or a portion of the PSUs held by such Participant (the “Performance Period”).

(2)

For each award of PSUs, the Board shall establish any Performance Criteria and other vesting conditions for a Participant to be entitled to receive Shares in exchange for his or her PSUs.

Section 5.4

Share Unit Vesting Determination Date.

The vesting determination date means the date on which the Board determines if the Performance Criteria and/or other vesting conditions with respect to a RSU and/or PSU have been met (the “Share Unit Vesting Determination Date”), and as a result, establishes the number of RSUs and/or PSUs that become vested, if any.

ARTICLE 6—GENERAL CONDITIONS

Section 6.1

General Conditions applicable to Awards.

Each Award, as applicable, shall be subject to the following conditions:

(1)

Employment - The granting of an Award to a Participant shall not impose upon the Company or a Subsidiary any obligation to retain the Participant in its employ in any capacity. For greater certainty, the granting of Awards to a Participant shall not impose any obligation on the Company to grant any awards in the future nor shall it entitle the Participant to receive future grants.

(2)

No Rights as a Shareholder - Neither the Participant nor such Participant's personal representatives or legatees shall have any rights whatsoever as shareholder in respect of any Shares covered by such Participant's Awards until the date of issuance of a share certificate to such Participant (or to the liquidator, executor or administrator, as the case may be, of the estate of the Participant) or the entry of such person's name on the share register for the Shares. Without in any way limiting the generality of the foregoing, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such share certificate is issued or entry of such person's name on the share register for the Shares.

(3)

Conformity to Plan — In the event that an Award is granted or an Award Agreement is executed which does not conform in all particulars with the provisions of the Plan, or purports to grant Awards on terms different from those set out in the Plan, the Award or the grant of such Award shall not be in any way void or invalidated, but the Award so granted will be adjusted to become, in all respects, in conformity with the Plan.

(4)

Non-Transferability — Except as set forth herein, Awards are not transferable. Awards may be exercised only by:

(a)

the Participant to whom the Awards were granted;

(b)

with the Board's prior written approval and subject to such conditions as the Board may stipulate, such Participant's family or retirement savings trust or any registered retirement savings plans or registered retirement income funds of which the Participant is and remains the annuitant;

(c)

upon the Participant's death, by the legal representative of the Participant's estate; or

(d)

upon the Participant's incapacity, the legal representative having authority to deal with the property of the Participant;

provided that any such legal representative shall first deliver evidence satisfactory to the Company of entitlement to exercise any Award. A person exercising an Award may subscribe for Shares only in the person's own name or in the person's capacity as a legal representative.

(5)

No Guarantee — For greater certainty, the granting of Awards to a Participant shall not impose any obligation on the Corporation to grant any Awards in the future nor shall it entitle the Participant to receive future grants. No amount will be paid to or in respect of a Participant under the Plan or pursuant to any other arrangement, and no Awards will be granted to such Participant to compensate for any downward fluctuation in the price of the Shares, nor will any other form of benefit be conferred upon or in respect of the Participant for such purpose.

(6)

Acceptance of Terms — Participation in the Plan by any Participant shall be construed as acceptance of the terms and conditions of the Plan by the Participant and as to the Participant's agreement to be bound thereby.

Section 6.2

Dividend Share Units.

When dividends (other than stock dividends) are paid on Shares, Participants shall receive additional DSUs, RSUs and/or PSUs, as applicable (“Dividend Share Units”) as of the dividend payment date. The number of Dividend Share Units to be granted to the Participant shall be determined by multiplying the aggregate number of DSUs, RSUs and/or PSUs, as applicable, held by the Participant on the relevant record date by the amount of the dividend paid by the Company on each Share, and dividing the result by the Market Value on the dividend payment date, which Dividend Share Units shall be in the form of DSUs, RSUs and/or PSUs, as applicable. Dividend Share Units granted to a Participant in accordance with this Section 6.2 shall be subject to the same vesting conditions and settlement terms as applicable to the related DSUs, RSUs and/or PSUs in accordance with the respective Award Agreement.

Section 6.3

Unfunded Plan.

Unless otherwise determined by the Board, the Plan shall be unfunded. To the extent any Participant or his or her estate holds any rights by virtue of a grant of Awards under the Plan, such rights (unless otherwise determined by the Board) shall be no greater than the rights of an unsecured creditor of the Company.

ARTICLE 7—ADJUSTMENTS AND AMENDMENTS

Section 7.1

Adjustment to Shares Subject to Outstanding Awards.

(1)

In the event of any stock dividend, stock split, combination or exchange of Shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of the Company's assets to shareholders, or any other change in the Shares, the Board will make such proportionate adjustments, if any, as the Board in its discretion, subject to regulatory approval, may deem appropriate to reflect such change (for the purpose of preserving the value of the Awards), with respect to (i) the number or kind of Shares or other securities reserved for issuance pursuant to the Plan; and (ii) the number or kind of Shares or other securities subject to unexercised Awards previously granted and the exercise price of those Awards provided, however, that no substitution or adjustment will obligate the Company to issue or sell fractional Shares. The existence of any Awards does not affect in any way the right or power of the Company or an Affiliate or any of their respective shareholders to make, authorize or determine any adjustment, recapitalization, reorganization or any other change in the capital structure or the business of, or any amalgamation, merger or consolidation involving, to create or issue any

bonds, debentures, shares or other securities of, or to determine the rights and conditions attaching thereto, to effect the dissolution or liquidation of or any sale or transfer of all or any part of the assets or the business of, or to effect any other corporate act or proceeding relating to, whether of a similar character or otherwise, the Company or such Affiliate, whether or not any such action would have an adverse effect on the Plan or any Award granted hereunder.

Section 7.2

Amendment or Discontinuance of the Plan.

(1)

The Board may, in its sole discretion, suspend or terminate the Plan at any time or from time to time and/or amend or revise the terms of the Plan or of any Award granted under the Plan and any agreement relating thereto, provided that such suspension, termination, amendment, or revision shall:

(a)

not materially adversely alter or impair any Award previously granted except as permitted by the terms of the Plan or upon the consent of the applicable Participant(s); and

(b)

be in compliance with applicable law and with the prior approval, if required, of the shareholders of the Company and of the TSX or any other stock exchange upon which the Company has applied to list its Shares.

(2)

If the Plan is terminated, the provisions of the Plan and any administrative guidelines and other rules and regulations adopted by the Board and in force on the date of termination will continue in effect as long as any Award or any rights awarded or granted under the Plan remain outstanding and, notwithstanding the termination of the Plan, the Board will have the ability to make such amendments to the Plan or the Awards as they would have been entitled to make if the Plan were still in effect.

(3)

Subject to Section 7.2(4), the Board may from time to time, in its discretion and without the approval of shareholders, make changes to the Plan or any Award that do not require the approval of shareholders under Section 7.2(1) which may include but are not limited to:

(a)

a change to the vesting provisions of this Plan and any Award granted under the Plan;

(b)

a change to the provisions governing the effect of termination of a Participant's employment, contract or office;

(c)

a change to accelerate the date on which any Award may be exercised under the Plan;

(d)

an amendment of the Plan or an Award as necessary to comply with applicable law or the requirements of any exchange upon which the securities of the Company are then listed or any other Regulatory Authority, the Plan, the Participants or the shareholders of the Company;

(e)

any amendment of a “housekeeping” nature, including without limitation those made to clarify the meaning of an existing provision of the Plan or any agreement, correct or supplement any provision of the Plan that is inconsistent with any other provision of the Plan or any agreement, correct any grammatical or typographical errors or amend the definitions in the Plan regarding administration of the Plan;

(f)

any amendment regarding the administration of the Plan; or

(g)

(4)

Notwithstanding the foregoing or any other provision of the Plan, shareholder approval is required for the following amendments to the Plan:

(a)

any increase in the maximum number of Shares that may be issuable from treasury pursuant to Awards granted under the Plan, other than an adjustment pursuant to Section 7.1;

(b)

any reduction in the exercise price of an Award including cancellation and reissuance of an Award, except in the case of an adjustment pursuant to Section 7.1;

(c)

any extension of the Expiration Date of an Award, except in case of an extension due to a Black-Out Period;

(d)

any amendment to remove or to exceed the insider participation limit set out in Section 2.5;

(e)

any amendment to the definition of Eligible Participant that would permit the issuance of Options, RSUs or PSUs to Non-Employee Directors;

(f)

any amendment to Section 6.1(4); and

(g)

any amendment to Section 7.2(3) or Section 7.2(4) of the Plan.

Section 7.3

Change of Control.

(1)

Despite any other provision of the Plan, but subject to Section 7.2(3), in the event of a Change of Control, all unvested Awards then outstanding will, as applicable, be substituted by or replaced with awards of the surviving corporation (or any Affiliate thereof) or the potential successor (or any Affiliate thereto) (the “continuing entity") on the same terms and conditions as the original Awards, subject to appropriate adjustments that do not diminish the value of the original Awards.

(2)

If, upon a Change of Control, the continuing entity fails to comply with Section 7.3(1), the vesting of all then outstanding Awards (and, if applicable, the time during which such Awards may be exercised) will be accelerated in full.

(3)

No fractional Shares or other security will be issued upon the exercise of any Award and accordingly, if as a result of a Change of Control, a Participant would become entitled to a fractional Share or other security, such participant will have the right to acquire only the next lowest whole number of Shares or other security and no payment or other adjustment will be made with respect to the fractional interest so disregarded.

(4)

Despite anything else to the contrary in the Plan, in the event of a potential Change of Control, the Board will have the power, in its sole discretion, to modify the terms of the Plan and/or the Awards to assist the Participants in tendering to a take-over bid or other transaction leading to a Change of Control. For greater certainty, in the event of a take-over bid or other transaction leading to a Change of Control, the Board has the power, in its sole discretion, to accelerate the vesting of Awards and to permit Participants to conditionally exercise their Awards, such conditional exercise to be conditional upon the take-up by such offeror of the Shares or other securities tendered to such take-over bid in accordance with the terms of the take-over bid (or the effectiveness of such other transaction leading to a Change of Control). If, however, the potential Change of Control referred to in this Section 7.3(4) is not completed within the time specified (as the same may be extended), then despite this Section 7.3(4) or the definition of "Change of Control”, (i) any conditional exercise of vested Awards will be deemed to be null, void and of no effect, and such conditionally exercised Awards will for all purposes be deemed not to have been exercised, and (ii) Awards which vested pursuant to this Section 7.3(4) will be returned by the

Participant to the Company and reinstated as authorized but unissued Shares and the original terms applicable to such Awards will be reinstated.

(5)

If the Board has, pursuant to the provisions of Section 7.3(4) permitted the conditional exercise of Awards in connection with a potential Change of Control, then the Board will have the power, in its sole discretion, to terminate, immediately following actual completion of such Change of Control and on such terms as it sees fit, any Awards not exercised (including all vested and unvested Awards).

ARTICLE 8—MISCELLANEOUS

Section 8.1

Currency.

Unless otherwise specifically provided, all references to dollars in the Plan are references to Canadian dollars.

Section 8.2

Sub-Plans.

The Board may, from time to time, establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board will establish such sub-plans by adopting supplements to this Plan containing (a) such limitations on the Board's discretion under the Plan as the Board deems necessary or desirable, or (b) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement will apply only to Participants within the affected jurisdiction and the Company will not be required to provide copies of any supplements to Participants in any jurisdiction which is not subject to such supplement.

Section 8.3

Compliance and Award Restrictions.

(1)

The Company's obligation to issue and deliver Shares under any Award is subject to: (i) the completion of such registration or other qualification of such Shares or obtaining approval of such Regulatory Authority as the Company shall determine to be necessary or advisable in connection with the authorization, issuance or sale thereof; (ii) the admission of such Shares to listing on any stock exchange on which such Shares may then be listed; and (iii) the receipt from the Participant of such representations, agreements and undertakings as to future dealings in such Shares as the Company determines to be necessary or advisable in order to safeguard against the violation of the securities laws of any jurisdiction. The Company shall take all reasonable steps to obtain such approvals, registrations and qualifications as may be necessary for the issuance of such Shares in compliance with applicable securities laws and for the listing of such Shares on any stock exchange on which such Shares are then listed.

(2)

The Participant agrees to fully cooperate with the Company in doing all such things, including executing and delivering all such agreements, undertakings or other documents or furnishing all such information as is reasonably necessary to facilitate compliance by the Company with such laws, rule and requirements, including all tax withholding and remittance obligations.

(3)

No Awards will be granted where such grant is restricted pursuant to the terms of any trading policies or other restrictions imposed by the Company.

(4)

The Company is not obliged by any provision of the Plan or the grant of any Award under the Plan to issue or sell Shares if, in the opinion of the Board, such action would constitute a violation by the Company or a Participant of any laws, rules and regulations or any condition of such approvals.

(5)

If Shares cannot be issued to a Participant upon the exercise or settlement of an Award due to legal or regulatory restrictions, the obligation of the Company to issue such Shares will terminate

and, if applicable, any funds paid to the Company in connection with the exercise of any Options will be returned to the applicable Participant as soon as practicable.

(6)

At the time a Participant ceased to hold Awards which are or may become exercisable, the Participant ceases to be a Participant.

(7)

Nothing contained herein will prevent the Board from adopting other or additional compensation arrangements for the benefit of any Participant or any other Person, subject to any required regulatory, shareholder or other approval.

Section 8.4

Use of an Administrative Agent and Trustee.

The Board may in its sole discretion appoint from time to time one or more entities to act as administrative agent to administer the Awards granted under the Plan and to act as trustee to hold and administer the assets that may be held in respect of Awards granted under the Plan, the whole in accordance with the terms and conditions determined by the Board in its sole discretion. The Company and the administrative agent will maintain records showing the number of Awards granted to each Participant under the Plan.

Section 8.5

Tax Withholding.

(1)

Notwithstanding any other provision of the Plan, all distributions, delivery of Shares or payments to a Participant (or to the liquidator, executor or administrator, as the case may be, of the estate of the Participant) under the Plan shall be made net of applicable source deductions. If the event giving rise to the withholding obligation involves an issuance or delivery of Shares, then, the withholding obligation may be satisfied by (a) having the Participant elect to have the appropriate number of such Shares sold by the Company, the Company's transfer agent and registrar or any trustee appointed by the Company pursuant to Section 8.4 hereof, on behalf of and as agent for the Participant as soon as permissible and practicable, with the proceeds of such sale being delivered to the Company, which will in turn remit such amounts to the appropriate governmental authorities, or (b) any other mechanism as may be required or appropriate to conform with local tax and other rules. Notwithstanding any other provision of the Plan, the Company shall not be required to issue any Shares or make payments under this Plan until arrangements satisfactory to the Company have been made for payment of all applicable withholdings obligations.

(2)

The sale of Shares by the Company, or by a Broker, under Section 8.5(1) or under any other provision of the Plan will be made on the TSX (or any other stock exchange on which the Shares are listed or posted for trading). The Participant consents to such sale and grants to the Company an irrevocable power of attorney to effect the sale of such Shares on his behalf and acknowledges and agrees that (i) the number of Shares sold will be, at a minimum, sufficient to fund the withholding obligations net of all selling costs, which costs are the responsibility of the Participant and which the Participant hereby authorizes to be deducted from the proceeds of such sale; (ii) in effecting the sale of any such Shares, the Company or the Broker will exercise its sole judgment as to the timing and the manner of sale and will not be obligated to seek or obtain a minimum price; and (iii) neither the Company nor the Broker will be liable for any loss arising out of such sale of the Shares including any loss relating to the pricing, manner or timing of the sales or any delay in transferring any Shares to a Participant or otherwise.

(3)

The Participant further acknowledges that the sale price of the Shares will fluctuate with the market price of the Shares and no assurance can be given that any particular price will be received upon any sale. The Company makes no representation or warranty as to the future market value of the Shares or with respect to any income tax matters affecting the Participant resulting from the grant or exercise of an Award and/or transactions in the Shares. Neither the Company, nor any of its directors, officers, employees, shareholders or agents will be liable for anything done or omitted to be done by such person or any other person with respect to the price, time, quantity or other conditions and circumstances of the issuance of Shares under the Plan,

with respect to any fluctuations in the market price of Shares or in any other manner related to the Plan.

(4)

Notwithstanding the first paragraph of this Section 8.5, the applicable tax withholdings may be waived where the Participant directs in writing that a payment be made directly to the Participant's registered retirement savings plan in circumstances to which regulation 100(3) of the regulations of the Tax Act apply.

Section 8.6

Reorganization of the Company.

The existence of any Awards shall not affect in any way the right or power of the Company or its shareholders to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, or any amalgamation, combination, merger or consolidation involving the Company or to create or issue any bonds, debentures, shares or other securities of the Company or the rights and conditions attaching thereto or to affect the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar nature or otherwise.

Section 8.7

Governing Laws.

The Plan and all matters to which reference is made herein shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

Section 8.8

Successors and Assigns.

The Plan shall be binding on all successors and assigns of the Company and a Participant, including without limitation, the personal legal representatives of a Participant, or any receiver or trustee in bankruptcy or representative of the Company's or Participant's creditors.

Section 8.9

Severability.

The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision and any invalid or unenforceable provision shall be severed from the Plan.

Section 8.10

No Liability.

No member of the Board, or any committee or other subdelegate shall be liable for any action or determination taken or made in good faith in the administration, interpretation, construction or application of the Plan or any Award granted hereunder.

Section 8.11

Effective Date of the Plan.

The Plan was approved by the Board and shall take effect on April 21, 2021.

SCHEDULE “A”

FORM OF NON-EMPLOYEE DIRECTOR DSU AWARD AGREEMENT

VERSABANK

DSU AWARD AGREEMENT

This DSU Award Agreement (this “Agreement”), dated as of •, is made by and between VersaBank (the “Company”) and • (the “Grantee").

WHEREAS, the Company has adopted the Omnibus Long-Term Incentive Plan (as may be amended from time to time, the “Plan");

AND WHEREAS, the Board has determined that the non-employee directors of the Company may elect to receive a portion of his or her then current annual Board retainer fee in the form of a grant of DSUs (as defined in the Plan) in each fiscal year, which retainer fee shall be payable in four equal quarterly instalments (the “Director's Remuneration”).

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves and for their successors and assigns, hereby agree as follows:

Grant of DSUs.

(a) Grant. The portion or percentage of the Director's Remuneration credited as DSUs for the fiscal year shall be determined on the first business day following the last day of each fiscal quarter of such fiscal year for which the Grantee's Director's Remuneration is payable and with respect to which such deferral election, if any, is effective (with respect to each such quarter, the “Date of Grant"), and shall equal a number of DSUs, rounded down to the nearest whole number, determined by dividing the dollar amount of such Director's Remuneration so deferred for such quarter by the Market Value (as defined in the Plan) of one Share as of such Date of Grant. All DSUs to be credited to the Grantee shall be subject to the terms and conditions set forth in this Agreement and as otherwise provided in the Plan. DSUs shall be credited to a separate book-entry account maintained on the books of the Company for the Grantee.

(b) Incorporation by Reference, Etc. The provisions of the Plan are incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any interpretations, amendments, rules, and regulations promulgated by the Board from time to time pursuant to the Plan. In the event of any inconsistency or conflict between the provisions of the Plan and any this Agreement, the provisions of the Plan shall prevail. Any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Board shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and conclusive upon the Grantee and his or her legal representatives in respect of any questions arising under the Plan or this Agreement.

Vesting; Forfeiture. The DSUs shall [be fully vested on the applicable Date of Grant and shall not be subject to forfeiture.]

Settlement. The Company shall settle the DSUs granted hereunder as soon as possible after receiving or being deemed to receive a DSU Redemption Notice, at which time the Company shall, subject to any required tax withholding and the execution of any required documentation, deliver to the Grantee [the Cash Equivalent (as defined in the Plan) of] one (1) Share for each DSU (and, upon such settlement, the DSUs shall cease to be credited to the Grantee's account) less an amount equal to any

federal, state, provincial, and local income and employment taxes required to be withheld. Such settlement will occur not later than the 90t^ day following the Termination Date.

4. Method of Electing to Defer Director's Remuneration. Unless otherwise permitted or determined by the Board, to elect to receive DSUs, the Grantee shall complete and deliver to the Company a written election (as set out in Appendix I attached). The Grantee's written election shall, subject to any minimum or maximum amount that may be determined by the Board from time to time, designate the portion or percentage of the Director's Remuneration to be paid in the form of DSUs, with the remaining portion or percentage to be paid in cash in accordance with the Company's regular practices of paying such cash compensation. In the absence of a designation to the contrary, the Grantee's election set forth in Appendix I shall continue to apply to all subsequent Director's Remuneration payments until the Grantee submits another written election in accordance with this paragraph. A Grantee shall only file one election no later than the last day of the fiscal year preceding the fiscal year in respect of which the Director's Remuneration becomes payable and the election shall be irrevocable for that fiscal year.

