As filed with the U.S. Securities and Exchange Commission on July 29, 2026.

Registration No. 333-296444​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549​

Amendment No. 2
to

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Versa Bancorp

(Exact Name of Registrant as Specified in Its Charter)​

250 Nicollet Mall, Suite 720
Minneapolis, Minnesota_55401

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)​

The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(302) 658-7581

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)​

Copies to:

Approximate date of commencement of proposed sale to the public:   As soon as practicable after the effective date of this registration statement and the consummation of the transactions described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This preliminary Management Information Circular/Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

PRELIMINARY MANAGEMENT INFORMATION CIRCULAR/PROSPECTUS
SUBJECT TO COMPLETION, DATED JULY 29, 2026

MANAGEMENT INFORMATION CIRCULAR OF VERSABANK
AND PROSPECTUS OF VERSA BANCORP

PROPOSED REORGANIZATION — YOUR VOTE IS VERY IMPORTANT

To VersaBank shareholders:

This management information circular (the “Management Circular”) is furnished in connection with the solicitation of proxies by the management of VersaBank, a Canadian Schedule I chartered bank (“VersaBank”), for use at the special meeting of shareholders (the “Meeting”). The Meeting will be held in person at 1979 Otter Place, London, Ontario on September 16, 2026, at 10:30 a.m. ET for the purposes set forth below and in the accompanying Notice of Special Meeting of Shareholders.

The purpose of the Meeting is to (i) obtain shareholder approval to effect a reorganization that would, among other things, cause Versa Bancorp, a Delaware corporation (the “Parent”), to become the holding company of VersaBank and its subsidiaries (the “Reorganization”) and (ii) transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.

In summary, under the proposed terms of the Reorganization, VersaBank will adopt an amendment to its by-laws and effect certain transactions to exchange all of its outstanding shares on a one-for-one basis into an equivalent number of shares of the Parent (the “Share Exchange”) as a result of which the Parent will become a holding company that will succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests. Following the Share Exchange, VersaBank will complete an internal reorganization that will result in VersaHoldings US Corp. and VersaBank becoming a direct subsidiary of the Parent.

VersaBank’s shares are currently traded on the Toronto Stock Exchange (“TSX”) and the Nasdaq Global Select Market (“Nasdaq”) under the symbol “VBNK”. The TSX has conditionally approved the listing of the Parent’s shares. Listing is subject to fulfilling all of the listing requirements of the TSX. The Parent intends to file a Company Event Notification with Nasdaq to notify Nasdaq of a Substitution Listing Event relating to the Reorganization and to assume the ticker symbol “VBNK” currently used by VersaBank. Shortly after completion of the Share Exchange, VersaBank shares will be delisted from the TSX and Nasdaq. In addition, following the Reorganization, (x) Parent will become the successor issuer to VersaBank pursuant to Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (y) VersaBank may apply to cease to be a reporting issuer in all jurisdictions in Canada in which it is a reporting issuer and terminate its reporting obligations in Canada.

The Reorganization is intended to enhance shareholder value over the long term by, among other things, increasing investor familiarity through U.S. domestic company reporting requirements and potential future index inclusion, and enabling VersaBank to compete effectively in raising the capital necessary to implement its strategic plans.

The proposal for the Reorganization is subject to the approval of not less than two-thirds of the votes cast by the holders of VersaBank’s outstanding shares, whether in person or by proxy at the Meeting. The board of directors of VersaBank has reserved the right to terminate or abandon the Reorganization at any time prior to its effectiveness, notwithstanding shareholder approval, if, among other things, it determines for any reason that the consummation of the Reorganization would not be advisable or in the best interests of VersaBank’s shareholders.