5. Tax Withholding. The Company shall be entitled to require, as a condition to the payment of any cash in settlement of the DSUs granted hereunder, that the Grantee remit an amount in cash or other property having a value sufficient to satisfy all federal, state, provincial, and local or other applicable withholding taxes relating thereto. In addition, the Company shall have the right and is hereby authorized to withhold from the cash otherwise deliverable upon settlement of the DSUs, or from any compensation or other amount owing to the Grantee, the amount (in cash or, in the discretion of the Company, other property) of any applicable withholding taxes in respect of the settlement of the DSUs and to take such other action as may be necessary in the discretion of the Company to satisfy all obligations for the payment of such taxes.

6. Compliance with Legal Requirements. The granting and settlement of the DSUs, and any other obligations of the Company under this Agreement, shall be subject to all applicable federal, state, provincial and local laws, rules, and regulations and to such approvals by any regulatory or governmental agency (including stock exchanges) as may be required. The Committee shall have the right to impose such restrictions on the DSUs as it deems reasonably necessary or advisable under applicable securities laws and the rules and regulations of the TSX.

Miscellaneous.

(a) Transferability. The DSUs are non-transferable or assignable except in accordance with the Plan.

(b) Inconsistency. This Agreement is subject to the terms and conditions of the Plan and, in the event of any inconsistency or contradiction between the terms of this Agreement and the Plan, the terms of the Plan shall govern.

(c) Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(d) Entire Agreement. This Agreement and the Plan embody the entire agreement and understanding among the parties and supersede and pre-empt any prior understandings, agreements or

representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(e) Successors and Assigns. This DSU Agreement shall bind and enure to the benefit of the Grantee and the Corporation and their respective successors and permitted assigns.

(f) Time of the Essence. Time shall be of the essence of this Agreement and of every part hereof.

(g) Governing Law. This Agreement and the DSUs shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

(h) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

By signing this Agreement, the Grantee represents, warrants and acknowledges that the Grantee (i) has been provided a copy of and has read and understands the Plan and agrees to the terms and conditions of the Plan and this Agreement, (ii) has requested and is satisfied that the foregoing be drawn up in the English language (Le soussigné reconnait qu'il a exigé que ce qui precede soit rédigé et execute en anglais et s'en declare satisfait.), (iii) has participated in the trade and acceptance of DSUs voluntarily, and (iv) has not been induced to participate in the Plan by expectation of engagement, appointment, employment, continued engagement, continued appointment or continued employment, as application with the Company or its Affiliates. For absolute certainty, by accepting and executing this Agreement, the Grantee specifically represents, warrants and acknowledges that the Grantee has read and understood the terms and conditions set out in Sections 2.8(1) and 2.8(2) and the definitions of “active employment” and “Termination Date” of which (i) state that the Grantee shall have no entitlement to damages or other compensation whatsoever arising from, in lieu of, or related to not receiving any incentive compensation or any other applicable rights pursuant to this Agreement and the Plan which would have vested or been granted after a termination including but not limited to damages in lieu of notice at common law; and (ii) have the effect that no period of common law reasonable notice that exceeds the Grantee's minimum statutory notice period under ap icable employment standards legislation (if any), shall be used for the purposes of calculating the Grantee's entitlements under this Agreement or the Plan. By accepting and executing this Agreement, the Grantee further waives any eligibility to receive damages or payment in lieu of any forfeited incentive compensation or any other applicable rights pursuant to this Agreement or the Plan that would have vested or accrued during any common law reasonable notice period that exceeds the Grantee's minimum statutory notice period under the applicable employment standards leqislation (if any).

IN WITNESS WHEREOF the parties hereof have executed this Agreement as of the day of , 20 .

	VERSABANK

	By:
		Authorized Signing Officer




	[Insert Participant's Name]

APPENDIX “I”

VERSABANK

(THE “COMPANY”)

DEFFERED SHARE UNIT ELECTION NOTICE

All capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the DSU Award Agreement.

Pursuant to the Omnibus Long-Term Incentive Plan of the Company (the “Plan”), I hereby elect to receive % of my Director's Remuneration in the form of DSUs in lieu of cash.

I confirm that:

(a)

I have received and reviewed a copy of the terms and conditions of the Plan and have reviewed, considered and agreed to be bound by the terms of this Election Notice, the Plan and the DSU Award Agreement.

(b)

I have requested and am satisfied that the Plan, the DSU Award Agreement and the foregoing be drawn up in the English language. Le soussigné reconnait qu'iI a exigé que Ie Regime et ce qui précéde soient rédigés et exécutés en anglais et s'en declare satisfait.

(c)

I recognize that when DSUs are redeemed in accordance with the terms of the Plan and the DSU Award Agreement, income tax and other withholdings as required will arise at that time.

(d)

The value of DSUs is based on the Market Value of the Shares of the Company and therefore is not guaranteed.

The foregoing is only a brief outline of certain key provisions of the Plan and the DSU Award Agreement. For more complete information, reference should be made to the Plan.

Date:

				(Name of Participant)




				(Signature of Participant)

SCHEDULE “B”

FORM OF OPTION AGREEMENT

VERSABANK

OPTION AGREEMENT

This Stock Option Agreement (the “Option Agreement”) is granted by VersaBank (the “Company”), in favour of the optionee named below (the “Optionee”) pursuant to and on the terms and subject to the conditions of the Company's Omnibus Long-Term Incentive Plan (the "Plan"). Capitalized terms used and not otherwise defined in this Option Agreement shall have the meanings set forth in the Plan.

The terms of the option (the “Option”), in addition to those terms set forth in the Plan, are as follows:

Optionee. The Optionee is •.

Number of Shares. The Optionee may purchase up to • Shares of the Company (the “Option Shares”) pursuant to this Option, as and to the extent that the Option vests and becomes exercisable as set forth in section 6 of this Option Agreement.

Exercise Price. The exercise price is Cdn $• per Option Share (the “Exercise Price”).

Date Option Granted. The Option was granted on •.

Expiry Date. The Option terminates on •. (the “Expiry Date”).

Vesting. The Option to purchase Option Shares shall vest and become exercisable as follows:

Exercise of Options. In order to exercise the Option, the Optionee shall notify the Company in the form annexed hereto as Appendix I, pay the Exercise Price to the Company as required by the Plan, whereupon the Optionee shall be entitled to receive a certificate representing the relevant number of fully paid and non-assessable Shares in the Company.

Transfer of Option. The Option is not-transferable or assignable except in accordance with the Plan.

Inconsistency. This Option Agreement is subject to the terms and conditions of the Plan and any Employment Agreement and, in the event of any inconsistency or contradiction between the terms of this Option Agreement and the Plan or any Employment Agreement, the terms of the Employment Agreement shall govern.

10.

Severability. Wherever possible, each provision of this Option Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Option Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Option Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

11.

Entire Agreement. This Option Agreement and the Plan embody the entire agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

12.

Successors and Assigns. This Option Agreement shall bind and enure to the benefit of the Optionee and the Company and their respective successors and permitted assigns.

13.

Time of the Essence. Time shall be of the essence of this Agreement and of every part hereof.

14.

Governing Law. This Agreement and the Option shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

15.

Counterparts. This Option Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

By signing this Agreement, the Optionee represents, warrants and acknowledges that the Optionee (i) has been provided a copy of and has read and understands the Plan and agrees to the terms and conditions of the Plan and this Option Agreement, (ii) has requested and is satisfied that the foregoing be drawn up in the English language (Le soussigné reconnai“t qu'il a exigé que ce qui precede soit rédigé et execute en anglais et s'en declare satisfait.), (iii) has participated in the trade and acceptance of Options voluntarily, and (iv) has not been induced to participate in the Plan by expectation of engagement, appointment, employment, continued engagement, continued appointment or continued employment, as application with the Company or its Affiliates. For absolute certainty, by accepting and executing this Agreement, the Optionee specifically represents, warrants and acknowledges that the Optionee has read and understood the terms and conditions set out in Sections 2.8(1) and 2.8(2) and the definitions of “active employment” and “Termination Date” of which (i) state that the Optionee shall have no entitlement to damages or other compensation whatsoever arising from, in lieu of, or related to not receiving any incentive compensation or any other ap icable rights pursuant to this Agreement and the Plan which would have vested or been granted after a termination including but not limited to damages in lieu of notice at common law; and (ii) have the effect that no period of common law reasonable notice that exceeds the Optionee's minimum statutory notice oeriod under aoolicable employment standards legislation (if any), shall be used for the purposes of calculating the Optionee's entitlements under this Agreement or the Plan. By accepting and executing this Agreement, the Optionee further waives any eligibility to receive damages or payment in lieu of any forfeited incentive compensation or any other applicable rights pursuant to this Agreement or the Plan that would have vested or accrued during any common law reasonable notice period that exceeds the Optionee's minimum statutory notice period under the applicable em oyment standards legislation (if any).

IN WITNESS WHEREOF the parties hereof have executed this Option Agreement as of the day of , 20a.

	VERSABANK

	By:
		Authorized Signing Officer




	[Insert Participant's Name]

APPENDIX I

VERSABANK

ELECTION TO EXERCISE STOCK OPTIONS

TO: VERSABANK (the "Company")

The undersigned Optionee hereby elects to exercise Options granted by the Company to the undersigned pursuant to an Option Agreement dated , 20 under the Company's Omnibus Long-Term Incentive Plan (the “Plan”), for the number Shares set forth below. Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Plan.

Number of Shares to be Acquired:	_________________________________

Exercise Price (per Share):	Cdn.$ _________________________________

Aggregate Purchase Price:	Cdn.$ _________________________________

Amount enclosed that is payable on account of any source deductions relating to this Option exercise (contact the Company for details of such amount):	Cdn.$ _________________________________

a Or check here if alternative arrangements have been made with the Company.

and hereby tenders a bank draft, certified cheque, wire transfer or other form of payment confirmed as acceptable by the Company for such aggregate purchase price, and, if applicable, all source seductions, and directs such Shares to be registered in the name of

I hereby agree to file or cause the Company to file on my behalf, on a timely basis, all insider reports and other reports that I may be required to file under applicable securities laws. I understand that this request to exercise my Options is irrevocable.

DATED this day of



	Signature of Participant


	Name of Participant (Please Print)

APPENDIX II

VERSABANK

SURRENDER NOTICE

TO: VERSABANK (the "Company")

The undersigned Optionee hereby elects to surrender Options granted by the Company to the undersigned pursuant to an Award Agreement dated , 20 under the Company's Omnibus Long-Term Incentive Plan (the “Plan”) in exchange for Shares as calculated in accordance with Section 3.7(3) of the Plan. Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Plan.

Amount enclosed that is payable on account of any source deductions relating to this surrender of Options (contact the Company for details of such amount):	Cdn.$ _________________________________

a Or check here if alternative arrangements have been made with the Company

Please issue a certificate or certificates representing the Shares in the name of ____________________________________________________________

DATED this day of


	Signature of Participant



	Name of Participant (Please Print)

Schedule “C”

Form of RSU/PSU Agreement

VERSABANK

[RSU / PSU] GRANT AGREEMENT

This [RSU / PSU] grant agreement (“Grant Agreement”) is entered into between VersaBank (the “Company”) and the Participant named below (the “Recipient”) of the [RSUs l PSUs] (“Units”) pursuant to the Company's Omnibus Long-Term Incentive Plan (the “Plan”). Capitalized terms used and not otherwise defined in this Grant Agreement shall have the meanings set forth in the Plan.

The terms of the Units, in addition to those terms set forth in the Plan, are as follows:

Recipient. The Recipient is •.

Grant of [RSUs I PSUs1 The Recipient is granted • Units.

Vestinq. The Units shall vest as follows: •.

[Performance Criteria. Settlement of the Units shall be conditional upon the achievement of the following Performance Criteria within the Performance Period set forth herein: •.]

Settlement. The Units shall be settled as follows: •

Date of Grant. The Units were granted to the Recipient on •.

Transfer of Units. The Units are non-transferable or assignable except in accordance with the Plan.

Inconsistency. This Agreement is subject to the terms and conditions of the Plan and, in the event of any inconsistency or contradiction between the terms of this Grant Agreement and the Plan, the terms of the Plan shall govern.

Severability. Wherever possible, each provision of this Grant Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Grant Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Grant Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

10.

Entire Agreement. This Grant Agreement and the Plan embody the entire agreement and understanding among the parties and supersede and pre-empt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

11.

Successors and Assigns. This Grant Agreement shall bind and enure to the benefit of the Recipient and the Corporation and their respective successors and permitted assigns.

12.

Time of the Essence. Time shall be of the essence of this Agreement and of every part hereof.

13.

Governing Law. This Grant Agreement and the Units shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

14.

Counterparts. This Grant Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

By signing this Grant Agreement, the Recipient represents, warrants and acknowledges that the Recipient (i) has been provided a copy of and has read and understands the Plan and agrees to the terms and conditions of the Plan and this Grant Agreement, (ii) has requested and is satisfied that the foregoing be drawn up in the English language (Le soussigné reconnai“t qu'il a exigé que ce qui precede soit rédigé et execute en anglais et s'en declare satisfait.), (iii) has participated in the trade and acceptance of Units voluntarily, and (iv) has not been induced to participate in the Plan by expectation of engagement, appointment, employment, continued engagement, continued appointment or continued employment, as application with the Company or its Affiliates. For absolute certainty, by accepting and executing this Agreement, the Recipient specifically represents, warrants and acknowledges that the Recipient has read and understood the terms and conditions set out in Sections 2.8(1) and 2.8(2) and the definitions of “active employment" and “Termination Date" of which

(i) state that the Recipient shall have no entitlement to damages or other compensation whatsoever arising from, in lieu of, or related to not receiving any incentive compensation or any other applicable rights pursuant to this Agreement and the Plan which would have vested or been granted after a termination including but not limited to damages in lieu of notice at common law; and (ii) have the effect that no period of common law reasonable notice that exceeds the Recipient's minimum statutory notice period under applicable employment standards legislation (if any), shall be used for the purposes of calculating the Recipient's entitlements under this Agreement or the Plan. By accepting and executing this Agreement, the Recipient further waives any eligibility to receive damages or payment in lieu of any forfeited incentive compensation or any other applicable rights pursuant to this Agreement or the Plan that would have vested or accrued during any common law reasonable notice period that exceeds the Recipient's minimum statutory notice period under the applicable employment standards legislation (if any).

IN WITNESS WHEREOF the parties hereof have executed this Grant Agreement as of the day of , 20a.

	VERSABANK

	By:
		Authorized Signing Officer




	[Insert Participant's Name]

SCHEDULE B – MANDATE OF THE BOARD OF DIRECTORS

BOARD APPROVED: June 6, 2023

Purpose

The purpose or role of the Board has two fundamental elements: decision-making and oversight. The decision- making function is exercised with respect to the formulation with management of fundamental policies and strategic goals and through the approval of certain significant actions. The oversight function concerns the review of management decisions, the adequacy of systems and controls and the implementation of policies. The Board establishes formal delegations of authority, defining the limits of management’s power and authority and delegating to management certain powers to manage the business of the Bank. The delegations of authority conform to statutory limitations specifying responsibilities of the board that cannot be delegated to management. Any responsibilities not delegated to management remain with the Board and its committees.

Organization of the Board of Directors

The Board shall consist of ten (10) directors, a majority of whom must be resident Canadians at the time of their election or appointment. The Board shall be constituted by a majority of independent directors¹².

Every director, in exercising any of the powers of a director and any of the duties of a director, shall:

(a)

act honestly and in good faith with a view to the best interests of the Bank; and

(b)

exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Meetings of the Board of Directors

In order for the Board to transact business at a meeting, a majority of directors must be present. The Board shall meet at least once each quarter and shall schedule a sufficient number of meetings (whether in person or by video conference) to carry out its mandate. There shall be an in-camera session at each quarterly Board meeting with only independent directors present.

The members of the Board of Directors are expected to attend all meetings of the Board and its committees in person, when at all possible. Attendance by video conference may be used to facilitate a director’s attendance.

Directors are expected to devote the appropriate amount of time necessary to review meeting materials such that they are able to engage in informed discussion and make informed decisions.

Reporting from Committees

Certain functions of the Board may be delegated to committees of the Board. Such delegation will be confirmed by the Board approval of committee mandates.

Unless waived by the Board, the Chair of each Board Committee shall provide a verbal summary report to the Board on material matters considered during a meeting of such committee at the next meeting of the Board.

¹A Director is independent if he or she meets the independence criteria as set out in the Bank’s Director Independence Policy.

²If the death, disability or resignation of a member has resulted in a vacancy of the Committee that the Board is required to fill, a Committee member appointed to fill such vacancy is exempt from the requirement for a period ending on the later of the next annual meeting and the date that is six months from the day the vacancy was created, so long as the Board has determined that a reliance on this exemption will not materially adversely affect the ability of the Committee to act independently and to satisfy its other requirements.

Resources and Authority

The Board shall have unrestricted access to management of the Bank and, if determined necessary by the Board, to any employee of the Bank, its subsidiaries or affiliates. The Board shall have the authority to retain and terminate independent legal counsel, consultant or other advisors to assist it in fulfilling its responsibilities and to set and pay the compensation of these advisors without consulting or obtaining the approval of any officer of the Company.

Duties and Responsibilities of the Board of Directors

The members of the Board of Directors have responsibility for the stewardship of the Bank and are charged with the following duties:

General Duties

(a)

Approve the by-laws of the Bank.

(b)

Appoint a Chair of the Board who shall be an independent director, subject to exceptional circumstances.

(c)

In the event that the Chair of the Board is not an independent director, an independent lead director shall be appointed.

(d)

Exercise independent judgment in directing and overseeing the operations of the Bank.

(e)

Establish an Audit Committee and approve the mandate and members for such committee.

(f)

Establish a Conduct Review, Governance & HR Committee and approve the mandate and members for such committee.

(g)

Establish a Risk Oversight Committee and approve the mandate and the members for such committee.

(h)

Establish an Innovation and Technology Committee and approve the mandate and the members for such committee.

(i)

Approve the mandates for each of the Bank’s oversight functions, and all other management related mandates.

(j)

Establish any other board committees that the Board of Directors deems advisable and approve the mandates for such committees.

(k)

Understand directors’ responsibilities and regularly evaluate objectively the individual director, the Board Committee and the Boards’ effectiveness in fulfilling those responsibilities.

(l)

Review director remuneration.

(m)

Approve all major changes to the Bank’s organizational structure.

(n)

Review policies for the Bank as recommended by management and approve all policies.

(o)

Review and approve the Recovery Plan and the Recovery Plan Policy every two years or as needed.

Liquidity and Market Risk

(a)

Understand the liquidity and funding needs of the Bank.

(b)

Establish appropriate and prudent liquidity and funding management policies for the Bank, taking into account the Bank’s significant operations, including policies on the sources, types and levels of liquidity that are to be maintained by the Bank, and policies that are designed to prevent the Bank’s funding from becoming unduly concentrated with respect to source, type, term to maturity or currency of denomination.

(c)

Review liquidity and market risk policies at least once a year to ensure that they remain appropriate and prudent.

(d)

Obtain, on a regular basis, reasonable assurance that the Bank has ongoing, appropriate and effective liquidity, funding and market risk processes, and that the Bank’s liquidity, funding and market risk management policies are being adhered to.

Credit Risk

(a)

Ensure the Bank has appropriate and prudent policies on the areas and types of credit, both on and off-balance sheet, in which the Bank is willing to engage.

(b)

Review management’s assessment of asset quality and asset quality trends, credit quality administration and underwriting standards, and the effectiveness of portfolio credit risk management systems and processes to enable management to monitor and control credit risk.

(c)

Ensure that procedures and controls for managing credit risk are in place, including:

Defined and prudent levels of decision-making authority for approving credit exposures;

ii.

An effective assessment and rating system for credit risk; and

iii.

An ongoing, appropriate and effective process for managing credit exposures that warrant special attention.

Operational Risk

Operational Risk Management

(a)

Review and approve, at least annually, the Bank’s Operational Risk Management Framework and the Operational Risk section of the Bank’s Risk Appetite Statement.

(b)

Review, at least annually, and approve the Bank’s Operational Risk Policy.

(c)

Understand the operational risks that the Bank is exposed to.

(d)

Establish appropriate and prudent policies on operational risks that are inherent in the Bank’s operations.

(e)

Review operational risk policies at least once a year to ensure they remain appropriate and prudent.

ii.

Human Resources

(a)

Appoint and when appropriate remove the President & CEO for the Bank and ensure that the Chair of the Board conducts an annual assessment of such officer’s performance.

(b)

Approve the Executive Agreement of the President & CEO.

(c)

Annually approve the base salary of the President & CEO.

(d)

Monitor the performance of the President & CEO in accordance with annual performance measurements for calculating the incentive award of the President & CEO.

(e)

Approve, upon recommendation of the Conduct Review, Governance & HR Committee, the annual incentive award of the President & CEO.

(f)

At least annually, review and approve, upon recommendation of the Conduct Review, Governance & HR Committee, the duties and responsibilities of the President & CEO.

(g)

At least annually, review and approve, upon recommendation of the Conduct Review, Governance & HR Committee, the Chart of Authorities.

(h)

Approve, upon recommendation of the Conduct Review, Governance & HR Committee, the annual incentive award pool for Executives.

(i)

Appoint officers for the Bank who are suitably qualified and capable of managing the operations of the Bank effectively and prudently.

(j)

Understand the responsibilities and accountabilities assigned to officers of the Bank.

(k)

Evaluate, on a regular basis, the effectiveness and prudence of the officers in managing the operations of the Bank and the risks to which the Bank is exposed.

(l)

Satisfy itself as to the integrity of the President & CEO and other officers, and satisfy itself that the President & CEO and other officers create a culture of integrity throughout the Bank.

(m)

Review the Bank’s Management Succession Plan submitted by management.

(n)

Review the Bank’s Human Resources Plan submitted by management.

(o)

Regularly satisfy itself that the Bank’s compensation plans are consistent with the sustainable achievement of the Bank’s business objectives, the prudent management of its operations and the risks to which it is exposed, and adherence to its processes, policies, procedures and controls.

(p)

Establish standards of business conduct and ethical behaviour for the Bank’s directors, officers, and other personnel, and obtain on a regular basis reasonable assurance that the Bank has an ongoing, appropriate and effective process for ensuring adherence to those standards.

iii.

Outsourcing and Business Continuity

(a)

Review all major contracts after approval by management and approve all major contracts out of the ordinary course of business.

(b)

Review all arrangements involving an outsourcing of significant operations.

(c)

Review disaster recovery plans as submitted by management.

iv.

Related Party Transactions

(a)

Approve related party transactions when required by the Bank’s governing legislation.

Legal and Regulatory Risk

Regulatory Compliance

(a)

Review, at least annually, and approve the Bank’s Regulatory Compliance Management Policy.

(b)

Review and approve, at least annually, the Bank’s Regulatory Compliance Management Framework and any changes to the Framework.

(c)

Understand material regulatory compliance risks that the Bank is exposed to.

ii.

Financial Statements, Public Documents & Other Financial Filings

(a)

Approve the annual financial statements of the Bank.

(b)

Approve the annual MD & A.

(c)

Approve a Corporate Disclosure Policy for the Bank.

Strategic Risk

Strategic Risk

(a)

Establish the business objectives of the Bank, consider and approve the Bank’s business strategy and its business plans for significant operations, and review those things annually to ensure that they remain appropriate and prudent in light of the Bank’s current and anticipated business and economic environment, resources and results.

(b)

Evaluate, at least quarterly, the Bank’s actual operating and financial results against forecast results, in light of the Bank’s business objectives, business strategy and business plans.

(c)

Obtain, on a regular basis, reasonable assurance that the Bank has an ongoing, appropriate and effective strategic management process.

(d)

Approve all significant acquisitions and dispositions.

ii.

Capital Management

(a)

Understand the capital needs of the Bank and approve changes to capital.

(b)

Establish appropriate and prudent capital management policies for the Bank, taking into account the Bank’s significant operations, including policies on the quantity and quality of capital needed to support the current and planned operations of the Bank that reflect both the risks to which the Bank is exposed and its regulatory capital requirements.

(c)

Review capital policies at least once a year to ensure that they remain appropriate and prudent.

(d)

Obtain, on a regular basis, reasonable assurance that the Bank has an ongoing, appropriate and effective capital management process, and that the Bank’s capital management policies are being adhered to.

Reputational Risk

(a)

Be aware of increased reputational risk to the Bank which can potentially impact the Bank’s image in the community or lower public confidence in it, resulting in the loss of business, legal action or increased regulatory oversight.

Other Duties

Risk Management

(a)

Review and approve at least annually the Bank’s Risk Appetite Framework and Risk Appetite Statement.

(b)

Review, at least annually, and approve the Bank’s Enterprise Risk Management Policy.

(c)

Review, at least annually, and approve the Bank’s Enterprise Risk Management Framework.

(d)

Review periodic reports related to management’s assessment of the Bank’s risk management performance relative to the Risk Appetite Statement and the Risk Magnitude Scale, and any other reports used by management to assess and discuss the categories of risk faced by the Bank.

(e)

Understand risks rated moderate and higher faced by the Bank.

ii.

Internal Audit

(a)

Approve the appointment of the Chief Internal Auditor, as recommended by the Audit Committee.

(b)

Approve changes respecting the incumbent holding the position of Chief Internal Auditor, as recommended by the Audit Committee.

iii.

External Audit

(a)

Recommend the appointment of the external auditor to the shareholders.

(b)

Upon recommendation of the Audit Committee, approve the compensation of the external auditor.

(c)

Require the external auditor to report directly to the Audit Committee.

iv.

Internal Controls

(a)

Review such information as required to obtain reasonable assurance that the Bank has a control environment and that the Bank is in control.

Exhibit 4.5

Interim Consolidated Financial Statements

July 31, 2024

(Unaudited)

VERSABANK

Consolidated Balance Sheets

(Unaudited)

(thousands of Canadian dollars)

As at	July 31 2024		October 31 2023		July 31 2023
Assets
Cash	$	247,983	$	132,242	$	87,726
Securities (note 4)		153,026		167,940		182,944
Loans, net of allowance for credit losses (note 5)		4,049,449		3,850,404		3,661,672
Other assets (note 6)		65,978		51,024		48,503
	$	4,516,436	$	4,201,610	$	3,980,845
Liabilities and Shareholders' Equity
Deposits	$	3,821,185	$	3,533,366	$	3,328,017
Subordinated notes payable (note 7)		101,641		106,850		101,585
Other liabilities (note 8)		184,625		184,236		186,200
		4,107,451		3,824,452		3,615,802
Shareholders' equity:
Share capital (note 9)		228,471		228,471		228,191
Contributed surplus		2,789		2,513		2,339
Retained earnings		177,584		146,043		134,461
Accumulated other comprehensive income		141		131		52
		408,985		377,158		365,043
	$	4,516,436	$	4,201,610	$	3,980,845

The accompanying notes are an integral part of these interim Consolidated Financial Statements.

VERSABANK

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(thousands of Canadian dollars, except per share amounts)
	for the three months ended						for the nine months ended
	July 31 2024			July 31 2023			July 31 2024			July 31 2023
Interest income:
Loans	$	66,614		$	56,206		$	197,786		$	153,765
Other		5,032			3,883			14,395			9,480
		71,646			60,089			212,181			163,245
Interest expense:
Deposits and other		45,357			33,725			130,097			85,100
Subordinated notes		1,345			1,435			4,330			4,333
		46,702			35,160			134,427			89,433
Net interest income		24,944			24,929			77,754			73,812
Non-interest income		2,052			1,930			6,594			5,650
Total revenue		26,996			26,859			84,348			79,462
Provision for (recovery of) credit losses (note 5)		(1	)		171			(112	)		793
		26,997			26,688			84,460			78,669
Non-interest expenses:
Salaries and benefits		7,507			7,453			21,454			24,139
General and administrative		4,833			4,446			12,723			10,888
Premises and equipment		1,194			980			3,566			2,913
		13,534			12,879			37,743			37,940
Income before income taxes		13,463			13,809			46,717			40,729
Income tax provision (note 10)		3,758			3,806			12,485			11,046
Net income	$	9,705		$	10,003		$	34,232		$	29,683
Other comprehensive income (loss): Items that may subsequently be reclassified to net income: Foreign exchange gain (loss) on translation of foreign operations		2			(42	)		10			(47	)
Comprehensive income	$	9,707		$	9,961		$	34,242		$	29,636
Basic and diluted income per common share (note 11)	$	0.36		$	0.38		$	1.29		$	1.10

The accompanying notes are an integral part of these interim Consolidated Financial Statements.

VERSABANK

Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)

(thousands of Canadian dollars)
	for the three months ended						for the nine months ended
	July 31 2024			July 31 2023			July 31 2024			July 31 2023
Common shares (note 9):
Balance, beginning of the period	$	214,824		$	215,233		$	214,824		$	225,982
Purchased and cancelled during the period		-			(689	)		-			(11,438	)
Balance, end of the period	$	214,824		$	214,544		$	214,824		$	214,544
Preferred shares (note 9): Series 1 preferred shares
Balance, beginning and end of the period	$	13,647		$	13,647		$	13,647		$	13,647

Total share capital	$	228,471		$	228,191		$	228,471		$	228,191
Contributed surplus:
Balance, beginning of the period	$	2,717		$	2,147		$	2,513		$	1,612
Stock-based compensation (note 9)		72			192			276			727
Balance, end of the period	$	2,789		$	2,339		$	2,789		$	2,339
Retained earnings:
Balance, beginning of the period	$	168,776		$	125,398		$	146,043		$	109,335
Adjustment for purchased and cancelled common shares		-			(45	)		-			(1,854	)
Net income		9,705			10,003			34,232			29,683
Dividends paid on common and preferred shares		(897	)		(895	)		(2,691	)		(2,703	)
Balance, end of the period	$	177,584		$	134,461		$	177,584		$	134,461
Accumulated other comprehensive income:
Balance, beginning of the period	$	139		$	94		$	131		$	99
Other comprehensive income (loss)		2			(42	)		10			(47	)
Balance, end of the period	$	141		$	52		$	141		$	52

Total shareholders' equity	$	408,985		$	365,043		$	408,985		$	365,043

The accompanying notes are an integral part of these interim Consolidated Financial Statements.

VERSABANK

Consolidated Statements of Cash Flows

(Unaudited)

(thousands of Canadian dollars)
	for the nine months ended
	July 31 2024			July 31 2023
Cash provided by (used in):
Operations:
Net income	$	34,232		$	29,683
Adjustments to determine net cash flows:
Items not involving cash:
Provision for (recovery of) credit losses		(112	)		793
Stock-based compensation		276			727
Income tax provision		12,485			11,046
Interest income		(212,181	)		(163,245	)
Interest expense		134,427			89,433
Amortization		1,792			1,348
Accretion of discount on securities		(95	)		(126	)
Foreign exchange rate change on assets and liabilities		(8,272	)		(667	)
Interest received		207,137			157,430
Interest paid		(129,261	)		(68,786	)
Income taxes paid		(15,568	)		(13,276	)
Change in operating assets and liabilities:
Loans		(193,956	)		(664,618	)
Deposits		282,909			651,238
Change in other assets and liabilities		5,609			33,997
		119,422			64,977
Investing:
Sale (purchase) of securities (note 19)		14,130			(42,155	)
Purchase of property and equipment		(18,681	)		(350	)
		(4,551	)		(42,505	)
Financing:
Purchase and cancellation of common shares		-			(13,292	)
Redemption of subordinated notes payable		(5,000	)		-
Dividends paid		(2,691	)		(2,703	)
Repayment of lease obligations		(541	)		(527	)
		(8,232	)		(16,522	)
Change in cash		106,639			5,950
Effect of exchange rate changes on cash		9,102			(6,805	)
Cash, beginning of the period		132,242			88,581
Cash, end of the period	$	247,983		$	87,726

The accompanying notes are an integral part of these interim Consolidated Financial Statements.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

Reporting entity:

VersaBank (the “Bank”) operates as a Schedule I bank under the Bank Act (Canada) and is regulated by the Office of the Superintendent of Financial Institutions Canada (“OSFI”). The Bank, whose shares trade on the Toronto Stock Exchange and Nasdaq Stock Exchange, provides commercial lending and banking services to select niche markets in Canada and the United States as well as cybersecurity services through the operations of its wholly owned subsidiary DRT Cyber Inc., (“DRTC”). The Bank is incorporated and domiciled in Canada, and maintains its registered office at Suite 2002, 140 Fullarton Street, London, Ontario, Canada, N6A 5P2.

Basis of preparation:

Statement of compliance:

These interim Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and have been prepared in accordance with International Accounting Standard (“IAS”) 34 – Interim Financial Reporting and do not include all of the information required for full annual financial statements. These interim Consolidated Financial Statements should be read in conjunction with the Bank’s audited Consolidated Financial Statements for the year ended October 31, 2023.

The interim Consolidated Financial Statements for the three and nine months ended July 31, 2024 and 2023 were approved by the Audit Committee of the Bank’s Board of Directors on September 3, 2024.

Basis of measurement:

These interim Consolidated Financial Statements have been prepared on the historical cost basis except securities (note 4), the investment in Canada Stablecorp Inc. (note 6) and an interest rate swap (note 12), which are measured at fair value in the Consolidated Balance Sheets.

Functional and presentation currency:

These interim Consolidated Financial Statements are presented in Canadian dollars, which is the Bank’s functional currency. Functional currency is also determined for each of the Bank’s subsidiaries, and items included in the interim financial statements of the subsidiaries are measured using their functional currency.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

Use of estimates and judgements:

In preparing these interim Consolidated Financial Statements, management has exercised judgement and developed estimates in applying accounting policies and generating reported amounts of assets and liabilities at the date of the financial statements and income and expenses during the reporting periods. Areas where judgement was applied include assessing significant changes in credit risk on financial assets and in the selection of relevant forward-looking information in assessing the Bank’s allowance for expected credit losses on its financial assets as described in note 5 – Loans. Estimates are applied in the determination of the allowance for expected credit losses on financial assets, the fair value of stock options granted as described in note 9, the fair value of the investment in Canada Stablecorp Inc. as described in note 6, and the measurement of deferred taxes. It is reasonably possible, on the basis of existing knowledge, that actual results may vary from those expected in the development of these estimates. This could result in material adjustments to the carrying amounts of assets and/or liabilities affected in the future.

Estimates and their underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are applied prospectively once they are known.

Significant accounting policies and future accounting changes:

The accounting policies applied by the Bank in these interim Consolidated Financial Statements are the same as those applied by the Bank as at and for the year ended October 31, 2023 and are detailed in note 3 of the Bank’s 2023 audited Consolidated Financial Statements.

Securities:

As at July 31, 2024, the Bank held securities totaling $153.0 million (October 31, 2023 - $167.9 million), including accrued interest, comprised of a Government of Canada Treasury Bill for $150.0 million with a face value of $150.0 million at maturity on August 1, 2024, yielding 4.51%, and a Government of Canada Bond for $3.0 million with a face value totaling $3.0 million, yielding 4.76%, with a 3.75% coupon and maturing on May 1, 2025.

Loans, net of allowance for credit losses:

The Bank organizes its lending portfolio into the following four broad asset categories: Point-of-Sale Loans and Leases, Commercial Real Estate Mortgages, Commercial Real Estate Loans, and Public Sector and Other Financing. These categories have been established in the Bank’s proprietary, internally developed asset management system and have been designed to catalogue individual lending assets as a function primarily of their key risk drivers, the nature of the underlying collateral, and the applicable market segment.

The Point-of-Sale Loans and Leases Receivable Purchase Program (“POS/RPP Financing”) asset category is comprised of point-of-sale loan and lease receivables acquired from the Bank’s network of origination and servicing partners as well as warehouse loans that provide bridge financing to the Bank’s origination and servicing partners for the purpose of accumulating and seasoning practical volumes of individual loans and leases prior to the Bank purchasing the cashflow receivables derived from same.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The Commercial Real Estate Mortgages (“CRE Mortgages”) asset category is comprised primarily of Residential Construction, Term, CMHC Insured and Land Mortgages. All of these loans are business-to- business loans with the underlying credit risk exposure being primarily consumer in nature given that the vast majority of the loans are related to properties that are designated primarily for residential use. The portfolio benefits from diversity in its underlying security in the form of a broad range of such collateral properties.

The Commercial Real Estate Loans (“CRE Loans”) asset category is comprised primarily of condominium corporation financing loans.

The Public Sector and Other Financing (“PSOF”) asset category is comprised primarily of public sector loans and leases, a small balance of corporate loans and leases and single family residential conventional and insured mortgages.

Summary of loans and allowance for credit losses:

(thousands of Canadian dollars)

	July 31 2024			October 31 2023			July 31 2023
Point-of-sale loans and leases	$	3,228,354		$	2,879,320		$	2,776,126
Commercial real estate mortgages		736,345			889,069			810,630
Commercial real estate loans		8,523			8,793			9,298
Public sector and other financing		56,923			55,054			49,627
		4,030,145			3,832,236			3,645,681
Allowance for credit losses		(2,401	)		(2,513	)		(2,697	)
Accrued interest		21,705			20,681			18,688
Total loans, net of allowance for credit losses	$	4,049,449		$	3,850,404		$	3,661,672

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The following table provides a summary of loan amounts, ECL allowance amounts, and expected loss (“EL”) rates by lending asset category:

(thousands of Canadian dollars)

	As at July 31, 2024												As at October 31, 2023
	Stage 1			Stage 2			Stage 3			Total			Stage 1			Stage 2			Stage 3			Total
Point-of-sale loans and leases	$	3,219,239		$	9,057		$	58		$	3,228,354		$	2,873,078		$	6,242		$	-		$	2,879,320
ECL allowance		565			-			-			565			100			-			-			100
EL %		0.02	%		0.00	%		0.00	%		0.02	%		0.00	%		0.00	%		0.00	%		0.00	%
Commercial real estate mortgages	$	524,773		$	211,572		$	-		$	736,345		$	717,755		$	155,993		$	15,321		$	889,069
ECL allowance		1,213			387			-			1,600			1,699			523			-			2,222
EL %		0.23	%		0.18	%		0.00	%		0.22	%		0.24	%		0.34	%		0.00	%		0.25	%
Commercial real estate loans	$	7,083		$	1,440		$	-		$	8,523		$	8,793		$	-		$	-		$	8,793
ECL allowance		48			11			-			59			42			-			-			42
EL %		0.68	%		0.76	%		0.00	%		0.69	%		0.48	%		0.00	%		0.00	%		0.48	%
Public sector and other financing	$	56,281		$	642		$	-		$	56,923		$	49,293		$	5,761		$	-		$	55,054
ECL allowance		176			1			-			177			104			45			-			149
EL %		0.31	%		0.16	%		0.00	%		0.31	%		0.21	%		0.78	%		0.00	%		0.27	%
Total loans	$	3,807,376		$	222,711		$	58		$	4,030,145		$	3,648,919		$	167,996		$	15,321		$	3,832,236
Total ECL allowance		2,002			399			-			2,401			1,945			568			-			2,513
Total EL %		0.05	%		0.18	%		0.00	%		0.06	%		0.05	%		0.34	%		0.00	%		0.07	%

The Bank’s maximum exposure to credit risk is the carrying value of its financial assets. The Bank holds security against the majority of its loans in the form of mortgage interests over property, other registered securities over assets, guarantees and/or cash reserves (holdbacks) on loan and lease receivables included in the POS/RPP Financing portfolio (see note 8).

Allowance for credit losses

The Bank must maintain an allowance for expected credit losses that is adequate, in management’s opinion, to absorb all credit related losses in the Bank’s lending and treasury portfolios. The expected credit loss methodology requires the recognition of credit losses based on 12 months of expected losses for performing loans which is reflected in the Bank’s Stage 1 grouping. The Bank recognizes lifetime expected losses on loans that have experienced a significant increase in credit risk since origination which is reflected in the Bank’s Stage 2 grouping. While there is elevated credit risk in the Bank’s POS/RPP Financing portfolio as at the measurement date, management does not believe that this represents significant increase in credit risk in that portfolio and the majority of this portfolio remains in Stage 1. Impaired loans require recognition of lifetime losses and are reflected in Stage 3 grouping.

Forward-looking Information

The Bank has sourced credit risk modeling systems and forecast macroeconomic scenario data from Moody’s Analytics, a third-party service provider for the purpose of computing forward-looking credit risk parameters under multiple macroeconomic scenarios that consider both market-wide and idiosyncratic factors and influences. The macroeconomic indicator data utilized by the Bank for the purpose of sensitizing probability of default and loss given default term structure data to forward economic conditions include, but are not limited to: real GDP, the national unemployment rate, long term interest rates, the consumer price index, the S&P/TSX Index and the price of oil. These specific macroeconomic indicators were selected in an attempt to ensure that the spectrum of fundamental macroeconomic influences on the key drivers of the credit risk profile of the Bank’s balance sheet, including: corporate, consumer and real estate market

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

dynamics; corporate, consumer and SME borrower performance; geography; as well as collateral value volatility, are appropriately captured and incorporated into the Bank’s forward macroeconomic sensitivity analysis.

Key assumptions driving Moody’s Analytics’ baseline macroeconomic forecast trends this quarter include: the Bank of Canada cutting interest rates at its September and December policy meetings; the Canadian economy returning to modest growth in late 2024 and early 2025 and inflation approaching the Bank of Canada’s target by the end of 2024; elevated debt service obligations strain household finances but result in only modest loan deterioration; high financing costs and low sales volumes cause home prices to contract until the end of the 2024 when falling interest rates help rejuvenate demand; the various military conflicts continue but do not escalate to other regional powers; supply-chain bottlenecks continue to ease which aids in moderating inflation; outbreaks of disease or illness have very little economic impact; and global oil prices stabilize with West Texas Intermediate in the low US $80 per barrel range until early 2025.

Management developed ECL estimates using credit risk parameter term structure forecasts sensitized to individual baseline, upside and downside forecast macroeconomic scenarios, each weighted at 100%, and subsequently computed the variance of each to the Bank’s reported ECL as at July 31, 2024 in order to assess the alignment of the Bank’s reported ECL with the Bank’s credit risk profile, and further, to assess the scope, depth and ultimate effectiveness of the credit risk mitigation strategies that the Bank has applied to its lending portfolios (see Expected Credit Loss Sensitivity below).