Pursuant to Section 277 of the Bank Act (Canada) (the “Bank Act”) and the reorganization agreement to be entered into by and between VersaBank and the Parent, which is attached to this Management Circular as Annex E (the “Reorganization Agreement”), registered holders of VersaBank shares have a right to dissent in respect of the Reorganization. If the Reorganization is completed and the dissent right has been validly exercised by registered holders, such holders are entitled to be paid an amount equal to the fair value of their VersaBank shares. A registered holder of VersaBank shares who wishes to dissent must ensure

that a written notice of objection to the Reorganization is sent to VersaBank, 140 Fullarton Street, Suite 2002, London, Ontario N6A 5P2, c/o Stikeman Elliott LLP, 199 Bay Street, Suite 5300, Commerce Court West, Toronto, Ontario M5L 1B9, Attention: Jeffrey M. Singer and Jeff Hershenfield, at or prior to the Meeting, and must otherwise strictly comply with the dissent procedures described in this Management Circular.

Beneficial owners of VersaBank shares who wish to dissent should be aware that only registered holders are entitled to dissent. Accordingly, beneficial owners that wish to dissent must make arrangements to either (i) become registered holders prior to the time a written objection to the Reorganization must be received by VersaBank or (ii) have the registered holders of their shares exercise the right to dissent on their behalf. It is strongly recommended that any VersaBank shareholder that wishes to exercise the right to dissent seek independent legal advice. Failure to strictly comply with the requirements set forth in Section 277 of the Bank Act may result in the loss or unavailability of the right to dissent with respect to the Reorganization. See “Appraisal and Dissenters’ Rights of VersaBank Shareholders” and Annex F to this Management Circular.

Your vote is very important. Whether or not you plan to attend the Meeting, please take appropriate action to make sure your shares are represented at the Meeting.

The board of directors of VersaBank unanimously recommends that you vote “FOR” the Reorganization. This Management Circular provides you with detailed information about the Reorganization to be considered at the Meeting. We urge you to read this Management Circular carefully. In particular, you should review the matters discussed in the section entitled “Risk Factors” beginning on page 26 of this Management Circular.

The Reorganization may have different tax consequences for VersaBank shareholders that reside in Canada and the United States. You are urged to carefully read the sections entitled “Certain Canadian Federal Income Tax Considerations” and “U.S. Federal Income Tax Considerations”, as applicable, and to consult with your own tax advisors.

If you are a VersaBank shareholder and have any questions regarding the information contained in this Management Circular or require assistance in completing your form of proxy or voting instruction form, please contact Odyssey Trust Company, by telephone at 1-888-290-1175 (toll-free in North America) or at 1-612-482-5100 (call enabled outside of North America), or by email at shareholders@odysseytrust.com.

This Management Circular is also a prospectus under U.S. securities laws that covers the registration under the Securities Act of 1933, as amended, of the issuance of up to 32,693,689 shares of common stock of the Parent upon consummation of the Reorganization. This Management Circular is not a prospectus for purposes of the securities laws of any province or territory of Canada, and no securities regulatory authority or commission in Canada has reviewed or approved its contents.

Neither the Securities and Exchange Commission nor any state securities commission, or any similar authority in any province or territory of Canada, has approved or disapproved of these securities or determined if the Management Circular is truthful or complete. Any representation to the contrary is a criminal offense.

We appreciate your continued interest in VersaBank.

Dated as of July 29, 2026

Frank J.C. Newbould
Chairman of the Board

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
AND
MANAGEMENT INFORMATION CIRCULAR

September 16, 2026

LONDON, ONTARIO

 

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
September 16, 2026

TAKE NOTICE that the Special Meeting of Shareholders (the “Meeting”) of VersaBank, a Canadian Schedule I chartered bank (“VersaBank”), will be held at 1979 Otter Place, London, Ontario on September 16, 2026, at 10:30 a.m. ET to:

(1)

consider and, if deemed advisable, vote to approve a special resolution of VersaBank (the “Reorganization Resolution”), the full text of which is set forth in Annex A to the accompanying management information circular (the “Management Circular”), to cause, among other things, Versa Bancorp, a Delaware corporation (the “Parent”), to become a holding company that will succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests (the “Reorganization Proposal”); and

​

(2)

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

​

The board of directors of VersaBank has fixed August 10, 2026, as the record date for determining shareholders entitled to receive notice of and to vote at the Meeting or any adjournment or postponement thereof. Whether or not you plan to attend the Meeting, we urge you to read the Management Circular carefully.