Expected credit loss sensitivity:

The following table presents the sensitivity of the Bank’s estimated ECL to a range of individual macroeconomic scenarios, that in isolation may not reflect the Bank’s actual expected ECL exposure, as well as the variance of each to the Bank’s reported ECL as at July 31, 2024:

(thousands of Canadian dollars)
	Reported ECL		100% Upside			100% Baseline			100% Downside
Allowance for expected credit losses	$	2,401	$	1,574		$	1,867		$	2,570
Variance from reported ECL				(827	)		(534	)		169
Variance from reported ECL (%)				(34	%)		(22	%)		7	%

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The following table provides a reconciliation of the Bank’s ECL allowance by lending asset category for the three months ended July 31, 2024:

(thousands of Canadian dollars)
	Stage 1			Stage 2			Stage 3		Total
Point-of-sale loans and leases
Balance at beginning of period	$	207		$	-		$	-	$	207
Transfer in (out) to Stage 1		-			-			-		-
Transfer in (out) to Stage 2		-			-			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		358			-			-		358
Loan originations		-			-			-		-
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		358			-			-		358
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	565		$	-		$	-	$	565
Commercial real estate mortgages
Balance at beginning of period	$	1,643		$	299		$	-	$	1,942
Transfer in (out) to Stage 1		65			(65	)		-		-
Transfer in (out) to Stage 2		(230	)		230			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		(172	)		(58	)		-		(230	)
Loan originations		7			-			-		7
Derecognitions and maturities		(100	)		(19	)		-		(119	)
Provision for (recovery of) credit losses		(430	)		88			-		(342	)
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	1,213		$	387		$	-	$	1,600
Commercial real estate loans
Balance at beginning of period	$	58		$	-		$	-	$	58
Transfer in (out) to Stage 1		-			-			-		-
Transfer in (out) to Stage 2		(11	)		11			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		1			-			-		1
Loan originations		-			-			-		-
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		(10	)		11			-		1
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	48		$	11		$	-	$	59
Public sector and other financing
Balance at beginning of period	$	185		$	10		$	-	$	195
Transfer in (out) to Stage 1		9			(9	)		-		-
Transfer in (out) to Stage 2		-			-			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		(18	)		-			-		(18	)
Loan originations		-			-			-		-
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		(9	)		(9	)		-		(18	)
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	176		$	1		$	-	$	177

Total balance at end of period	$	2,002		$	399		$	-	$	2,401

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The following table provides a reconciliation of the Bank’s ECL allowance by lending asset category for the three months ended July 31, 2023:

(thousands of Canadian dollars)
	Stage 1			Stage 2			Stage 3		Total
Point-of-sale loans and leases
Balance at beginning of period	$	627		$	-		$	-	$	627
Transfer in (out) to Stage 1		52			(52	)		-		-
Transfer in (out) to Stage 2		(85	)		85			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		52			(33	)		-		19
Loan originations		-			-			-		-
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		19			-			-		19
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	646		$	-		$	-	$	646
Commercial real estate mortgages
Balance at beginning of period	$	1,647		$	120		$	-	$	1,767
Transfer in (out) to Stage 1		14			(14	)		-		-
Transfer in (out) to Stage 2		(106	)		106			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		138			44			-		182
Loan originations		56			-			-		56
Derecognitions and maturities		(94	)		(5	)		-		(99	)
Provision for (recovery of) credit losses		8			131			-		139
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	1,655		$	251		$	-	$	1,906
Commercial real estate loans
Balance at beginning of period	$	59		$	-		$	-	$	59
Transfer in (out) to Stage 1		-			-			-		-
Transfer in (out) to Stage 2		-			-			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		(5	)		-			-		(5	)
Loan originations		-			-			-		-
Derecognitions and maturities		(4	)		-			-		(4	)
Provision for (recovery of) credit losses		(9	)		-			-		(9	)
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	50		$	-		$	-	$	50
Public sector and other financing
Balance at beginning of period	$	70		$	3		$	-	$	73
Transfer in (out) to Stage 1		-			-			-		-
Transfer in (out) to Stage 2		(8	)		8			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		(4	)		10			-		6
Loan originations		16			-			-		16
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		4			18			-		22
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	74		$	21		$	-	$	95

Total balance at end of period	$	2,425		$	272		$	-	$	2,697

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The following table provides a reconciliation of the Bank’s ECL allowance by lending asset category for the nine months ended July 31, 2024:

(thousands of Canadian dollars)
	Stage 1			Stage 2			Stage 3		Total
Point-of-sale loans and leases
Balance at beginning of period	$	100		$	-		$	-	$	100
Transfer in (out) to Stage 1		-			-			-		-
Transfer in (out) to Stage 2		-			-			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		465			-			-		465
Loan originations		-			-			-		-
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		465			-			-		465
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	565		$	-		$	-	$	565
Commercial real estate mortgages
Balance at beginning of period	$	1,699		$	523		$	-	$	2,222
Transfer in (out) to Stage 1		297			(297	)		-		-
Transfer in (out) to Stage 2		(392	)		392			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		(278	)		(169	)		-		(447	)
Loan originations		84			-			-		84
Derecognitions and maturities		(197	)		(62	)		-		(259	)
Provision for (recovery of) credit losses		(486	)		(136	)		-		(622	)
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	1,213		$	387		$	-	$	1,600
Commercial real estate loans
Balance at beginning of period	$	42		$	-		$	-	$	42
Transfer in (out) to Stage 1		-			-			-		-
Transfer in (out) to Stage 2		(11	)		11			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		6			-			-		6
Loan originations		11			-			-		11
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		6			11			-		17
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	48		$	11		$	-	$	59
Public sector and other financing
Balance at beginning of period	$	104		$	45		$	-	$	149
Transfer in (out) to Stage 1		27			(27	)		-		-
Transfer in (out) to Stage 2		-			-			-		-
Transfer in (out) to Stage 3		-			-			-		-
Net remeasurement of loss allowance		32			(17	)		-		15
Loan originations		13			-			-		13
Derecognitions and maturities		-			-			-		-
Provision for (recovery of) credit losses		72			(44	)		-		28
Write-offs		-			-			-		-
Recoveries		-			-			-		-
Balance at end of period	$	176		$	1		$	-	$	177

Total balance at end of period	$	2,002		$	399		$	-	$	2,401

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The following table provides a reconciliation of the Bank’s ECL allowance by lending asset category for the nine months ended July 31, 2023:

(thousands of Canadian dollars)
	Stage 1			Stage 2			Stage 3			Total
Point-of-sale loans and leases
Balance at beginning of period	$	545		$	-		$	-		$	545
Transfer in (out) to Stage 1		122			(122	)		-			-
Transfer in (out) to Stage 2		(257	)		257			-			-
Transfer in (out) to Stage 3		-			-			-			-
Net remeasurement of loss allowance		236			(135	)		-			101
Loan originations		-			-			-			-
Derecognitions and maturities		-			-			-			-
Provision for (recovery of) credit losses		101			-			-			101
Write-offs		-			-			-			-
Recoveries		-			-			-			-
Balance at end of period	$	646		$	-		$	-		$	646
Commercial real estate mortgages
Balance at beginning of period	$	1,150		$	137		$	-		$	1,287
Transfer in (out) to Stage 1		93			(93	)		-			-
Transfer in (out) to Stage 2		(224	)		224			-			-
Transfer in (out) to Stage 3		-			(13	)		13			-
Net remeasurement of loss allowance		560			6			(13	)		553
Loan originations		205			-			-			205
Derecognitions and maturities		(129	)		(10	)		-			(139	)
Provision for (recovery of) credit losses		505			114			-			619
Write-offs		-			-			-			-
Recoveries		-			-			-			-
Balance at end of period	$	1,655		$	251		$	-		$	1,906
Commercial real estate loans
Balance at beginning of period	$	54		$	-		$	-		$	54
Transfer in (out) to Stage 1		-			-			-			-
Transfer in (out) to Stage 2		-			-			-			-
Transfer in (out) to Stage 3		-			-			-			-
Net remeasurement of loss allowance		-			-			-			-
Loan originations		-			-			-			-
Derecognitions and maturities		(4	)		-			-			(4	)
Provision for (recovery of) credit losses		(4	)		-			-			(4	)
Write-offs		-			-			-			-
Recoveries		-			-			-			-
Balance at end of period	$	50		$	-		$	-		$	50
Public sector and other financing
Balance at beginning of period	$	17		$	1		$	-		$	18
Transfer in (out) to Stage 1		-			-			-			-
Transfer in (out) to Stage 2		(8	)		8			-			-
Transfer in (out) to Stage 3		-			-			-			-
Net remeasurement of loss allowance		6			12			-			18
Loan originations		59			-			-			59
Derecognitions and maturities		-			-			-			-
Provision for (recovery of) credit losses		57			20			-			77
Write-offs		-			-			-			-
Recoveries		-			-			-			-
Balance at end of period	$	74		$	21		$	-		$	95

Total balance at end of period	$	2,425		$	272		$	-		$	2,697

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

Credit quality:

The Bank assigns a risk rating to each lending asset comprising its lending portfolio. A risk rating is assigned as a function of each new credit application, annual review or an amendment to a facility. The risk rating considers the credit risk attributes of the lending asset, structure, individual borrower circumstances as well as local, regional and global macroeconomic and market conditions. The Bank aggregates its risk rating assignments into the following three broad categories:

Satisfactory – The borrower and lending asset valuation are of acceptable credit quality.

ii) Watchlist – The borrower or the lending asset valuation exhibits potential credit weakness or a downward trend which, if not mitigated, will potentially weaken the Bank’s position. The lending asset requires close supervision.

iii) Classified – The collection of the structural payment and/or the full repayment of the lending asset is uncertain.

As of July 31, 2024, 97% (October 31, 2023 – 99%) of the Bank’s lending assets were categorized Satisfactory. There was no material change in the Bank’s processes for managing credit risk during the current quarter.

Other assets:

(thousands of Canadian dollars)
	July 31 2024		October 31 2023		July 31 2023
Accounts receivable	$	5,710	$	3,858	$	3,177
Prepaid expenses and other		21,517		22,130		21,682
Property and equipment		24,239		6,536		6,687
Right-of-use assets		2,909		3,427		3,602
Deferred income tax asset		2,251		4,058		2,641
Interest rate swap (note 12)		150		1,517		1,118
Investment (note 6a)		953		953		953
Goodwill		5,754		5,754		5,754
Intangible assets		2,495		2,791		2,889
	$	65,978	$	51,024	$	48,503

In February 2021, the Bank acquired an 11% investment in Canada Stablecorp Inc. for cash consideration of $953,000. The Bank has made an irrevocable election to designate this investment at fair value through other comprehensive income at initial recognition and any future changes in the fair value of the investment will be recognized in other comprehensive income (loss). Amounts recorded in other comprehensive income (loss) will not be reclassified to profit and loss at a later date.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

Subordinated notes payable:

(thousands of Canadian dollars)
	July 31 2024		October 31 2023		July 31 2023
Issued April 2021, unsecured, non-viability contingent capital compliant, subordinated notes payable, principal amount of US $75.0 million, fixed effective interest rate of 5.38%, maturing May 2031.	$	101,641	$	101,931	$	96,669
Issued March 2019, unsecured, non-viability contingent capital compliant, subordinated notes payable, principal amount of $5.0 million, $500,000 is held by related party (note 14), fixed effective interest rate of 10.41%, maturing March 2029.		-		4,919		4,916
	$	101,641	$	106,850	$	101,585

On April 30, 2024, the Bank redeemed its $5.0 million, unsecured, non-viability contingent capital compliant, subordinate note payable using the Bank’s general funds.

Other liabilities:

(thousands of Canadian dollars)
	July 31 2024		October 31 2023		July 31 2023
Accounts payable and other	$	9,252	$	9,681	$	7,265
Current income tax liability		3,109		7,466		4,527
Deferred income tax liability		332		731		659
Lease obligations		3,230		3,771		3,944
Cash collateral and amounts held in escrow		6,421		8,818		9,657
Cash reserves on loan and lease receivables		162,281		153,769		160,148
	$	184,625	$	184,236	$	186,200

Share capital:

Common shares:

At July 31, 2024, there were 25,964,424 (October 31, 2023 - 25,964,424) common shares outstanding.

On August 5, 2022, the Bank received approval from the Toronto Stock Exchange (“TSX”) to proceed with a Normal Course Issuer Bid (“NCIB”) for its common shares. On September 21, 2022, the Bank received approval from the Nasdaq to proceed with a NCIB for its common shares. Pursuant to the NCIB, VersaBank was authorized to purchase for cancellation up to 1,700,000 of its common shares representing approximately 9.54% of its public float.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The Bank was eligible to make purchases commencing on August 17, 2022 and the NCIB was terminated on August 16, 2023. The purchases were made by VersaBank through the facilities of the TSX and alternate trading systems and the Nasdaq in accordance with the rules of the TSX and such alternate trading systems and the Nasdaq, as applicable, and the prices that VersaBank paid for the Common Shares was at the market price of such shares at the time of acquisition. VersaBank made no purchases of Common Shares other than open market purchases. All shares purchased under the NCIB were cancelled.

No common shares were issued or purchased in the quarter end July 31, 2024. For the quarter ended July 31, 2023, the Bank purchased and cancelled 79,562 common shares for $734,000, reducing the Bank’s Common Share capital value by $689,000 and retained earnings by $45,000.

No common shares were issued or purchased in the nine-month period ended July 31, 2024. For the nine- month period ended July 31, 2023, the Bank purchased and cancelled 1,321,358 common shares for $13.3 million, reducing the Bank’s Common Share capital value by $11.4 million and retained earnings by $1.9 million.

Preferred shares:

At July 31, 2024, there were 1,461,460 (October 31, 2023 - 1,461,460) Series 1 preferred shares outstanding. These shares are Basel III compliant, non-cumulative rate reset preferred shares and include non-viability contingent capital (“NVCC”) provisions. As a result, these shares qualify as Additional Tier 1 Capital (see note 15).

The holders of the Series 1 preferred shares are entitled to receive a non-cumulative fixed dividend in the amount of $0.6772 annually per share, payable quarterly, as and when declared by the Board of Directors for the period ending October 31, 2024. The dividend represents an annual yield of 6.772% based on the stated issue price per share. Thereafter, the dividend rate will reset every five years at a level of 543 basis points over the then five year Government of Canada bond yield.

The Bank maintains the right to redeem, subject to the approval of OSFI, up to all of the outstanding Series 1 preferred shares on October 31, 2024 and on October 31 every five years thereafter at a price of $10.00 per share. Should the Bank choose not to exercise its right to redeem the Series 1 preferred shares, holders of these shares will have the right to convert their shares into an equal number of non-cumulative, floating rate Series 2 preferred shares. Holders of Series 2 preferred shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors, equal to the 90-day Government of Canada Treasury bill rate plus 543 basis points.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

Stock options

Stock option transactions during the three and nine-month periods ended July 31, 2024 and 2023:

	for the three months ended										for the nine months ended
	July 31, 2024					July 31, 2023					July 31, 2024					July 31, 2023
	Number of options			Weighted average exercise price		Number of options			Weighted average exercise price		Number of options			Weighted average exercise price		Number of options			Weighted average exercise price
Outstanding, beginning of period		861,793		$	15.90		952,776		$	15.53		874,393		$	15.90		965,766		$	15.53
Granted		-			-		-			-		-			-		1,500			15.90
Exercised		-			-		-			-		-			-		-			-
Forfeited/cancelled		(2,325	)		15.90		(26,000	)		15.90		(14,925	)		15.90		(40,490	)		15.90
Expired		-			-		-			-		-			-		-			-
Outstanding, end of period		859,468		$	15.90		926,776		$	15.52		859,468		$	15.90		926,776		$	15.52

For the three and nine-month periods ended July 31, 2024, the Bank recognized $72,000 (July 31, 2023 - $192,000) and $276,000 (July 31, 2023 - $1.0 million) in compensation expense related to the estimated fair value of options granted.

10.

Income tax provision:

Income tax provision for the three and nine month periods ended July 31, 2024 was $3.8 million (July 31, 2023 - $3.8 million) and $12.5 million (July 31, 2023 - $11.0 million) respectively. The Bank’s combined statutory federal and provincial income tax rate in Canada is approximately 27% (2023 - 27%). The Bank’s effective rate reflects the statutory rate adjusted for certain items not being taxable or deductible for income tax purposes.

11.

Income per common share:

(thousands of Canadian dollars, except shares outstanding and per share amounts)
	for the three months ended						for the nine months ended
	July 31 2024			July 31 2023			July 31 2024			July 31 2023
Net income	$	9,705		$	10,003		$	34,232		$	29,683
Less: dividends on preferred shares		(247	)		(247	)		(741	)		(741	)
		9,458			9,756			33,491			28,942
Weighted average number of common shares outstanding		25,964,424			25,957,755			25,964,424			26,386,915
Income per common share:	$	0.36		$	0.38		$	1.29		$	1.10

Common shares associated with the Series 1 NVCC preferred shares are contingently issuable shares and would only have a dilutive impact upon issuance.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

12.

Derivative instruments:

At July 31, 2024, the Bank had an outstanding contract established for asset liability management purposes to swap between fixed and floating interest rates with a notional amount totaling $22.4 million (October 31, 2023 - $20.8 million), of which $22.4 million (October 31, 2023 - $20.8 million) qualified for hedge accounting. The Bank enters into interest rate swap contracts for its own account exclusively and does not act as an intermediary in this market. As required under the accounting standard relating to hedges, at July 31, 2024, $150,000 (October 31, 2023 - $1.5 million) relating to this contract was included in other assets and the offsetting amount included in the carrying values of the assets to which they relate. Approved counterparties are limited to major Canadian chartered banks. The carrying amount of the hedged item recognized in the loans was $22.7 million.

13.

Commitments and contingencies:

The amount of credit-related commitments represents the maximum amount of additional credit that the Bank could be obligated to extend.

(thousands of Canadian dollars)

	July 31 2024		October 31 2023		July 31 2023
Loan commitments	$	367,494	$	405,426	$	341,679
Letters of credit		66,167		75,963		82,847
	$	433,661	$	481,389	$	424,526

14.

Related party transactions:

The Bank’s Board of Directors and Senior Executive Officers represent key management personnel and are related parties. At July 31, 2024, amounts due from these related parties totaled $1.5 million (October 31, 2023 - $1.5 million) and an amount due from a corporation controlled by key management personnel totalled $4.8 million (October 31, 2023 - $3.9 million). The interest rates charged on loans and advances to related parties are based on mutually agreed-upon terms. Interest income earned on the above loans for the three and nine months ended July 31, 2024, was $41,000 (July 31, 2023 - $26,000) and $121,000 (July 31, 2023 - $75,000). As at July 31, 2024, there were no specific provisions for credit losses associated with loans issued to key management personnel (October 31, 2023 - $nil), and all loans issued to key management personnel were current. On April 30, 2024, the Bank redeemed all of its issued and outstanding $5.0 million subordinated note payable originally issued in April 2019; $500,000 of this amount was held by a related party (note 7).

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

15.

Capital management:

Overview:

The Bank’s policy is to maintain a strong capital base so as to retain investor, creditor and market confidence as well as to support the future growth and development of the business. The impact of the level of capital held on shareholders’ return is an important consideration, and the Bank recognizes the need to maintain a balance between the higher returns that may be possible with greater leverage and the advantages and security that may be afforded by a more robust capital position.

OSFI sets and monitors capital requirements for the Bank. Capital is managed in accordance with policies and plans that are regularly reviewed and approved by the Board of Directors and that take into account, amongst other items, forecasted capital requirements and current and anticipated financial market conditions.

The goal is to maintain adequate regulatory capital for the Bank to be considered well capitalized, protect deposits and provide capacity to support organic growth as well as to capitalize on strategic opportunities that do not otherwise require accessing the public capital markets, all the while providing a satisfactory return to shareholders. The Bank’s regulatory capital is comprised of share capital, retained earnings and unrealized gains and losses on fair value through other comprehensive income securities (Common Equity Tier 1 capital), preferred shares (Additional Tier 1 capital) and subordinated notes (Tier 2 capital).

The Bank monitors its capital adequacy and related capital ratios on a daily basis and has stipulated policies, which are approved by the Board of Directors, setting internal targets and thresholds for its capital ratios. These capital ratios consist of the leverage ratio and the risk-based capital ratios.

The Bank makes use of the Standardized Approach for credit risk as prescribed by OSFI and, therefore, may include eligible ECL allowance amounts in its Tier 2 capital, up to a maximum of 1.25% of its credit risk-weighted assets calculated under the Standardized Approach.

During the period ended July 31, 2024, there were no material changes in the Bank’s management of capital.

Risk-based capital ratios:

The Basel Committee on Banking Supervision has published the Basel III rules on capital adequacy and liquidity (“Basel III”). OSFI requires that all Canadian banks must comply with the Basel III standards on an “all-in” basis for the purpose of determining their risk-based capital ratios. Required minimum regulatory capital ratios are a 7.0% Common Equity Tier 1 capital ratio (“CET1”), an 8.5% Tier 1 capital ratio and a 10.5% Total capital ratio, all of which include a 2.50% capital conservation buffer.

OSFI also requires banks to measure capital adequacy in accordance with guidelines for determining risk- adjusted capital and risk-weighted assets, including off-balance sheet credit instruments as specified in the Basel III regulations. Based on the deemed credit risk for each type of asset, both on and off-balance sheet

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

assets of the Bank are assigned a weighting ranging between 0% to 150% to determine the Bank’s risk- weighted equivalent assets and its risk-based capital ratios.

The Bank’s risk-based capital ratios are calculated as follows:

(thousands of Canadian dollars)

	July 31 2024			October 31 2023
Common Equity Tier 1 (CET1) capital
Directly issued qualifying common share capital	$	214,824		$	214,824
Contributed surplus		2,789			2,513
Retained earnings		177,584			146,043
Accumulated other comprehensive income		141			131
CET1 before regulatory adjustments		395,338			363,511
Regulatory adjustments applied to CET1		(10,842	)		(12,699	)
Common Equity Tier 1 capital	$	384,496		$	350,812

Additional Tier 1 capital
Directly issued qualifying Additional Tier 1 instruments	$	13,647		$	13,647
Total Tier 1 capital	$	398,143		$	364,459

Tier 2 capital
Directly issued Tier 2 capital instruments	$	103,568		$	109,033
Tier 2 capital before regulatory adjustments		103,568			109,033
Eligible stage 1 and stage 2 allowance		2,401			2,513
Total Tier 2 capital	$	105,969		$	111,546
Total regulatory capital	$	504,112		$	476,005
Total risk-weighted assets	$	3,273,524		$	3,095,092

Capital ratios
CET1 capital ratio		11.75	%		11.33	%
Tier 1 capital ratio		12.16	%		11.78	%
Total capital ratio		15.40	%		15.38	%

As at July 31, 2024 and October 31, 2023, the Bank exceeded all of the minimum Basel III regulatory capital requirements prescribed by OSFI.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

Leverage ratio:

The leverage ratio, which is prescribed under the Basel III Accord, is a supplementary measure to the risk- based capital requirements and is defined as the ratio of Tier 1 capital to the Bank’s total exposures. The Basel III minimum leverage ratio is 3.0%. The Bank’s leverage ratio is calculated as follows:

(thousands of Canadian dollars)

	July 31 2024			October 31 2023
On-balance sheet assets	$	4,516,436		$	4,201,610
Assets amounts adjusted in determining the Basel III
Tier 1 capital		(10,842	)		(12,699	)
Total on-balance sheet exposures		4,505,594			4,188,911
Total off-balance sheet exposure at gross notional amount	$	433,661		$	481,389
Adjustments for conversion to credit equivalent amount		(275,050	)		(281,705	)
Total off-balance sheet exposures		158,611			199,684
Tier 1 capital		398,143			364,459
Total exposures		4,664,205			4,388,595
Leverage ratio		8.54	%		8.30	%

As at July 31, 2024 and October 31, 2023, the Bank was in compliance with the leverage ratio prescribed by OSFI.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

16.

Interest rate risk position:

The Bank is subject to interest rate risk, which is the risk that a movement in interest rates could negatively impact net interest margin, net interest income and the economic value of assets, liabilities and shareholders’ equity. The following table provides the duration difference between the Bank’s assets and liabilities and the potential after-tax impact of a 100 basis point shift in interest rates on the Bank’s earnings during a 12 month-period.

(thousands of Canadian dollars)

	July 31, 2024					October 31, 2023
	Increase 100 bps		Decrease 100 bps			Increase 100 bps		Decrease 100 bps
Increase (decrease):
Impact on projected net interest income during a 12 month period	$	5,444	$	(5,457	)	$	4,046	$	(4,059	)
Duration difference between assets and liabilities (months)		(2.8)					(2.0)

17.

Fair value of financial instruments:

Fair values are based on management’s best estimates of market conditions and valuation policies at a certain point in time. The estimates are subjective and involve particular assumptions and judgement and, as such, may not be reflective of future fair values. The Bank’s loans and deposits lack an available market as they are not typically exchanged and, therefore, the book value of these instruments is not necessarily representative of amounts realizable upon immediate settlement. See note 21 of the October 31, 2023 audited Consolidated Financial Statements for more information on fair values.

(thousands of Canadian dollars)

	July 31, 2024										October 31, 2023
	Carrying Value		Fair value Level 1		Fair Value Level 2		Fair Value Level 3		Total Fair Value		Carrying Value		Fair value Level 1		Fair Value Level 2		Fair Value Level 3		Total Fair Value
Assets
Cash	$	247,983	$	247,983	$	-	$	-	$	247,983	$	132,242	$	132,242	$	-	$	-	$	132,242
Securities		153,026		153,026		-		-		153,026		167,940		167,940		-		-		167,940
Loans		4,049,449		-		-		4,007,130		4,007,130		3,850,404		-		-		3,837,599		3,837,599
Derivatives		150		-		150		-		150		1,517		-		1,517		-		1,517
Other financial assets		953		-		-		953		953		953		-		-		953		953
Liabilities
Deposits	$	3,821,185	$	-	$	-	$	3,791,490	$	3,791,490	$	3,533,366	$	-	$	-	$	3,436,491	$	3,436,491
Subordinated notes payable		101,641		-		98,390		-		98,390		106,850		-		109,033		-		109,033
Other financial liabilities		181,184		-		-		181,184		181,184		176,039		-		-		176,039		176,039

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

18.

Operating segmentation:

The Bank has established two reportable operating segments, those being Digital Banking and DRTC (cybersecurity services). 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 branchless 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, DRT Cyber Inc., to pursue significant large-market opportunities in cybersecurity and 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 the Bank’s 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 the Bank’s Consolidated Financial Statements, as disclosed in note 3 of the Bank’s 2023 audited Consolidated Financial Statements.

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.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

The following table sets out the results of each reportable operating segment as at and for the three and nine months ended July 31, 2024 and 2023:

(thousands of Canadian dollars)

	for the three months ended
	July 31, 2024												July 31, 2023
	Digital Banking			DRTC			Eliminations/ Adjustments			Consolidated			Digital Banking		DRTC			Eliminations/ Adjustments			Consolidated
Net interest income	$	24,944		$	-		$	-		$	24,944		$	24,929	$	-		$	-		$	24,929
Non-interest income		175			2,219			(342	)		2,052			101		2,020			(191	)		1,930
Total revenue		25,119			2,219			(342	)		26,996			25,030		2,020			(191	)		26,859
Provision for (recovery of) credit losses		(1	)		-			-			(1	)		171		-			-			171
		25,120			2,219			(342	)		26,997			24,859		2,020			(191	)		26,688
Non-interest expenses:
Salaries and benefits		5,945			1,562			-			7,507			5,891		1,562			-			7,453
General and administrative		4,729			446			(342	)		4,833			4,257		380			(191	)		4,446
Premises and equipment		824			370			-			1,194			610		370			-			980
		11,498			2,378			(342	)		13,534			10,758		2,312			(191	)		12,879
Income (loss) before income taxes		13,622			(159	)		-			13,463			14,101		(292	)		-			13,809
Income tax provision		3,811			(53	)		-			3,758			3,999		(193	)		-			3,806
Net income (loss)	$	9,811		$	(106	)	$	-		$	9,705		$	10,102	$	(99	)	$	-		$	10,003

Total assets	$	4,507,158		$	27,285		$	(18,007	)	$	4,516,436		$	3,971,781	$	25,485		$	(16,421	)	$	3,980,845

Total liabilities	$	4,102,239		$	29,471		$	(24,259	)	$	4,107,451		$	3,609,832	$	29,123		$	(23,153	)	$	3,615,802

(thousands of Canadian dollars)
	for the nine months ended
	July 31, 2024											July 31, 2023
	Digital Banking			DRTC		Eliminations/ Adjustments			Consolidated			Digital Banking		DRTC			Eliminations/ Adjustments			Consolidated
Net interest income	$	77,754		$	-	$	-		$	77,754		$	73,812	$	-		$	-		$	73,812
Non-interest income		557			7,055		(1,018	)		6,594			225		5,999			(574	)		5,650
Total revenue		78,311			7,055		(1,018	)		84,348			74,037		5,999			(574	)		79,462
Provision for (recovery of) credit losses		(112	)		-		-			(112	)		793		-			-			793
		78,423			7,055		(1,018	)		84,460			73,244		5,999			(574	)		78,669
Non-interest expenses:
Salaries and benefits		17,040			4,414		-			21,454			19,505		4,634			-			24,139
General and administrative		12,450			1,291		(1,018	)		12,723			10,250		1,212			(574	)		10,888
Premises and equipment		2,437			1,129		-			3,566			1,845		1,068			-			2,913
		31,927			6,834		(1,018	)		37,743			31,600		6,914			(574	)		37,940
Income (loss) before income taxes		46,496			221		-			46,717			41,644		(915	)		-			40,729
Income tax provision		12,431			54		-			12,485			11,779		(733	)		-			11,046
Net income (loss)	$	34,065		$	167	$	-		$	34,232		$	29,865	$	(182	)	$	-		$	29,683

Total assets	$	4,507,158		$	27,285	$	(18,007	)	$	4,516,436		$	3,971,781	$	25,485		$	(16,421	)	$	3,980,845

Total liabilities	$	4,102,239		$	29,471	$	(24,259	)	$	4,107,451		$	3,609,832	$	29,123		$	(23,153	)	$	3,615,802

The Bank has operations in the US, through both its Digital Banking and DRTC businesses, however as at July 31, 2024, substantially all of the Bank’s earnings and assets are based in Canada.

VERSABANK

Notes to Interim Consolidated Financial Statements

(Unaudited)

Three & nine month periods ended July 31, 2024 and 2023

19.

Comparative balances:

The interim financial statements have been reclassified, where applicable, to conform with the financial statement presentation used in the current period. Cash flows related to the Bank’s investments in securities were reflected in operating activities in the comparative period and are now reflected as investing activities, consistent with the presentation and disclosure in the Bank’s annual audited financial statements for the year ended October 31, 2023. The change did not affect the Bank’s comparative period earnings.

20.

Subsequent event:

Acquisition of Stearns Bank Holdingford, N.A.

On August 30, 2024 the Bank through its wholly-owned US subsidiary VersaHoldings US Corp., acquired 100% of the outstanding shares of shares of Minnesota-based Stearns Bank Holdingford, N.A. ("SBH"), a privately held, wholly-owned subsidiary of Stearns Financial Services Inc. based in St. Cloud, Minnesota, for cash consideration of approximately US$14.0 million (CA$19.3 million), subject to closing related adjustments. SBH is a fully operational, OCC (Office of the Comptroller of the Currency)-chartered national bank, focused on small business lending. The acquisition follows the approval for acquisition received in June 2024 from OSFI, as well as the US’s OCC and the US Federal Reserve.

Upon the close of the share acquisition of SBH, the Bank acquired approximately US$61.1 million in assets and assumed approximately US$54.1 million in deposits and other liabilities and renamed SBH as VersaBank USA. The acquisition will provide the Bank with access to US deposits to support the growth of its Receivable Purchase Program business, which the Bank launched in the United States in Fiscal 2022. The acquisition is expected to be accretive to the Bank’s earnings per share within the first year after closing; and, VersaBank USA was well capitalized, as per the OCC’s definition of same, with a Total Capital ratio in excess of 10% as at August 30, 2024.

Exhibit 4.6

Management’s Discussion and Analysis

This management’s discussion and analysis (“MD&A”) of operations and financial condition for the third quarter of fiscal 2024, dated September 3, 2024, should be read in conjunction with the unaudited interim consolidated financial statements for the period ended July 31, 2024, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). This MD&A should also be read in conjunction with VersaBank’s MD&A and Audited Consolidated Financial Statements for the year ended October 31, 2023, which are available on VersaBank’s website at www.versabank.com, SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar. Except as discussed below, all other factors discussed and referred to in the MD&A for the year ended October 31, 2023, remain substantially unchanged. All currency amounts in this document are in Canadian dollars unless otherwise indicated.

Cautionary Note Regarding Forward-Looking Statements	2
About VersaBank	3
Overview of Performance	4
Selected Financial Highlights	8
Business Outlook	9
Financial Review – Earnings	13
Financial Review – Balance Sheet	19
Off-Balance Sheet Arrangements	27
Related Party Transactions	27
Capital Management and Capital Resources	28
Results of Operating Segments	30
Summary of Quarterly Results	32
Subsequent Event	32
Non-GAAP and Other Financial Measures	33
Significant Accounting Policies and Use of Estimates and Judgements	35
Controls and Procedures	35
Additional Information	35

VersaBank - Q3 2024 MD&A

Cautionary Note Regarding Forward-Looking Statements

VersaBank’s public communications often include written or oral forward-looking statements. 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 management’s discussion and analysis 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; 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. 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, 2023.

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. Except as required by securities law, VersaBank does not undertake to update any forward-looking statement that is contained in this management’s discussion and analysis or made from time to time by VersaBank or on its behalf.

VersaBank - Q3 2024 MD&A

About VersaBank

VersaBank (the “Bank”) adopted an electronic business-to-business model in 1993, becoming (to its knowledge) the world’s first financial institution with a branchless model. It obtains all of its deposits and conducts the majority of its lending digitally through financial intermediaries who subsequently engage with the actual depositors and borrowers. VersaBank is focused on increasing earnings by concentrating on underserved markets that support more attractive pricing and returns for its products, leveraging existing distribution channels to deliver its financial products to these chosen markets and expanding its diverse deposit gathering network that provides efficient access to a range of low-cost deposit sources in order to maintain a low cost of funds.

In Canada, the Bank holds a Canadian Schedule 1 chartered bank licence and is regulated by the Office of the Superintendent of Financial Institutions (“OSFI”). In the United States, the Bank, through its wholly owned subsidiary, VersaBank USA, will hold a national Office of the Comptroller of the Currency (“OCC”) charter following its recently completed acquisition of Stearns Bank Holdingford and is regulated by the OCC (see Subsequent Event below).

In addition to its core Digital Banking operations, VersaBank has established cybersecurity services and banking and financial technology development operations through its wholly-owned subsidiary, DRT Cyber Inc. (“DRTC”).

VersaBank’s Common Shares trade on the Toronto Stock Exchange and Nasdaq under the symbol VBNK. Its Series 1 Preferred Shares trade on the Toronto Stock Exchange under the symbol VBNK.PR.A.

The underlying drivers of VersaBank’s performance trends for the current and comparative periods are set out in the following sections of this MD&A.

VersaBank - Q3 2024 MD&A

Overview of Performance

* See definition in the "Non-GAAP and Other Financial Measures" section below.

Closing of the acquisition of Stearns Bank Holdingford N.A.

In June 2024, the Bank obtained approval from the US Office of the Comptroller of the Currency (the "OCC"), the US Federal Reserve and OSFI (Canada) to acquire Stearns Bank Holdingford N.A. (“SBH”), a privately held, wholly-owned subsidiary of Stearns Financial Services Inc. ("SFSI") based in St. Cloud, Minnesota. On August 30, 2024, the Bank, through its wholly owned US subsidiary VersaHoldings US Corp., completed the acquisition, acquiring 100% of the outstanding shares of SBH for cash consideration of approximately US$14.0 million (CA$19.3 million), subject to closing related adjustments. Based in Minnesota, SBH is a fully operational, OCC-chartered national bank, focused on

VersaBank - Q3 2024 MD&A

small business lending. Upon closing, SBH was renamed Versabank USA (See Subsequent Event section below).

Several factors associated with preparations for the closing of the acquisition of SBH dampened VersaBank’s third quarter fiscal 2024 financial results. In preparation to fund the capital requirements of the US subsidiary following closing of the SBH acquisition, VersaBank maintained higher than typical cash balances. The higher than typical cash balances exacerbated the impact of the temporary dampening of net interest margin that usually occurs when interest rates decline, the result of the lag in the adjustment of the Bank’s term deposit rates. In addition, non-interest expense was higher due to acquisition-related costs, some of which were specific to the third quarter and some of which are being incurred ahead of asset growth and revenue generated by the launch of US Receivable Purchase Program (“RPP”) in the US through VersaBank USA.

Q3 2024 vs Q3 2023

Loans increased 11% to $4.05 billion, driven primarily by continued growth in the Bank’s Point-of-Sale Receivable Purchase Program Loans and Leases (“POS/RPP Financing”) portfolio, which increased 16%;

Total revenue increased 1% to $27.0 million and was composed of net interest income of $24.9 million and non-interest income of $2.1 million;

NIM was 2.23% compared with 2.57% and NIM on loans was 2.41% compared with 2.69%. The decreases were due primarily to the strong growth of the POS/RPP Financing portfolio (composed of lower risk-weighted, lower yielding but higher Return on Common Equity (“ROCE”) assets than the Bank’s residential land and construction financing portfolio, also known as the Commercial Real Estate, or “CRE”, portfolio), as well as the impact of temporarily elevated GIC (term deposit) rates relative to Government of Canada bonds due to the adjustment lag typically experienced in a decreasing interest rate environment. The impact of the adjustment lag was exacerbated by the higher cash balances described above. This was offset partially by higher yields earned on the Bank’s lending assets due to the elevated interest rate environment;

Recovery of credit losses was $1,000 compared with a provision for credit losses of $171,000 and as a percentage of average loans was 0.00% compared with 0.02%. The Bank’s Provision for credit losses (“PCL”) continues to remain among the lowest of the publicly traded Canadian Schedule 1 (federally licensed) Banks;

Non-interest expenses were $13.5 million compared with $12.9 million, with higher acquisition-related costs, some of which were specific to the third quarter and some of which are being incurred ahead of asset growth and revenue generated by the launch of US RPP;

Net income decreased 3% to $9.7 million from $10.0 million;

Earnings per share (“EPS”) decreased 5% to $0.36 from $0.38;

Return on average common equity decreased 152 bps to 9.63% from 11.15%; and,

Efficiency ratio for the Digital Banking operations (excluding DRTC) was 46% compared to 43% last year.

VersaBank - Q3 2024 MD&A

Q3 2024 vs Q2 2024

Loans increased 1% to $4.05 billion, driven primarily by continued growth of the POS/RPP Financing portfolio, which increased 4%;

Total revenue decreased 5% to $27.0 million from $28.5 million and was composed of net interest income of $24.9 million and non-interest income of $2.1 million;

NIM was 2.23% compared with 2.45% and NIM on loans was 2.41% compared with 2.52%. The decreases were due primarily to the continued growth of the POS/RPP Financing portfolio (which is composed of lower-risk weighted, lower yielding but higher ROCE assets than the CRE portfolio), the impact of increasing liquidity in anticipation of funding the acquisition and injection of capital into SBH in the fourth quarter, as well as the impact of temporarily elevated GIC (term deposit) rates relative to Government of Canada bonds due to the adjustment lag typically experienced in a decreasing interest rate environment;

Recovery of credit losses was $1,000 compared with a provision for credit losses of $16,000 and provision for credit losses as a percentage of average loans was 0.00% compared with 0.00%;

Non-interest expenses increased 11% to $13.5 million, with higher acquisition-related costs, some of which were specific to the third quarter and some of which are being incurred ahead of asset growth and revenue generated by the launch of US RPP;

Net income and earnings per share were $9.7 million and $0.36 per share, respectively, compared with $11.8 million and $0.45 per share, respectively, with the sequential trend reflecting the impact of higher acquisition related costs which lowered the Bank’s NIM to fund the acquisition and reduced the pace of loan origination to manage capital and higher non-interest expense;

Return on average common equity decreased 273 bps to 9.63% on lower earnings; and,

Efficiency ratio for the Digital Banking operations (excluding DRTC) was 46% compared to 38% last quarter.

Q3 YTD 2024 vs Q3 YTD 2023

Total revenue increased 6% to $84.3 million driven by higher net interest income attributable substantially to strong loan growth and higher non-interest income derived from growth in the revenue contribution of DRTC;

NIM was 2.38% compared with 2.72% and NIM on loans was 2.58% compared with 2.89%. The decreases were due primarily to the strong growth of the POS/RPP Financing portfolio (composed of lower-risk weighted, lower yielding but higher ROCE assets than the CRE portfolio) and the impact of the planned transition of some higher yielding, higher risk-weighted CRE loans to lower yielding, but lower risk-weighted CRE loans as part of the Bank’s strategy to capitalize on opportunities for lower- risk loans with a higher return on capital deployed, as well as the impact of temporarily elevated GIC (term deposit) rates relative to Government of Canada bonds due to the adjustment lag typically experienced in a decreasing interest rate environment;

Recovery of credit losses was $112,000 compared with a provision for credit losses of $793,000 last year;

Provision for credit losses as a percentage of average loans was 0.00% compared with 0.03% last year;

VersaBank - Q3 2024 MD&A

Non-interest expenses decreased 1% to $37.7 million;

Net income increased 15% to $34.2 million;

Earnings per share increased 17% to $1.29, with the trend reflecting the impact of a lower number of common shares outstanding as a result of the purchase and cancellation of common shares under the Bank’s Normal Course Issuer Bid (“NCIB”) over the course of fiscal 2023;

Return on average common equity increased 55 bps to 11.79%; and,

Efficiency ratio for the Digital Banking operations (excluding DRTC) was 41% compared to 43% last year.