You are encouraged to complete the form of proxy accompanying this Notice of Meeting and return it to VersaBank’s transfer agent, Odyssey Trust Company, in accordance with the instructions provided in the form of proxy. Failure to submit your form of proxy by 10:30 a.m. ET on September 14, 2026, may result in your shares not being voted at the Meeting.

If you have received this Notice of Meeting and the Management 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 very important. Whether or not you plan to attend the Meeting, please take appropriate action to make sure your shares are represented at the Meeting.

The board of directors of VersaBank unanimously recommends that you vote “FOR” the Reorganization.

DATED at the City of London, in the Province of Ontario, this 29th day of July 2026.

By order of the board of directors,

Frank J.C. Newbould
Chairman of the Board

 

 

TABLE OF CONTENTS

 

i

 

 

ii

 

ABOUT THIS MANAGEMENT INFORMATION CIRCULAR AND PROSPECTUS

This Management Information Circular/Prospectus (this “prospectus/circular”) forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Versa Bancorp, a Delaware corporation (the “Parent”) and VersaBank, a Canadian Schedule I chartered bank (“VersaBank”), and relates to the shares of common stock of the Parent to be issued to VersaBank’s shareholders upon consummation of the Share Exchange (as defined and described in further detail in this prospectus/circular). It also constitutes a notice of meeting with respect to the special meeting of VersaBank’s shareholders to be held on September 16, 2026, at 10:30 a.m. ET (the “Meeting”). VersaBank and the Parent have not authorized anyone to provide you with any information other than the information that is contained in this prospectus/circular. VersaBank and the Parent take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. You should not assume that the information contained in this prospectus/circular is accurate as of any date other than the date of this prospectus/circular. Neither the mailing of this prospectus/circular to VersaBank’s shareholders, nor the issuance by the Parent of shares of its common stock in connection with the Reorganization as described in this prospectus/circular, will create any implication to the contrary. This prospectus/circular does not constitute an offer to sell or the solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. This document is not a prospectus for purposes of the securities laws of any province or territory of Canada, and no securities regulatory authority or commission in Canada has reviewed or approved its contents.

BASIS OF FINANCIAL STATEMENT PRESENTATION

Following the effectiveness of the registration statement of which this prospectus/circular forms a part, VersaBank intends, subject to the approval of VersaBank’s shareholders and regulatory and stock exchange approvals, including the U.S. Federal Reserve Approvals (defined below) and the Bank Act Approvals (defined below), to (i) exchange all of its outstanding shares on a one-for-one basis into an equivalent number of shares of the Parent, as a result of which the Parent will become a holding company that will succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests and (ii) effect certain related corporate reorganization transactions as described in this prospectus/circular (the “Reorganization”). The Parent, which was incorporated as a Delaware corporation solely to facilitate the Reorganization, will be the issuer of the shares of common stock that are the subject of the registration statement on Form S-4 of which this prospectus/circular forms a part.

Following the consummation of the Reorganization, the Parent will be a U.S. reporting issuer subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and will be a reporting issuer in each of the provinces and territories of Canada. The Parent will be a holding company, and VersaBank will be the predecessor of the Parent for financial reporting purposes. The Parent’s principal assets will be its (i) direct ownership of (a) shares of VersaBank, (b) shares of VersaHoldings US Corp. and (ii) indirect ownership of shares of DRT Cyber Inc. (“DRTC”). As a result, the Parent will consolidate VersaBank on its consolidated financial statements. See “Proposed Organizational Structure”.

Accordingly, the registration statement of which this prospectus/circular forms a part includes certain unaudited and audited annual financial statements of VersaBank, as the accounting predecessor to the Parent. Our financial statement periods presented for the three and six months ended April 30, 2026, and the years ended October 31, 2025 and 2024, within the registration statement and any amendments thereto are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

In this prospectus/circular, unless otherwise stated or the context otherwise requires, “Company”, “we”, “us”, “our” and similar references refer (i) prior to the consummation of the Reorganization, to VersaBank and its consolidated subsidiaries and (ii) subsequent to the consummation of the Reorganization, to the Parent and its consolidated subsidiaries.