VersaBank - Q3 2024 MD&A

Selected Financial Highlights

(unaudited)	for the three months ended							for the nine months ended
(thousands of Canadian dollars, except per share amounts)		July 31, 2024			July 31, 2023			July 31 2024			July 31, 2023
Results of operations
Interest income		$	71,646		$	60,089		$	212,181		$	163,245
Net interest income			24,944			24,929			77,754			73,812
Non-interest income			2,052			1,930			6,594			5,650
Total revenue			26,996			26,859			84,348			79,462
Provision for (recovery of) credit losses			(1	)		171			(112	)		793
Non-interest expenses			13,534			12,879			37,743			37,940
Digital Banking			11,498			10,758			31,927			31,600
DRTC			2,378			2,312			6,834			6,914
Net income			9,705			10,003			34,232			29,683
Income per common share:
Basic		$	0.36		$	0.38		$	1.29		$	1.10
Diluted		$	0.36		$	0.38		$	1.29		$	1.10
Dividends paid on preferred shares		$	247		$	247		$	741		$	741
Dividends paid on common shares		$	650		$	648		$	1,950		$	1,962
Yield*			6.40	%		6.19	%		6.50	%		6.02	%
Cost of funds*			4.17	%		3.62	%		4.12	%		3,30	%
Net interest margin*			2.23	%		2.57	%		2.38	%		2.72	%
Net interest margin on loans*			2.41	%		2.69	%		2.58	%		2.89	%
Return on average common equity*			9.63	%%		11.15	%		11.79	%		11.24	%
Book value per common share*		$	15.23		$	13.55		$	15.23		$	13.55
Efficiency ratio*			50	%		48	%		45	%		48	%
Efficiency ratio – Digital Banking*			46	%		43	%		41	%		43	%
Return on average total assets*			0.85	%		1.00	%		1.03	%		1.07	%
Provision (recovery) for credit losses as a % of average loans*			0.00	%		0.02	%		0.00	%		0.03	%
						as at
Balance Sheet Summary
Cash		$	247,983		$	87,726		$	247,983		$	87,726
Securities			153,026			182,944			153,026			182,944
Loans, net of allowance for credit losses			4,049,449			3,661,672			4,049,449			3,661,672
Average loans			4,033,954			3,540,564			3,949,927			3,327,175
Total assets			4,516,436			3,980,845			4,516,436			3,980,845
Deposits			3,821,185			3,328,017			3,821,185			3,328,017
Subordinated notes payable			101,641			101,585			101,641			101,585
Shareholders’ equity			408,985			365,043			408,985			365,043
Capital ratios**
Risk-weighted assets		$	3,273,524		$	3,047,172		$	3,273,524		$	3,047,172
Common Equity Tier 1 capital			384,496			339,894			384,496			339,894
Total regulatory capital			504,112			460,065			504,112			460,065
Common Equity Tier 1 (CET1) ratio			11.75	%		11.15	%		11.75	%		11.15	%
Tier 1 capital ratio			12.16	%		11.60	%		12.16	%		11.60	%
Total capital ratio			15.40			15.10	%		15.40	%		15.10	%
Leverage ratio			8.54	%		8.53	%		8.54	%		8.53	%

* See definition in "Non-GAAP and Other Financial Measures" section below.

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

VersaBank - Q3 2024 MD&A

Business Outlook

VersaBank is active in underserved banking markets in Canada and the US in which its innovative, value- added, business-to-business (B2B) digital banking products command more attractive pricing for its lending products, and further, continues to develop and expand its diverse deposit gathering network that provides efficient access to a range of low-cost deposit sources. In addition, VersaBank remains highly committed to, and focused on, further developing and enhancing its technology advantage, a key component of its value proposition that not only provides efficient access to VersaBank’s chosen underserved lending and deposit markets, but also delivers superior financial products and better customer service to its clients.

Management is closely monitoring geo-political, economic and financial market risk precipitated by current wars or conflicts and major national and international events, their potential impact on VersaBank’s business. At this time, management has not identified any material adverse direct or indirect risk exposure to VersaBank resulting from these risks but will continue to assess the relevant data and information as it becomes available.

While VersaBank does not provide guidance on specific performance metrics, the commentary provided below discusses aspects of VersaBank’s business and certain anticipated trends related to same that, in management’s view, could potentially impact future performance.

US Operations

On August 30, 2024, VersaBank, through its wholly owned US subsidiary VersaHoldings US Corp., acquired 100% of the outstanding shares of SBH, for cash consideration of approximately US$14.0 million (CA$19.3 million), subject to post closing related adjustments. Under the acquisition, VersaBank acquired US$61.1 million in assets and assumed US$54.1 million in deposits and other liabilities and renamed SBH as VersaBank USA. VersaBank USA holds a national license. The acquisition will provide the Bank with access to US deposits to support the growth of its Receivable Purchase Program business, which the Bank launched in the US in Fiscal 2022. The acquisition is expected to be accretive to the Bank’s earnings per share within the first year after closing; and, VersaBank USA was well capitalized, as per the OCC’s definition of same, with a Total Capital ratio in excess of 10% as of August 30, 2024.

Lending Assets

Canadian Point-of-Sale Financing: Consumer spending and business investment in Canada are expected to remain steady over the course of fiscal 2024 and into the start of fiscal 2025 following modest contraction in growth the prior year with the impact of higher interest rates, inflationary pressures (albeit moderated from those recently) and a softening labour market still countering GDP growth. Management, however, is seeing a slightly greater impact of the elevated interest rate environment and softness in the consumer spending on the POS/RPP Financing portfolio volumes. It remains management’s view that the impact of the continued softness in consumer spending on the Bank’s POS/RPP Financing portfolio in fiscal 2024 will be mitigated by the onboarding of new origination

VersaBank - Q3 2024 MD&A

partners and the continued expansion of business with existing partners over the balance of the year and into fiscal 2025. As a result, management expects to see continued growth in the Canadian POS/RPP Financing portfolio in the final quarter of fiscal 2024;

US Receivable Purchase Program (“RPP”): Despite higher interest rates and continuing inflationary pressures in the US, the US labour market remains resilient, which, combined with the broad expectation that the US Federal Reserve’s tightening cycle has come to an end will continue to support consumer spending. Management views the current trajectory of the US economy to be favourable in the context of continued, stable demand for durable goods due primarily to enduring consumption. Management believes that the anticipated US macroeconomic and industry trends described above will continue to support healthy demand in the Bank’s RPP portfolio over the remainder of fiscal 2024 and into the next fiscal year, which would be expected to contribute meaningful additional growth through VersaBank USA to broadly launch its RPP business; and,

Commercial Real Estate (Business-to-Business Loans with Credit Risk Exposure Predominantly Related to Residential Properties): Notwithstanding the effective risk mitigation strategies that are employed in managing the Bank’s CRE portfolios, including working with well-established, well-capitalized partners and maintaining modest loan-to-value ratios on individual transactions, management continues to take a cautionary stance with respect to its broader CRE exposures due to volatility in CRE asset valuations and the potential impact of higher interest rates on borrowers’ ability to service debt. While management has and will continue to focus on multi-family insured mortgages in fiscal 2024, it is also anticipated that the Bank’s CRE portfolio asset mix will continue to transition into lower risk weighted insured assets that will drive moderate portfolio growth in fiscal 2024.

Credit Quality

VersaBank lends to underserved markets that support more attractive pricing for its lending products but typically exhibit a lower-than-average risk profile due primarily to the lower inherent risk associated with the underlying collateral assets and/or the structure of VersaBank’s offered financing arrangements; and,

Based on available forward-looking macroeconomic and industry data (as described above), as well as the Bank’s historical credit experience, current underwriting governance, and general expectations for credit performance, management anticipates that the existing level of credit risk in its portfolio may increase modestly during fiscal 2024 and into fiscal 2025 due primarily to any economic softness and elevated interest rate environments in Canada and/or the US and the ability of consumers and businesses to service debt in such an environment. Further, management expects that the lower risk profile of VersaBank’s unique business to business lending portfolio, which is a function of VersaBank’s prudent underwriting practices, structured lending products and focus on underserved financing markets within which it has a wealth of experience, will contribute to mitigating any modest increases in forward credit risk in the Bank’s lending portfolio.

VersaBank - Q3 2024 MD&A

Funding and Liquidity

Management expects that commercial deposits raised via VersaBank’s Trustee Integrated Banking (“TIB”) program will continue to grow throughout fiscal 2024 and into fiscal 2025 due primarily to higher volumes of consumer and commercial bankruptcy and proposal restructuring proceedings, attributable primarily to the impact of current economic conditions. In addition, VersaBank continues to pursue a number of initiatives to grow and expand its well-established, diverse deposit broker network through which it sources personal deposits, consisting primarily of guaranteed investment certificates. The Bank’s current deposit channels remain an efficient, reliable and diversified source of funding, providing access to ample reasonably priced deposits in volumes that comfortably support the Bank’s liquidity requirements. Substantially all of the Bank’s deposit volumes raised through these channels are eligible for CDIC insurance;

Management believes that VersaBank has one of the lowest liquidity risk profiles among North American banks attributable to the quality, stability and stickiness of its deposit base. VersaBank’s Canadian deposits are sourced through existing, third-party distribution channels, specifically wealth management firms that distribute the Bank’s term deposit products and Licensed Insolvency Trustee firms that invest in the Bank’s demand and term deposit products. Currently, the Bank does not accept deposits directly from individuals and does not offer high interest-bearing demand deposit products that are accessible to the public via the internet. With the acquisition of SBH, the Bank will assume US deposits of approximately US$54.1 million (CA$74.7 million), which would include balances from individuals directly, however this would only represent approximately 2% of the Bank’s total deposits; and,

Aside from the recent funding activities to support the acquisition of SBH, liquidity levels are expected to remain reasonably consistent throughout fiscal 2024 and management anticipates this trend to continue for the remainder of fiscal 2024 and into the start of fiscal 2025 as the Bank continues to fund anticipated balance sheet growth across each of its lines of business. Further, management will continue to deploy cash into low risk, government securities with the objective of earning a more favourable yield on its available liquidity.

Earnings and Capital

Earnings growth for the remainder of fiscal 2024 and into the start of fiscal 2025 is expected to be a function primarily of anticipated organic balance sheet growth from its existing Digital Banking operations, specifically, continued expansion of the Bank’s POS/RPP Financing and RPP portfolios in Canada and the US, respectively. Following the acquisition of SBH, the Bank anticipates modest accretive earnings growth from the assets acquired and increased RPP lending through SBH. Digital Banking’s Canadian operations will continue to benefit from the operating leverage inherent in its branchless, business-to-business model, as well as incremental contributions from DRTC;

Net interest income growth for the remainder of fiscal 2024 and into the start of fiscal 2025 is expected to be a function primarily of continued expansion of the Bank’s POS/RPP Financing and RPP portfolios in Canada and the US, respectively, disciplined liquidity management and the expectation that growth

VersaBank - Q3 2024 MD&A

in the TIB program in fiscal 2024 and further expansion of the Bank’s diverse deposit broker network should have a favourable impact on cost of funds although the Bank expects that it could see more volatility in NIM due to the dynamics of the term deposit market;

Non-interest income growth for fiscal 2024 and into the start of fiscal 2025 is expected to be a function primarily of DRTC revenue growth derived from its suite of cybersecurity services;

VersaBank’s capital ratios remain comfortably in excess of management’s limits, as well as regulatory minimums and expectations. Management is of the view that VersaBank’s current capital levels are sufficient to accommodate balance sheet growth contemplated for fiscal 2024 and into 2025. However, management believes that demand for its POS/RPP Financing solution, which was recently launched in the United States, could exceed the Bank's lending capacity under its current capital ratios and, accordingly, will monitor the capital markets for the option to raise additional regulatory capital on attractive terms to capitalize on this opportunity in a manner that would be accretive to earnings; and,

Management does not anticipate increasing VersaBank’s dividends over the course of fiscal 2024 to ensure that it continues to have adequate regulatory capital available to support contemplated balance sheet growth, as well as specific business development initiatives for earnings growth currently contemplated over the same timeframe and remain in compliance with its established regulatory capital ratio targets and thresholds.

There is potential that VersaBank may not realize or achieve the anticipated performance trends set out above due to a number of factors and variables including, but not limited to, the strength of the Canadian and US economies in general and the strength of the local economies in which VersaBank conducts operations; the effects of changes in monetary and fiscal policy, including changes in the 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; inflation; capital market fluctuations; the timely development and introduction of new products in receptive markets; the ability of VersaBank to grow its business and execute its strategy in the US market; the impact of changes in the laws and regulations regulating financial services; the impact of wars or conflicts and the impact of outbreaks of disease or illness that affect local, national or international economies. Please see “Cautionary Note Regarding Forward- Looking Statements” on page 2 of this MD&A.

VersaBank - Q3 2024 MD&A

Financial Review – Earnings

Total Revenue

Total revenue, which consists of net interest income and non-interest income, for the quarter ended July 31, 2024 increased 1% to $27.0 million compared with the same period a year ago and decreased 5% compared with last quarter. Total revenue for the nine months ended July 31, 2024 increased 6% to $84.3 million compared with the same period a year ago.

Net Interest Income

(thousands of Canadian dollars)
	For the three months ended:												For the nine months ended:
	July 31, 2024		April 30, 2024		Change			July 31, 2023		Change			July 31, 2024		July 31, 2023		Change
Interest income
Point-of-sale loans and leases	$	48,775	$	47,414		3	%	$	38,013		28	%	$	141,761	$	104,230		36	%
Commercial real estate mortgages		17,347		18,191		(5	)%		17,705		(2	)%		54,553		48,073		13	%
Commercial real estate loans		154		155		(1	)%		161		(4	)%		443		503		(12	)%
Public sector and other financing		338		336		1	%		327		3	%		1,029		959		7	%
Other		5,032		5,147		(2	)%		3,883		30	%		14,395		9,480		52	%
Interest income	$	71,646	$	71,243		1	%	$	60,089		19	%	$	212,181	$	163,245		30	%

Interest expense
Deposit and other	$	43,357	$	43,469		4	%	$	33,725		34	%	$	130,097	$	85,100		53	%
Subordinated notes		1,345		1,532		(12	)%		1,435		(6	)%		4,330		4,333		0	%
Interest expense	$	46,702	$	45,001		4	%	$	35,160		33	%	$	134,427	$	89,433		50	%

Net interest income	$	24,944	$	26,242		(5	)%	$	24,929		0	%	$	77,754	$	73,812		5	%

Non-interest income	$	2,052	$	2,259		(9	)%	$	1,930		6	%	$	6,594	$	5,650		17	%
Total revenue	$	26,996	$	28,501		(5	)%	$	26,859		1	%	$	84,348	$	79,462		6	%

Q3 2024 vs Q3 2023

Net interest income increased marginally to $24.9 million due primarily to:

Higher interest income attributable to continued POS/RPP lending asset growth and higher overall yields consistent with the elevated interest rate environment.

Offset partially by:

Lower CRE lending asset balance in the current quarter due to timing of loan origination;

The impact of the planned transition of some higher yielding, higher risk-weighted CRE loans to lower yielding, lower risk-weighted CRE loans as part of the Bank’s strategy to capitalize on opportunities for lower-risk loans with a higher return on capital deployed; and,

Higher interest expense attributable to higher deposit balances to fund balance sheet growth across each of its lines of business and the acquisition of SBH, as well as higher cost of funds consistent with the elevated interest rate environment.

VersaBank - Q3 2024 MD&A

Q3 2024 vs Q2 2024

Net interest income decreased 5% due primarily to:

Lower CRE lending asset balance in the current quarter due to timing of loan origination;

Offset partially by:

Higher interest income attributable to continued POS/RPP lending asset growth.

Q3 YTD 2024 vs Q3 YTD 2023

Net interest income increased 5% due primarily to:

Higher interest income attributable to continued POS/RPP lending asset growth and higher yields consistent with the elevated interest rate environment.

Offset partially by:

Lower CRE lending asset balance due to timing of loan origination;

Higher interest expense attributable to higher deposit balances and higher cost of funds consistent with the elevated interest rate environment.

Net Interest Margin

(thousands of Canadian dollars)
	For the three months ended:															For the nine months ended:
	July 31, 2024			April 30, 2024			Change			July 31, 2023			Change			July 31, 2024			July 31, 2023			Change
Interest income	$	71,646		$	71,243			1	%	$	60,089			19	%	$	212,181		$	163,245			30	%
Interest expense		46,702			45,001			4	%		35,160			33	%		134,427			89,433			50	%
Net interest income		24,944			26,242			(5	)%		24,929			0	%		77,754			73,812			5	%

Average assets	$	4,452,378		$	4,348,978			2	%	$	3,855,119			15	%	$	4,359,023		$	3,623,422			20	%
Yield*		6.40	%		6.66	%		(4	)%		6.19	%		3	%		6.50	%		6.02	%		8	%
Cost of funds*		4.17	%		4.21	%		(1	)%		3.62	%		15	%		4.12	%		3.30	%		25	%
Net interest margin*		2.23	%		2.45	%		(9	)%		2.57	%		(13	)%		2.38	%		2.72	%		(13	)%
Average gross loans	$	4,014,653		$	3,982,164			1	%	$	3,525,286			14	%	$	3,931,191		$	3,312,781			19	%
Net interest margin on loans*		2.41	%		2.52	%		(4	)%		2.69	%		(10	)%		2.58	%		2.89	%		(11	)%

* See definition in "Non-GAAP and Other Financial Measures" section below.

VersaBank - Q3 2024 MD&A

Q3 2024 vs Q3 2023

Net interest margin decreased 34 bps due primarily to:

Continued growth in the POS/RPP Financing portfolio, which is composed of lower risk-weighted, lower yielding assets;

Lower CRE lending asset balance and the impact of the planned transition of some higher yielding, higher risk-weighted CRE loans to lower yielding, lower risk-weighted CRE loans as part of the Bank’s strategy to capitalize on opportunities for lower-risk loans with a higher return on capital deployed;

Higher cost of funds due to higher rates on term deposits which also increased to fund balance sheet growth across each of its lines of business and the acquisition of SBH; and,

The impact of temporarily elevated GIC (term deposit) rates relative to Government of Canada bonds due to the adjustment lag typically experienced in a decreasing interest rate environment.

Offset partially by:

Higher yields earned on the Bank’s lending and treasury assets, generally, due primarily to the elevated interest rate environment.

Q3 2024 vs Q2 2024

Net interest margin decreased 22 bps due primarily to:

Continuing growth in the POS/RPP Financing portfolio which is composed of lower risk-weighted, lower yielding assets;

Higher cost of funds attributable to higher rates paid on term deposits during the quarter amidst higher rates in the term deposit market in Canada; and,

The impact of temporarily elevated GIC (term deposit) rates relative to Government of Canada bonds due to the adjustment lag typically experienced in a decreasing interest rate environment.

Offset partially by:

Higher yields earned on the Bank’s lending and treasury assets. While interest income increased 1%, the growth was dampened by timing of expected loan originations.

Q3 YTD 2024 vs Q3 YTD 2023

Net interest margin decreased 34 bps due primarily to the trends noted in the quarterly results above.

VersaBank - Q3 2024 MD&A

Non-Interest Income

Non-interest income is composed of revenue generated by DRTC which includes the gross profit of Digital Boundary Group (“DBG”), as well as income derived from miscellaneous transaction fees not directly attributable to lending assets.

Non-interest income for the quarter ended July 31, 2024 was $2.1 million compared with $1.9 million for the same period a year ago and $2.3 million last quarter and was composed substantially of the consolidated gross profit of DBG. The year-over-year and quarter-over-quarter trends were a function primarily of the timing of client engagements.

Non-interest income for the nine months ended July 31, 2024 was $6.6 million compared with $5.7 million for the same period a year ago. The year-over-year trend was due primarily to increased client engagements in the current year.

Provision for Credit Losses

(thousands of Canadian dollars)
	For the three months ended									For the nine months ended
	July 31, 2024			April 30, 2024			July 31, 2023			July 31, 2024			July 31, 2023

Provision for (recovery of) credit losses:
Point-of-sale loans and leases	$	358		$	142		$	19		$	465		$	101
Commercial real estate mortgages		(342	)		(164	)		139			(622	)		619
Commercial real estate loans		1			3			(9	)		17			(4	)
Public sector and other financing		(18	)		35			22			28			77
Provision for (recovery of) credit losses	$	(1	)	$	16		$	171		$	(112	)	$	793

Q3 2024 vs Q3 2023

VersaBank recorded a recovery of credit losses in the amount of $1,000 in the current quarter compared with a provision for credit losses in the amount of $171,000 last year due primarily to:

Changes in the forward-looking information used by the Bank in its credit risk models; and,

A recalibration of the Bank’s calculation in the POS/RPP Financing portfolio to align more closely with empirical data and general credit performance.

Q3 2024 vs Q2 2024

VersaBank recorded a recovery of credit losses in the amount of $1,000 in the current quarter compared with a provision for credit losses in the amount of $16,000 last quarter due primarily to:

Changes in the forward-looking information used by the Bank in its credit risk models.

VersaBank - Q3 2024 MD&A

Q3 YTD 2024 vs Q3 YTD 2023

VersaBank recorded a recovery of credit losses in the amount of $112,000 compared with a provision for credit losses in the amount of $793,000 last year due primarily to:

Changes in the forward-looking information used by the Bank in its credit risk models; and,

A recalibration of the calculation in the POS/RPP Financing portfolio to align more closely with empirical data and general credit performance.

Non-Interest Expenses

(thousands of Canadian dollars)
	For the three months ended:															For the nine months ended:
	July 31, 2024			April 30, 2024			Change			July 31, 2023			Change			July 31, 2024			July 31, 2023			Change
Salaries and benefits	$	7,507		$	7,409			1	%	$	7,453			1	%	$	21,454		$	24,139			(11	)%
General and administrative		4,833			3,557			36	%		4,446			9	%		12,723			10,888			17	%
Premises and equipment		1,194			1,219			(2	)%		980			22	%		3,566			2,913			22	%
Total non-interest expenses	$	13,534		$	12,185			11	%	$	12,879			5	%	$	37,743		$	37,940			(1	)%
Efficiency Ratio		50	%		43	%		17	%		48	%		4	%		45	%		48	%		(6	)%

Q3 2024 vs Q3 2023

Non-interest expenses increased 5% to $13.5 million due primarily to:

Prior year favourable adjustment to capital tax expense attributable to a shift in the provincial allocation of the Bank’s loan and deposit originations; and,

Higher general operating costs consistent with increased business activities, including costs being incurred ahead of anticipated asset growth and revenue generated by the launch of US RPP through VersaBank USA.

Offset partially by:

Lower professional fees related primarily to the advancement of the regulatory approval process for the Bank’s proposed acquisition of a US bank.

Q3 2024 vs Q2 2024

Non-interest expenses increased 11% due primarily to:

Higher professional fees attributable to the continuing regulatory approval process associated with VersaBank’s acquisition of a US bank;

Adjustments in compensation obligations in the comparable quarter; and,

VersaBank - Q3 2024 MD&A

Q3 YTD 2024 vs Q3 YTD 2023

Non-interest expenses decreased 1% due primarily to:

Lower general annual compensation adjustments; and,

Lower professional fees related primarily to the advancement of the regulatory approval process for the Bank’s proposed acquisition of a US bank.

Offset partially by:

Prior year favourable adjustment to capital tax expense attributable to a shift in the provincial allocation of the Bank’s loan and deposit originations; and,

Income Tax Provision

VersaBank’s year to date effective tax rate is approximately 27% compared with approximately 27% for fiscal 2023.The Bank’s effective tax rate in the current year was due primarily to the impact of deferred tax assets recognized in the current period associated with tax loss carry forwards which are anticipated to be applied to future taxable earnings and lower non-deductible expenses associated with employee stock options, which were issued as part of the Bank’s employee retention program in early fiscal 2022. Provision for income taxes for the current quarter was $3.8 million compared with $3.8 million for the same period a year ago and $4.5 million last quarter. Provision for income taxes for the nine months ended July 31, 2024 was $12.5 million compared with $11.0 million for the same period a year ago.

VersaBank - Q3 2024 MD&A

Financial Review – Balance Sheet

(thousands of Canadian dollars)
	July 31, 2024		April 30, 2024		Change			July 31 2023		Change
Total assets	$	4,516,436	$	4,388,320		3	%	$	3,980,845		13	%
Cash and securities		401,009		302,577		33	%		270,670		48	%
Loans, net of allowance for credit losses		4,049,449		4,018,458		1	%		3,661,672		11	%
Deposits		3,821,185		3,693,495		3	%		3,328,017		15	%

Total Assets

Total assets as at July 31, 2024, were $4.52 billion compared with $3.98 billion a year ago and $4.39 billion last quarter. The year-over-year and sequential increases were due primarily to growth in VersaBank’s POS/RPP Financing portfolio. The modest sequential asset growth reflects the seasonality in the POS/RPP Financing portfolio and the impact of softness in the Canadian economy and elevated interest rates.

Cash and securities

Cash and securities, which are held primarily for liquidity purposes as at July 31, 2024 were $401.0 million or 9% of total assets, compared with $270.7 million, or 7% of total assets, a year ago and $302.6 million,

VersaBank - Q3 2024 MD&A

or 7% of total assets, last quarter. The year-over-year and sequential trends were primarily attributable to the anticipated funding related to the acquisition of SBH.

As at July 31, 2024, the Bank held securities totalling $153.0 million (October 31, 2023 - $167.9 million), including accrued interest, comprised of a Government of Canada Treasury Bill for $150.0 million with a face value of $150.0 million at maturity on August 1, 2024, yielding 4.51%, and a Government of Canada Bond for $3.0 million with a face value totaling $3.0 million, yielding 4.76%, with a 3.75% coupon and maturing on May 1, 2025.

Loans

(thousands of Canadian dollars)
	July 31, 2024			April 30, 2024			Change			July 31 2023			Change
Point-of-sale loans and leases	$	3,228,354		$	3,114,024			4	%	$	2,776,126			16	%
Commercial real estate mortgages		736,345			819,853			(10	)%		810,630			(9	)%
Commercial real estate loans		8,523			8,612			(1	)%		9,298			(8	)%
Public sector and other financings		56,923			56,671			0	%		49,627			15	%
		4,030,145			3,999,160			1	%		3,645,681			11	%
Allowance for credit losses		(2,401	)		(2,402	)					(2,697	)
Accrued interest		21,705			21,700						18,688
Total loans, net allowance for credit losses	$	4,049,449		$	4,018,458			1	%	$	3,661,672			11	%

VersaBank organizes its lending portfolio into the following four broad asset categories: Point-of-Sale Loans & Leases, Commercial Real Estate Mortgages, Commercial Real Estate Loans, and Public Sector and Other Financing. These categories have been established in VersaBank’s proprietary, internally developed asset management system and have been designed to catalogue individual lending assets as a function primarily of their key risk drivers, the nature of the underlying collateral, and the applicable market segment.

The Point-of-Sale Loans and Leases Receivable Purchase Program (“POS/RPP Financing”) asset category is composed of Point-of-Sale Loan and Lease Receivables acquired from VersaBank’s network of origination and servicing partners in Canada and the US as well as Warehouse Loans that provide bridge financing to VersaBank’s origination and servicing partners for the purpose of accumulating and seasoning practical volumes of individual loans and leases prior to VersaBank purchasing the cashflow receivables derived from same.

The Commercial Real Estate Mortgages (“CRE Mortgages”) asset category is comprised primarily of Residential Construction, Term, CMHC Insured and Land Mortgages. All of these loans are business-to- business loans with the underlying credit risk exposure being primarily consumer in nature given that the vast majority (approximately 93% as at July 31, 2024) of the loans are related to properties that are designated primarily for residential use. The portfolio benefits from diversity in its underlying security in the form of a broad range of such collateral properties.

VersaBank - Q3 2024 MD&A

The Commercial Real Estate Loans (“CRE Loans”) asset category is comprised primarily of Condominium Corporation Financing loans.

The Public Sector and Other Financing (“PSOF”) asset category is comprised primarily of Public Sector Loans and Leases, a small balance of Corporate Loans and Leases and Single Family Residential Conventional and Insured Mortgages. VersaBank has de-emphasized Corporate lending and continues to monitor the public sector space in anticipation of more robust demand for Federal, Provincial and Municipal infrastructure and other project financings.

Q3 2024 vs Q3 2023

Loans increased 11% to $4.05 billion due primarily to:

Higher POS/RPP Financing balances, which increased 16% year-over-year due primarily to consistent strong demand for home improvement/HVAC receivable financing.

Offset partially by:

Lower commercial lending balances due to timing of loan originations.

Q3 2024 vs Q2 2024

Loans increased 1% due primarily to:

Higher POS/RPP Financing balances, which increased 4% sequentially.

Offset partially by:

Lower commercial lending balances due to timing of loan originations.

Residential Mortgage Exposures

In accordance with the OSFI Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures, additional information is provided regarding the Bank’s residential mortgage exposure. For the purposes of the Guideline, a residential mortgage is defined as a loan to an individual that is secured by residential property (one-to-four-unit dwellings) and includes home equity lines of credit (“HELOCs”). This differs from the classification of residential mortgages used by the Bank which also includes multi-family residential mortgages.

Under OSFI’s definition, the Bank’s exposure to residential mortgages at July 31, 2024 was $4.2 million compared with $4.3 million a year ago and $4.2 million last quarter. The Bank does not currently offer residential mortgages to the public. The Bank did not have any HELOCs outstanding at July 31, 2024, last quarter or a year ago.

VersaBank - Q3 2024 MD&A

Credit Quality and Allowance for Credit Losses

VersaBank closely monitors its lending portfolio, the portfolio’s underlying borrowers, as well as its origination partners in order to ensure that management maintains good visibility on credit trends that could provide an early warning indication of the emergence of any elevated risk in VersaBank’s lending portfolio.

Allowance for Credit Losses

(thousands of Canadian dollars)
	July 31, 2024		April 30, 2024		Change			July 31 2023		Change
ECL allowance by lending asset:
Point-of-sale loans and leases	$	565	$	207		173	%	$	646		(13	)%
Commercial real estate mortgages		1,600		1,942		(18	)%		1906		(16	)%
Commercial real estate loans		59		58		2	%		50		18	%
Public sector and other financings		177		195		(9	)%		05		86	%
Total ECL allowance	$	2,401	$	2,402		0	%	$	2,697		(11	)%

(thousands of Canadian dollars)
	July 31, 2024		April 30, 2024		Change			July 31 2023		Change
ECL allowance by stage:
ECL allowance stage 1	$	2,002	$	2,093		(4	)%	$	2,425		(17	)%
ECL allowance stage 2		399		309		29	%		272		47	%
ECL allowance stage 3		-		-					-
Total ECL allowance	$	2,401	$	2,402		0	%	$	2,697		(11	)%

Q3 2024 vs Q3 2023

VersaBank’s ECL allowance as at July 31, 2024, was $2.40 million compared with $2.70 million a year ago due primarily to:

Changes in the forward-looking information used by the Bank in its credit risk models; and,

A recalibration of the Bank’s calculation in the POS/RPP Financing portfolio to align more closely with empirical data and general credit performance.

VersaBank - Q3 2024 MD&A

Q3 2024 vs Q2 2024

VersaBank’s ECL allowance as at July 31, 2024, was $2.40 million compared with $2.40 million last quarter.

Forward-looking information

VersaBank - Q3 2024 MD&A

A summary of the key forecast macroeconomic indicator data trends utilized by VersaBank for the purpose of sensitizing lending asset credit risk parameter term structure forecasts to forward looking information, which in turn are used in the estimation of VersaBank’s reported ECL, as well as in the assessment of same are presented in the charts below.

Expected Credit Loss Sensitivity:

The following table presents the sensitivity of the Bank’s estimated ECL to a range of individual forecast macroeconomic scenarios, that in isolation may not reflect the Bank’s actual expected ECL exposure, as well as the variance of each to the Bank’s reported ECL as at July 31, 2024:

(thousands of Canadian dollars)
	Reported ECL		100% Upside			100% Baseline			100% Downside
Allowance for expected credit losses	$	2,401	$	1,574		$	1,867		$	2,570
Variance from reported ECL				(827	)		(534	)		169
Variance from reported ECL (%)				(34	)%		(22	)%		7	%

The uncertainty associated with the directionality, velocity and magnitude of both interest rates and inflation as well as the general uncertainty associated with the broader Canadian and US economies may result in VersaBank’s estimated ECL amounts exhibiting some future volatility which in turn may result in the Bank recognizing higher provisions for credit losses in the coming quarters.

VersaBank - Q3 2024 MD&A

Considering the analysis set out above and based on management’s review of the loan and credit data comprising VersaBank’s lending portfolio, combined with management’s interpretation of the available forecast macroeconomic and industry data, management is of the view that its reported ECL allowance represents a reasonable proxy for potential future losses.

Deposits

VersaBank has established three core funding channels, those being personal deposits, commercial deposits, and cash reserves retained from VersaBank’s POS/RPP Financing origination partners that are classified as other liabilities.

(thousands of Canadian dollars)
	July 31, 2024		April 30, 2024		Change			July 31 2023		Change
Commercial deposits	$	706,918	$	672,382		5	%	$	603,583		17	%
Personal deposits		3,114,267		3,021,113		3	%		2,724,434		14	%
Total deposits	$	3,821,185	$	3,693,495		3	%	$	3,328,017		15	%

Personal deposits, consisting principally of guaranteed investment certificates, are sourced primarily through a well-established and well-diversified deposit broker network that the Bank continues to grow and expand across Canada.

Commercial deposits are sourced primarily via specialized operating accounts made available to Licensed Insolvency Trustee firms (“Trustees”) in the Canadian insolvency industry. The Bank developed customized banking software platforms for use by Trustees that integrates banking services with the market-leading software platform used in the administration of consumer bankruptcy and proposal restructuring proceedings.

Substantially all of the Bank’s Personal and Commercial deposits sourced through these channels are eligible for CDIC insurance.

Q3 2024 vs Q3 2023

Deposits increased 15% to $3.8 billion due primarily to:

Higher personal deposits attributable to VersaBank increasing activity in its broker market network to fund balance sheet growth and the funding related to the acquisition of SBH; and,

Higher commercial deposits attributable to an increase in the volume of consumer and commercial bankruptcy and proposal restructuring proceedings in the current year.

Q3 2024 vs Q2 2024

Deposits increased 3% due primarily to the variables and trends set out above.

VersaBank - Q3 2024 MD&A

Subordinated Notes Payable

(thousands of Canadian dollars)
	July 31, 2024		April 30, 2024		July 31, 2023
Issued April 2021, unsecured, non-viability contingent capital compliant, subordinated notes payable, principal amount of $75.0 million, fixed effective interest rate of 5.38%, maturing May 2031.	$	101,641	$	101,108	$	96,669

Issued March 2019, unsecured, non-viability contingent capital compliant, subordinated notes payable, principal amount of $5.0 million, fixed effective interest rate of 10.41%, maturing May 2029.		-		-		4,916
	$	101,641	$	101,108	$	101,585

Subordinated notes payable, net of issue costs, were $101.6 million as at July 31, 2024, compared with $101.6 million a year ago and $101.1 million last quarter. The year-over-year trend was a function primarily attributable to the change in the USD/CAD foreign exchange spot rate related to the US $75.0 million subordinated note, offset by the Bank redeeming its $5.0 million, unsecured, non-viability contingent capital compliant, subordinate note payable on April 30, 2024, using the Bank’s general funds. The sequential trend reflects the change in the USD/CAD foreign exchange spot rate.

Shareholders’ Equity

Shareholders’ equity was $409.0 million as at July 31, 2024, compared with $365.0 million a year ago and $400.1 million last quarter.

At July 31, 2024, there were 25,964,424 common shares outstanding compared with 25,924,424 common shares outstanding a year ago and 25,964,424 common shares outstanding last quarter.

Q3 2024 vs Q3 2023 vs Q2 2024

Shareholders’ equity increased 12% compared with a year ago and 2% compared with last quarter due primarily to higher retained earnings attributable to net income earned over the course of the year, offset partially by payment of dividends and for the year-over-year trend the purchase and cancellation of common shares through the Bank’s NCIB during fiscal 2023.

VersaBank’s book value per common share as at July 31, 2024 was $15.23 compared with $13.55 a year ago and $14.88 last quarter. The year-over-year and sequential increases were due primarily to higher retained earnings attributable to net income earned in the current quarter offset partially by the payment of dividends over the same period. The year-over-year trend also reflects impact of the purchase and cancellation of common shares through the Bank’s NCIB during fiscal 2023.

See note 9 to the unaudited interim consolidated financial statements for additional information relating to share capital.

VersaBank - Q3 2024 MD&A

Stock-Based Compensation

Stock options are accounted for using the fair value method which recognizes the fair value of the stock option over the applicable vesting period as an increase in salaries and benefits expense with the same amount being recorded in contributed surplus. VersaBank recognized compensation expense for the current quarter totaling $72,000 compared with $192,000 for the same period a year ago and $72,000 last quarter, relating to the estimated fair value of stock options granted. The recognized compensation expense for the nine-month period ended July 31, 2024, totaled $276,000 compared with $727,000 for the same period a year ago. See note 9 to the unaudited interim consolidated financial statements for additional information relating to stock options.

Updated Share Information

As at September 3, 2024, there were no changes since July 31, 2024 in the number of common shares, Series 1 preferred shares, and common share options outstanding.

Off-Balance Sheet Arrangements

As at July 31, 2024, VersaBank had an outstanding interest rate derivative contract established for asset liability management purposes to swap between fixed and floating interest rates with a notional amount totalling $22.4 million that qualified for hedge accounting. The Bank enters into interest rate swap contracts for its own account exclusively and does not act as an intermediary in this market.

As at July 31, 2024, VersaBank did not have any significant off-balance sheet arrangements other than an interest rate swap contract, loan commitments and letters of credit attributable to normal course business activities. See notes 12 and 13 to the unaudited interim consolidated financial statements for more information.

Related Party Transactions

VersaBank’s Board of Directors and senior executive officers represent key management personnel. See note 14 to the unaudited interim consolidated financial statements for additional information on related party transactions and balances.

VersaBank - Q3 2024 MD&A

Capital Management and Capital Resources

The table below presents VersaBank’s regulatory capital position, risk-weighted assets and regulatory capital and leverage ratios for the current and comparative periods.

(thousands of Canadian dollars)
	July 31, 2024			April 30, 2024			Change			July 31 2023			Change
Common Equity Tier 1 capital	$	384,496		$	375,153			2	%	$	339,894			13	%

Total Tier 1 capital	$	398,143		$	388,800			2	%	$	353,541			13	%

Total Tier 2 capital	$	105,969		$	105,497			0	%	$	106,524			(1	)%

Total regulatory capital	$	504,112		$	494,297			2	%	$	460,065			10	%

Total risk-weighted assets	$	3,273,524		$	3,224,822			2	%	$	3,047,172			7	%
Capital ratios
CET1 capital ratio		11.75	%		11.63	%		1	%		11.15	%		5	%
Tier 1 capital ratio		12.16	%		12.06	%		1	%		11.60	%		5	%
Total capital ratio		15.40	%		15.33	%		0	%		15.10	%		2	%
Leverage ratio		8.54	%		8.55	%		0	%		8.53	%		0	%

VersaBank reports its regulatory capital ratios using the Standardized approach for calculating risk- weighted assets, as defined under Basel III, which may require VersaBank to carry more capital for certain credit exposures compared with requirements under the Advanced Internal Ratings Based (“AIRB”) methodology. As a result, regulatory capital ratios of banks that utilize the Standardized approach are not directly comparable with the large Canadian banks that employ the AIRB methodology.

OSFI requires that all Canadian banks must comply with the Basel III standards on an “all-in” basis for purposes of determining their risk-based capital ratios. Required minimum regulatory capital ratios are a 7.0% Common Equity Tier 1 (“CET1”) capital ratio, an 8.5% Tier 1 capital ratio and a 10.5% total capital ratio, all of which include a 2.5% capital conservation buffer.

The year-over-year and sequential trends exhibited by VersaBank’s reported regulatory capital levels, regulatory capital ratios and leverage ratio were a function primarily of retained earnings growth, the purchase and cancellation of common shares through the Bank’s NCIB, and changes to VersaBank’s risk- weighted asset balances and composition.

For more information regarding capital management, please see note 15 to VersaBank’s July 31, 2024, unaudited interim Consolidated Financial Statements as well as the Capital Management and Capital Resources section of VersaBank’s MD&A for the year ended October 31, 2023.

VersaBank - Q3 2024 MD&A

Liquidity

The unaudited Consolidated Statement of Cash Flows for the nine months ended July 31, 2024, shows cash provided by operations in the amount of $119.4 million compared with cash provided by operations in the amount of $65.0 million for the same period last year. The trend in the current period was due primarily to the inflows from operations and deposits raised exceeding outflows to fund loans. The comparative period trend was due primarily to the cash outflows to fund loans exceeding the cash inflows from operations and deposits raised. Based on factors such as liquidity requirements and opportunities for investment in loans and securities, VersaBank may manage the amount of deposits it raises and loans it funds in ways that result in the balances of these items giving rise to either negative or positive cash flow from operations. VersaBank will continue to fund its operations and meet contractual obligations as they become due using cash on hand and by closely managing its flow of deposits.

Interest Rate Sensitivity

The table below presents the duration difference between VersaBank’s assets and liabilities and the potential after-tax impact of a 100-basis point shift in interest rates on VersaBank’s earnings during a 12- month period if no remedial actions are taken. As at July 31, 2024, the duration difference between assets and liabilities was (2.8) months compared with (2.0) months as at October 31, 2023. As at July 31, 2024, VersaBank’s assets would reprice faster than its liabilities in the event of a future change in interest rates.