 

iii

 

CURRENCY AND EXCHANGE RATES

In this prospectus/circular, all references to “$” and “USD” mean U.S. dollars, and all references to “C$” and “CAD” mean Canadian dollars. Any conversion from U.S. dollars to Canadian dollars (or vice versa) has been determined by converting such currencies at the foreign exchange rate published by Tullett Prebon as of the date indicated. Except as otherwise indicated, all dollar amounts in this prospectus/circular are expressed in U.S. dollars.

The following table presents, for the periods and dates indicated, certain information regarding the exchange rate expressed in U.S. dollar to Canadian dollar. The information is based on Tullett Prebon’s daily average exchange rate. Such exchange rate on June 30, 2026 was $0.7044 to C$1.00.

(1)

The average of the daily exchange rates during the relevant period.

​

NON-GAAP MEASURES

This prospectus contains certain financial measures, including return on average common equity, adjusted return on average common equity, tangible book value per common share, book value per common share, return on average total assets, adjusted net income and adjusted earnings per common share that are not required by, or prepared in accordance with, GAAP. We refer to these measures as “non-GAAP” financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” for our definitions of these non-GAAP measures, information about how and why we use these non-GAAP measures and a reconciliation of each of these non-GAAP measures to its most directly comparable financial measure calculated in accordance with GAAP. You should be aware that our presentation of these and other non-GAAP financial measures in this prospectus or incorporated by reference herein may not be comparable to similarly titled measures used by other companies.

INDUSTRY AND MARKET DATA

This prospectus/circular includes industry and market data that we obtained from periodic industry publications, third-party studies, surveys and other publicly available information. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe the industry and market data to be reliable as of the date of this prospectus/​circular, this information could prove to be inaccurate. Industry and market data could be inaccurate

 

iv

 

because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Nonetheless, we are liable for the information included in this prospectus/circular. None of the publications, reports or other published industry sources referred to in this prospectus/circular were commissioned by us or prepared at our request, and as such, we have not sought or obtained the consent of any of these sources to include such market data in this prospectus/circular.

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

This prospectus includes our trademarks, service marks and trade names such as VersaBank and the VersaBank logo, which are protected under applicable intellectual property laws and are our property or the property of our subsidiaries. This prospectus may also contain trademarks, service marks and trade names of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks or trade names to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are listed without the ®, sm and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks and trade names.

PRESENTATION OF SHARE CAPITAL

Unless otherwise indicated or the context otherwise requires, in this prospectus/circular the number of common shares of VersaBank, and the number of shares of common stock of the Parent to be outstanding following the consummation of the Reorganization, is based on VersaBank’s outstanding securities as of July 24, 2026, and excludes:

•

281,276 common shares issuable upon the exercise of options outstanding under VersaBank’s equity compensation plan as of July 24, 2026; and

​

•

1,087,131 additional common shares reserved for future issuance under VersaBank’s equity compensation plan, consisting of 216,793 shares available for future option grants and 870,338 for DSU, PSU and RSU grants as of July 24, 2026.

​

See “Description of Capital Stock” for more information.

WHERE YOU CAN FIND MORE INFORMATION

The Parent and VersaBank have filed with the SEC a registration statement on Form S-4 (File No. 333-296444) (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”) with respect to the transactions described herein. This prospectus/circular, which constitutes part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits thereto. For further information about VersaBank, the Parent and such transactions, we refer you to the Registration Statement and the exhibits filed as part of the Registration Statement. Statements contained in this prospectus/circular as to the contents of any contract or other document referred to are not necessarily complete. If a contract or document has been filed as an exhibit to the Registration Statement, we refer you to the copy of the contract or document that has been filed as an exhibit to the Registration Statement, and each statement about such contract or document is qualified in all respects by such reference.

As a result of the Reorganization, the Parent will become a U.S. reporting issuer subject to Section 13 or 15(d) of the Exchange Act and will be required to file periodic reports and other information with the SEC. The SEC maintains an internet website that contains reports, proxy statements and other information about issuers, like the Parent, that file such reports, proxy statements and other information electronically with the SEC. The address of that website is www.sec.gov. Following the consummation of the Reorganization, you can also obtain these documents, free of charge, from our website at www.versabank.com. The information contained on, or that may be accessed through, the Company’s website is not incorporated by

 

v

 

reference into, and is not a part of, this prospectus/circular, and the Parent’s reports and any other information that the Parent has filed or may in the future file with the SEC are not incorporated by reference into, and do not constitute a part of, this prospectus/circular or the Registration Statement.

VersaBank also files annual, quarterly and material change reports, management circulars and other business and financial information with the applicable members of the Canadian Securities Administrators System for Electronic Document Analysis and Retrieval+ (“SEDAR+”) at www.sedarplus.ca. The information contained on, or that may be accessed through, SEDAR+ is not incorporated by reference into, and is not a part of, this prospectus/circular. Following the consummation of the Reorganization, the Parent will be a reporting issuer in each of the provinces and territories of Canada, and VersaBank may apply to the applicable Canadian securities regulatory authorities to cease to be a reporting issuer in each province and territory in which it is currently a reporting issuer once it is eligible to do so. Until such time as the applicable securities regulatory authorities grant such relief, VersaBank will remain a reporting issuer in each province and territory in which it is currently a reporting issuer.

In addition, you may obtain copies of this prospectus/circular and any such documents filed as an exhibit to the Registration Statement for no charge by writing or telephoning the Company, as applicable, at the following address or telephone number:

For timely delivery, you must request additional copies of this prospectus/circular or any other materials no later than five business days prior to the Meeting, or September 9, 2026.

 

vi

 

QUESTIONS & ANSWERS ABOUT THE REORGANIZATION

The following questions and answers briefly address some commonly asked questions related to the Reorganization, including the proposals to be presented at the Meeting. The following questions and answers may not include all of the information that may be important to you and that you should consider in making a decision with respect to the proposals described herein. Additionally, the following questions and answers, as well as the summary section that follows, are not meant to be a substitute for the information contained in the remainder of this prospectus/circular, and this information is qualified in its entirety by the more detailed descriptions and explanations contained elsewhere in this prospectus/circular. You are urged to carefully read the remainder of this prospectus/circular, including the attached annexes. You should pay special attention to the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.

General Questions & Answers for VersaBank Shareholders

Q:

Why are VersaBank shareholders receiving this prospectus/circular?

​

A:

VersaBank shareholders are receiving this prospectus/circular because they are being asked to consider and vote upon a proposal to approve certain reorganization transactions that, among other things, would cause the Parent to become the holding company of VersaBank and its subsidiaries and to succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests, as described in this prospectus/circular. This prospectus/circular is furnished to VersaBank shareholders in connection with the solicitation of proxies by VersaBank management for use at the Meeting.

​

In addition, pursuant to the Registration Statement of which this prospectus/circular forms a part, the Parent is registering the issuance of the shares of its common stock that will ultimately be held by VersaBank shareholders upon completion of the Reorganization.

This prospectus/circular and its annexes contain important information about the transactions described herein. You should read this prospectus/circular, including the attached annexes, carefully and in its entirety.

YOUR VOTE IS IMPORTANT. IF YOU ARE A VERSABANK SHAREHOLDER, YOU ARE ENCOURAGED TO SUBMIT YOUR PROXY AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROSPECTUS/CIRCULAR, INCLUDING THE ATTACHED ANNEXES.

Q:

What is the Reorganization?

​

A:

Subject to the approval of VersaBank shareholders, VersaBank is proposing to effectuate a series of transactions that would cause the Parent to succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests, thereby domesticating the Company as a U.S. reporting issuer incorporated in Delaware.

​

In summary, under the proposed terms of the Reorganization, among other things, VersaBank will adopt an amendment to its by-laws and effect certain transactions to exchange all of VersaBank’s outstanding shares for shares of the Parent (the “Share Exchange”). Following the Share Exchange, VersaBank will sell all of its shares of VersaHoldings US Corp. to the Parent in exchange for a promissory note equal to the aggregate fair market value of such shares (the “Versa Bancorp Note”), which will be subsequently distributed to the Parent as a return of capital.