(thousands of Canadian dollars)

	July 31, 2024						October 31, 2023
		Increase 100 bps			Decrease 100 bps			Increase 100 bps			Decrease 100 bps
Increase (decrease):
Impact on projected net interest income during a 12 month period	$	5,444		$	(5,457	)	$	4,046		$	(4,059	)
During difference between assets and liabilities (months)		(2.8	)					(2.0	)

Contractual Obligations

As at July 31, 2024, VersaBank had an outstanding contract established for asset liability management purposes to swap between fixed and floating interest rates with a notional amount totalling $22.8 million which qualified for hedge accounting. There have been no other significant changes in contractual obligations as disclosed in VersaBank’s MD&A and Audited Consolidated Financial Statements for the year ended October 31, 2023.

VersaBank - Q3 2024 MD&A

Results of Operating Segments


(thousands of Canadian dollars)
For the three months ended	July 31, 2024												April 30, 2024										July 31, 2023
	Digital Banking			DRTC			Eliminations/ Adjustments			Consolidated			Digital Banking		DRTC			Eliminations/ Adjustments			Consolidated		Digital Banking		DRTC			Eliminations/ Adjustments			Consolidated
Net interest income	$	24,944		$	-		$	-		$	24,944		$	26,242	$	-		$	-		$	26,242	$	24,929	$	-		$	-		$	224,929
Non-interest income		175			2,219			(342	)		2,052			262		2,336			(339	)		2,259		101		2,020			(191	)		1,930
Total revenue		25,119			2,219			(342	)		26,996			26,504		2,336			(339	)		28,501		25,030		2,020			(191	)		26,859
Provision for (recovery of) credit losses		(1	)		-			-			(1	)		16		-			-			16		171		-			-			171
		25,120			2,219			(342	)		26,997			26,488		2,336			(339	)		28,485		24,859		2,020			(191	)		26,688
Non-interest expenses:
Salaries and benefits		5,945			1,562			-			7,507			5,724		1,685			-			7,409		5,891		1,562			-			7,453
General and administrative		4,729			446			(342	)		4,833			3,445		451			(339	)		3,557		4,257		380			(191	)		4,446
Premises and equipment		824			370			-			1,194			845		374			-			1,219		610		370						980
		11,498			2,378			(342	)		13,534			10,014		2,510			(339	)		12,185		10,758		2,312			(191	)		12,879
Income (loss) before income taxes		13,622			(159	)		-			13,463			16,474		(174	)		-			16,300		14,101		(292	)					13,809
Income tax provision		3,811			(53	)		-			3,758			4,484		(12	)		-			4,472		3,999		(193	)					3,806
Net income (loss)	$	9,811		$	(106	)	$	-		$	9,705		$	11,990	$	(162	)	$	-		$	11,828	$	10,102	$	(99	)	$	-		$	10,003

Total assets	$	4,507,158		$	27,285		$	(18,007	)	$	4,516,436		$	4,378,863	$	26,980		$	(17,523	)	$	4,388,320	$	3,971,781	$	25,485		$	(16,421	)	$	3,980,845

Total liabilities	$	4,102,239		$	29,471		$	(24,259	)	$	4,107,451		$	3,982,924	$	29,069		$	(23,776	)	$	3,988,217	$	3,609,832	$	29,123		$	(23,153	)	$	3,615,802

(thousands of Canadian dollars)
For the nine months ended	July 31, 2024											July 31, 2023
	Digital Banking			DRTC		Eliminations/ Adjustments			Consolidated			Digital Banking		DRTC			Eliminations/ Adjustments			Consolidated
Net interest income	$	77,754		$	-	$	-		$	77,754		$	73,812	$	-		$	-		$	73,812
Non-interest income		557			7,055		(1,018	)		6,594			225		5,999			(574	)		5,650
Total revenue		78,311			7,055		(1,018	)		84,348			74,037		5,999			(574	)		79,462
Provision for (recovery of) credit losses		(112	)		-		-			(112	)		793		-			-			793
		78,423			7,055		(1,018	)		84,460			73,244		5,999			(574	)		78,669
Non-interest expenses:
Salaries and benefits		17,040			4,414		-			21,454			19,505		4,634			-			24,139
General and administrative		12,450			1,291		(1,018	)		12,723			10,250		1,212			(574	)		10,888
Premises and equipment		2,437			1,129		-			3,566			1,845		1,068			-			2,913
		31,927			6,834		(1,018	)		37,743			31,600		6,914			(574	)		37,940
Income (loss) before income taxes		46,496			221		-			46,717			41,644		(915	)		-			40,729
Income tax provision		12,431			54		-			12,485			11,779		(733	)		-			11,046
Net income (loss)	$	34,065		$	167	$	-		$	34,232		$	29,865	$	(182	)	$	-		$	29,683

Total assets	$	4,507,158		$	27,285	$	(18,007	)	$	4,516,436		$	3,971,781	$	25,485		$	(16,421	)	$	3,980,845

Total liabilities	$	4,102,239		$	29,471	$	(24,259	)	$	4,107,451		$	3,609,832	$	29,123		$	(23,153	)	$	3,615,802

Digital Banking Operations

Q3 2024 vs Q3 2023

Net income decreased 3% to $9.8 million due primarily to higher non-interest expenses, offset partially by higher revenue and lower provision for credit losses.

VersaBank - Q3 2024 MD&A

Q3 2024 vs Q2 2024

Net income decreased 18% due primarily to lower revenues and higher non-interest expenses.

Q3 YTD 2024 vs Q3 YTD 2023

Net income increased 14% due primarily to higher revenues attributable to strong loan growth, a recovery of credit losses, offset partially by higher non-interest expenses.

DRTC (Cybersecurity Services and Banking and Financial Technology Development)

Q3 2024 vs Q3 2023

DRTC reported a net loss of $106,000 compared with net loss of $99,000, due primarily to tax provision adjustments, offset partially by higher revenues attributable to higher gross profit from DBG and intercorporate cybersecurity services provided to Digital Banking.

DBG revenue increased 8% to $2.5 million and gross profit increased 5% to $1.9 million due primarily to higher service engagements in the current quarter.

Q3 2024 vs Q2 2024

DRTC reported a net loss of $106,000 compared with net loss of $162,000 attributable primarily to lower non-interest expenses, offset partially by lower revenues and gross profit from DBG in the current quarter.

DRTC’s DBG services revenue and gross profit decreased 8% and 6%, respectively, due primarily to lower service engagements in the current quarter.

Q3 YTD 2024 vs Q3 YTD 2023

DRTC recorded net income of $167,000 compared with a net loss of $182,000 attributable primarily to higher revenues and gross profit from DBG, higher intercorporate cybersecurity services provided to Digital Banking and lower non-interest expenses.

DRTC’s DBG services revenue and gross profit were 13% and 13%, respectively.

VersaBank - Q3 2024 MD&A

Summary of Quarterly Results

(thousands of Canadian dollars, except per share amounts)	2024									2023												2022
		Q3			Q2			Q1			Q4			Q3			Q2			Q1			Q4
Results of operations:
Interest income	$	71,646		$	71,243		$	69,292		$	66,089		$	60,089		$	53,595		$	49,561		$	42,072
Yield on assets (%)		6.40	%		6.66	%		6.47	%		6.40	%		6.19	%		6.05	%		5.78	%		5.26	%
Interest expense		46,702			45,001			42,724			39,850			35,160			28,986			25,287			19,595
Cost of funds (%)		4.17	%		4.21	%		3.99	%		3.86	%		3.62	%		3.27	%		2.95	%		2.45	%
Net interest income		24,944			26,242			26,568			26,239			24,929			24,609			24,274			22,477
Net interest margin (%)		2.23	%		2.45	%		2.48	%		2.54	%		2.57	%		2.78	%		2.83	%		2.81	%
Net interest margin on loans (%)		2.41	%		2.52	%		2.63	%		2.69	%		2.69	%		2.99	%		3.03	%		3.03	%
Non-interest income		2,052			2,259			2,283			2,934			1,930			2,076			1,644			1,775
Total revenue		26,996			28,501			28,851			29,173			26,859			26,685			25,918			24,252
Provision for (recovery of) credit losses		(1	)		16			(127	)		(184	)		171			237			385			205
Non-interest expenses		13,534			12,185			12,024			12,441			12,879			12,726			12,335			13,774
Efficiency ratio		50	%		43	%		42	%		43	%		48	%		48	%		48	%		57	%
Efficiency ratio - Digital Banking		46	%		38	%		40	%		45	%		43	%		43	%		42	%		51	%
Tax provision		3,758			4,472			4,255			4,437			3,806			3,459			3,781			3,844
Net income	$	9,705		$	11,828		$	12,699		$	12,479		$	10,003		$	10,263		$	9,417		$	6,429
Income per share
Basic	$	0.36		$	0.45		$	0.48		$	0.47		$	0.38		$	0.38		$	0.34		$	0.23
Diluted	$	0.36		$	0.45		$	0.48		$	0.47		$	0.38		$	0.38		$	0.34		$	0.23
Return on average common equity		9.63	%		12.36	%		13.41	%		13.58	%		11.15	%		12.07	%		10.79	%		7.32	%
Return on average total assets		0.85	%		1.08	%		1.16	%		1.19	%		1.00	%		1.13	%		1.07	%		0.77	%

The financial results for each of the last eight quarters are summarized above. Key drivers of VersaBank’s sequential performance trends for the current reporting period were:

Lending asset growth attributable to continued growth in the POS/RPP Financing portfolio;

Lower NIM attributable primarily to lower yields earned on the Bank’s lending assets and higher cost of funds (with higher cost of funds over the most recent 12 months due largely to higher rates on term deposits);

Provision for credit losses trend attributable primarily to changes in the forward-looking information used by the Bank in its credit risk models; and,

Higher non-interest expense attributable primarily to higher professional fees attributable to the continuing regulatory approval process associated with VersaBank’s acquisition of a US bank, a favourable adjustment in compensation obligations in the comparable quarter and higher general operating costs consistent with increased business activities.

Subsequent Event

Acquisition of Stearns Bank Holdingford, N.A.

On August 30, 2024 the Bank through its wholly owned US subsidiary VersaHoldings US Corp., acquired 100% of the outstanding shares of shares of Minnesota-based SBH, a privately held, wholly owned subsidiary of "SFSI" based in St. Cloud, Minnesota, for cash consideration of approximately US$14.0 million (CA$19.3 million), subject to closing related adjustments. SBH is a fully operational, OCC-chartered

VersaBank - Q3 2024 MD&A

national bank, focused on small business lending. The acquisition follows the approval for acquisition received in June 2024 from OSFI, as well as the US’s OCC and the US Federal Reserve.

Upon the close of the share acquisition of SBH, the Bank acquired approximately US$61.1 million in assets and assumed approximately US$54.1 million in deposits and other liabilities and renamed SBH as VersaBank USA. The acquisition will provide the Bank with access to U.S. deposits to support the growth of its Receivable Purchase Program business, which the Bank launched in Fiscal 2022. The acquisition is expected to be accretive to the Bank’s earnings per share within the first year after closing; and, VersaBank USA was well capitalized, as per the OCC’s definition of same, with a Total Capital ratio in excess of 10% as at August 30, 2024.

Non-GAAP and Other Financial Measures

Non-GAAP and other financial measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements of the Bank to which these measures relate. These measures may not be comparable to similar financial measures disclosed by other issuers. The Bank uses these financial measures to assess its performance and as such believes these financial measures are useful in providing readers with a better understanding of how management assesses the Bank’s performance.

Non-GAAP Measures

Return on Average Common Equity is defined as annualized net income less amounts relating to preferred share dividends, divided by average common shareholders’ equity which is average shareholders’ equity less amounts relating to preferred shares recorded in equity.

	For the three months ended						For the nine months ended
(thousands of Canadian dollars)	July 31, 2024			July 31, 2023			July 31, 2024			July 31, 2023

Return on average common equity
Net income	$	9,705		$	10,003		$	34,232		$	29,683
Preferred share dividends		(247	)		(247	)		(741	)		(741	)
Adjusted net income		9,458			9,756			33,491			28,942
Annualized adjusted net income		37,626			38,706			44,736			38,695
Average common equity	$	390,898		$	.347,135		$	379,425		$	344,213
Return on average common equity		9.63	%		11.15	%		11.79	%		11.24	%

Book Value per Common Share is defined as Shareholders’ Equity less amounts relating to preferred shares recorded in equity, divided by the number of common shares outstanding.

	As at
(thousands of Canadian dollars, except shares outstanding and per share amounts)	July 31, 2024		July 31, 2023
Book value per common share
Common equity	$	395,338	$	351,396
Shares outstanding		25,964,424		25,924,424
Book value per common share	$	15.23	$	13.55

VersaBank - Q3 2024 MD&A

Return on Average Total Assets is defined as annualized net income less amounts relating to preferred share dividends, divided by average total assets.


	For the three months ended						For the nine months ended
(thousands of Canadian dollars)	July 31, 2024			July 31, 2023			July 31, 2024			July 31, 2023
Return on average total assets
Net income	$	9,705		$	10,003		$	34,232		$	29,683
Preferred share dividends		(247	)		(247	)		(741	)		(741	)
Adjusted net income		9,458			9,756			33,491			28,942
Annualized adjusted net income		37,626			38,706			44,736			38,695
Average assets	$	4,452,378		$	.3,855,119		$	4,359,023		$	3,623,422
Return on average common assets		0.85	%		1.00	%		1.03	%		1.07	%

Other Financial Measures

Yield is calculated as interest income (as presented in the Consolidated Statements of Comprehensive Income) divided by average total assets. Yield does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.

Cost of Funds is calculated as interest expense (as presented in the Consolidated Statements of Comprehensive Income) divided by average total assets. Cost of funds does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.

Net Interest Margin or Spread are calculated as net interest income divided by average total assets. Net interest margin or spread does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.

Net Interest Margin on Loans is calculated as net interest income adjusted for the impact of cash. securities and other assets, divided by average gross loans. This metric does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.

Efficiency Ratio is calculated as non-interest expenses from consolidated operations as a percentage of total revenue (as presented in the interim Consolidated Statements of Comprehensive Income). This ratio does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.

Efficiency Ratio Digital Banking is calculated as non-interest expenses from the Digital Banking operations as a percentage of total revenue from the Digital Banking operations. This ratio does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.

VersaBank - Q3 2024 MD&A

Provision for (Recovery of) Credit Losses as a Percentage of Average Total Loans captures the provision for (recovery of) credit losses (as presented in the interim Consolidated Statements of Comprehensive Income) as a percentage of VersaBank’s average loans, net of allowance for credit losses. This percentage does not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other financial institutions.

Basel III Common Equity Tier 1, Tier 1, Total Capital Adequacy and Leverage Ratios are determined in accordance with guidelines issued by the Office of the Superintendent of Financial Institutions (Canada) (OSFI).

Significant Accounting Policies and Use of Estimates and Judgements

Significant accounting policies and use of estimates and judgements are detailed in note 2 and note 3 of VersaBank’s 2023 Audited Consolidated Financial Statements. There have been no material changes in accounting policies since October 31, 2023.

Controls and Procedures

During the quarter ended July 31, 2024, there were no changes in VersaBank’s internal controls over financial reporting, that have materially affected, or are reasonably likely to materially affect VersaBank’s internal controls over financial reporting.

Additional Information

Additional information regarding VersaBank, including its Annual Information Form for the year ended October 31, 2023, is available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.

VersaBank - Q3 2024 MD&A

Exhibit 4.7

FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1

Name and Address of Company

VersaBank

2002 – 140 Fullarton Street

London, Ontario
N6A 5P2

Item 2

Date of Material Change

October 31, 2024

Item 3

News Release

A news release describing the material change was issued on September 25, 2024 through the facilities of Canada News Wire and subsequently filed on SEDAR+.

Item 4

Summary of Material Change

VersaBank (the “Bank”) announced that it intends to redeem all outstanding Non-cumulative 5-Year Rate Reset Preferred Shares, Series 1 (Non-Viability Contingent Capital (NVCC)) ("Series 1 Preferred Shares") of the Bank on October 31, 2024 (the “Redemption Date”).

Item 5

Full Description of Material Change

5.1

Full Description of Material Change

VersaBank redeemed all outstanding Series 1 Preferred Shares of the Bank on October 31, 2024 at a price equal to $10.00 per share (the “Redemption Price”) together with all declared and unpaid dividends to the Redemption Date. Dividends were paid separately from the Redemption Price.

The redemption was approved by the Office of the Superintendent of Financial Institutions and was financed out of the general funds of the Bank.

5.2

Disclosure for Restructuring Transactions

Not Applicable

Item 6

Reliance on subsection 7.1(2) of National Instrument 51-102

Not Applicable.

-2-

Item 7

Omitted Information

Not Applicable.

Item 8

Executive Officer

For further information, please contact:

David Taylor

President & Chief Executive Officer

Telephone No: (519) 675-4216

Item 9

Date of Report

October 31, 2024

Exhibit 5.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form F-10) of VersaBank for the registration of Debt Securities (unsubordinated indebtedness), Debt Securities (subordinated indebtedness), Common Shares, Preferred Shares, Subscription Receipts, and Warrants, of our report dated December 12, 2023 with respect to the consolidated financial statements of VersaBank as of and for the year ended October 31, 2023, included as Exhibit 99.2 in its Annual Report on Form 40-F filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Chartered Professional Accountants

Licensed Public Accountants

London, Canada

November 7, 2024

Exhibit 5.2

Consent of Independent Registered Public Accounting Firm

The Board of Directors

VersaBank (the “Bank”)

We consent to the use of our report dated December 6, 2022, on the consolidated financial statements of the Bank, which comprise the consolidated balance sheet as at October 31, 2022, the consolidated statements of income and comprehensive income, changes in equity and cash flows for the year then ended, and the related notes, which is incorporated by reference in the Registration Statement on Form F-10 dated November 7, 2024 of the Bank.

/s/ KPMG LLP

Chartered Professional Accountants, Licensed Public Accountants

November 7, 2024

Toronto, Canada

Exhibit 5.3

CONSENT OF LEGAL COUNSEL

Re: Registration Statement on Form F-10 of VersaBank.

We refer to the registration statement on Form F-10 dated November 7, 2024 (the “Registration Statement”) of VersaBank to which this consent is exhibited. We hereby consent to the references to this firm on the cover page of the Registration Statement and under the headings “Legal Matters” and “Documents Filed as Part of the Registration Statement.” In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under the U.S. Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder.

Yours truly,

/s/ Stikeman Elliott LLP

STIKEMAN ELLIOTT LLP

Toronto, Ontario, Canada

November 7, 2024

Exhibit 107

Calculation of Filing Fee Tables

Form F-10

(Form Type)

VersaBank

(Exact Name of Registrant as Specified in Its Charter)

Table 1: Newly Registered Securities

	Security Type	Security Class Title	Fee Calculation or Carry Forward Rule	Amount Registered	Proposed Maximum Offering Price Per Unit	Maximum Aggregate Offering Price	Fee Rate	Amount of Registration Fee
Fees to Be Paid	Unallocated (Universal) Shelf	Debt Securities (unsubordinated and subordinated), Common Shares, Preferred Shares, Subscription Receipts and Warrants	Rule 457(o)	$200,000,000⁽¹⁾	(1)	$200,000,000⁽¹⁾⁽²⁾	0.00015310	$30,620
Fees Previously Paid	N/A	N/A	N/A	N/A	N/A	N/A		N/A
	Total Offering Amounts					$200,000,000		$30,620
	Total Fees Previously							N/A
	Total Fee Offsets							N/A
	Net Fee Due							$30,620

(1)

There are being registered under this Registration Statement such indeterminate number of Debt Securities (unsubordinated and subordinated indebtedness), Common Shares, Preferred Shares, Subscription Receipts, Warrants or a combination of such securities of the Registrant, as may be sold by the Registrant from time to time, which collectively shall have an aggregate initial offering price not to exceed US$200,000,000. The securities registered hereunder also include such indeterminate number of each class of identified securities as may be issued upon conversion, exercise or exchange of any other securities that provide for such conversion into, exercise for or exchange into such securities. Separate consideration may or may not be received for the securities that are issuable on exercise, conversion or exchange of other securities. In addition, pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the Common Shares being registered hereunder include such indeterminate number of Common Shares as may be issuable with respect to the Common Shares being registered hereunder as a result of stock splits, stock dividends, distributions or similar transactions. The proposed maximum initial offering price per security will be determined, from time to time, by the Registrant in connection with the sale of the securities under this Registration Statement.

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act with respect to the securities to be sold by the Registrant.

VersaBank (NASDAQ:VBNK)
Historical Stock Chart
From Oct 2024 to Nov 2024

VersaBank (NASDAQ:VBNK)
Historical Stock Chart
From Nov 2023 to Nov 2024

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

VBNK VersaBank

VersaBank News

Your Recent History

Company

Business

Popular

Get The App

Trending Now

Toplists

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

VBNK VersaBank

VersaBank News

Your Recent History

Company

Business

Popular

Get The App