VersaBank’s shares are currently traded on the Toronto Stock Exchange (the “TSX”) and the Nasdaq Global Select Market (“Nasdaq”) under the symbol “VBNK.” The TSX has conditionally approved the listing of the Parent’s shares. Listing is subject to fulfilling all of the listing requirements of the TSX. The Parent intends to file a Company Event Notification with Nasdaq to notify Nasdaq of a Substitution Listing Event relating to the Reorganization and to assume the ticker symbol “VBNK” currently used by VersaBank. Shortly after completion of the Share Exchange, VersaBank shares will be delisted from the TSX and Nasdaq. In addition, following the Reorganization, (x) Parent will become the successor issuer to VersaBank pursuant to Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (y) VersaBank may apply to cease to be a reporting issuer in all jurisdictions in Canada in which it is a reporting issuer and terminate its reporting obligations in Canada.

 

1

 

Q:

Does the board of directors of VersaBank recommend that I vote “FOR” the Reorganization Proposal?

​

A:

Yes. The board of directors of VersaBank unanimously recommends that VersaBank shareholders vote for “FOR” the Reorganization Proposal.

​

Q:

How will VersaBank’s directors and executive officers vote?

​

A:

It is expected that each of VersaBank’s directors and executive officers will vote “FOR” the Reorganization Proposal. As of the close of business on July 24, 2026, VersaBank’s directors and executive officers had the right to vote 1,748,025 shares, representing approximately 5.39% of VersaBank shares then outstanding and entitled to vote at the Meeting.

​

Q:

Why is VersaBank proposing the Reorganization?

​

A:

The board of directors of VersaBank believes that the Reorganization will enhance shareholder value over the long term by, among other things, increasing investor familiarity through U.S. domestic company reporting requirements and potential future index inclusion, and enabling VersaBank to compete effectively in raising the capital necessary to implement its strategic plans, as described in the section entitled “The Reorganization Proposal — Principal Reasons for the Reorganization”.

​

Q:

What will I receive from my VersaBank shares if the Reorganization is completed?

​

A:

If the Reorganization is completed, each VersaBank share will be exchanged for an Exchangeable Share (as defined below) on a one-for-one basis. Immediately following the conversion of each VersaBank share into the Exchangeable Shares, the Exchangeable Shares will be transferred automatically to the Parent for:

​

(i)

an equivalent number of newly issued shares of common stock of the Parent on a one-for-one basis, other than those Exchangeable Shares issued upon the consummation of the Reorganization that are held by a registered shareholder who properly exercises their dissent rights (such shares, the “Dissent Shares” and such shareholder, the “Dissenting Shareholder”); or

​

(ii)

the right to be paid fair value for Exchangeable Shares, in the case of Exchangeable Shares that are Dissent Shares.

​

Q:

How do I receive shares of the Parent in exchange for my shares of VersaBank?

​

A:

Enclosed with this prospectus/circular is a Letter of Transmittal, which is being delivered to all of VersaBank’s registered shareholders as of the Record Date as recorded on VersaBank’s share register (each, a “Registered Shareholder”). The Letter of Transmittal, when duly completed, executed and returned to Odyssey Trust Company, together with the certificate or certificates representing the holder’s VersaBank shares and any other required documents, will enable the holder of VersaBank shares to receive shares of the Parent on a one-for-one basis.

​

Q:

Is the Reorganization subject to any approvals?

​

A:

Yes. In addition to shareholder approval, the Reorganization is subject to regulatory and stock exchange approvals.

​

In the United States, the Reorganization must be approved by the U.S. Federal Reserve. The Parent must receive U.S. Federal Reserve approval under Section 3 of the Bank Holding Company Act of 1956, as amended (the “BHC Act”), to acquire the shares of VersaBank USA. The Parent must also receive U.S. Federal Reserve approval under Section 4 of the BHC Act to acquire indirectly the shares of VersaFinance US Corp. and under Subpart A of the U.S. Federal Reserve’s Regulation K to hold VersaBank as a foreign subsidiary. In addition, GBH, Inc. (“GBH”), which beneficially owned 24.34% of VersaBank’s shares as of July 24, 2026, must receive U.S. Federal Reserve approval under Section 3 of the BHC Act to acquire shares of Parent if GBH will “control” Parent following the Reorganization. Applications for U.S. Federal Reserve Approval under Sections 3 and 4 of the BHC Act and Subpart

 

2

 

A of Regulation K are expected to be submitted on August 14, 2026. For further information see “The Reorganization Proposal — Certain U.S. Regulatory Matters”.

In Canada, Part VII of the Bank Act sets out constraints on the ownership of banks. Specifically, Section 373(1) of the Bank Act states that no person, or entity controlled by a person, shall, without the approval of the Minister of Finance (Canada), purchase or otherwise acquire any share of a bank, or otherwise acquire control of any entity that holds any share of a bank, if the acquisition would cause the person to have a significant interest in any class of shares of the bank. “Significant interest” is defined in the Bank Act as directly holding greater than 10% of the outstanding shares of a class of shares of a bank or controlling an entity that does. In addition, Section 377.1(1) of the Bank Act states that no person shall, without the approval of the Minister of Finance (Canada), acquire control of a bank with equity of less than C$12 billion. The Reorganization will include an acquisition of a significant interest in, and control of, VersaBank by the Parent. As a result, an application under Sections 373(1) and 377.1(1) of the Bank Act was submitted on May 8, 2026. See “Bank Regulatory Approvals  — Bank Act Approvals — Minister of Finance (Canada)”.

Additionally, the approval of the Superintendent of Financial Institutions (Canada) (the “Superintendent”) will be required for VersaBank pursuant to Section 494(4) of the Bank Act for VersaBank to enter into related-party asset transactions as part of a restructuring in respect of its sale of issued and outstanding shares of VersaHoldings US Corp. to the Parent in exchange for the Versa Bancorp Note. In addition, approval of the Superintendent will be required for VersaBank pursuant to Section 65(1) of the Bank Act for VersaBank to issue shares in consideration of property in connection with the conversion of VersaBank’s common shares into the Exchangeable Shares. Finally, approval of the Superintendent will be required pursuant to Section 75(4) of the Bank Act for VersaBank to reduce its stated capital and distribute the amount of such reduction as a return of capital to the Parent following the Share Exchange. As a result, an application under Sections 65(1), 75(4) and 494(4) of the Bank Act was submitted on May 8, 2026. See “Bank Regulatory Approvals — Bank Act Approvals — Superintendent”.

VersaBank’s shares are currently traded on the TSX and the Nasdaq Global Select Market (“Nasdaq”) under the symbol “VBNK.” The TSX has conditionally approved the listing of the Parent’s shares. Listing is subject to fulfilling all of the listing requirements of the TSX. The Parent intends to file a Company Event Notification with Nasdaq to notify Nasdaq of a Substitution Listing Event relating to the Reorganization and to assume the ticker symbol “VBNK” currently used by VersaBank. See “The Reorganization Proposal — Stock Exchange Considerations”.

Q:

When will I know when all required approvals have been obtained?

​

A:

If the Reorganization is completed, the Company will issue a press release to announce that the Reorganization has been completed and all conditions to the completion of the Reorganization have been satisfied or waived.

​

Q:

When will the Reorganization occur?

​

A:

Subject to the necessary approval of VersaBank shareholders, the U.S. Federal Reserve, the Superintendent and the Minister of Finance (Canada), the Reorganization is expected to be consummated on October 26, 2026. We expect to submit all necessary applications and materials to the U.S. Federal Reserve, the Minister of Finance (Canada) and the Superintendent by August 14, 2026.

​

Q:

What will happen if the Reorganization is not consummated?

​

A:

If the Reorganization is not consummated for any reason, VersaBank shareholders will not receive shares of the Parent, and VersaBank will continue as a publicly traded bank. Existing shareholders will retain their current equity interests, and VersaBank shares will continue to trade on both the TSX and Nasdaq.

​

Q:

Do VersaBank shareholders have appraisal or dissenters’ rights if they object to the Reorganization?

​

A:

Under Canadian law, VersaBank shareholders have the ability to exercise dissenters’ rights in respect of the Reorganization and to be paid the fair value of their VersaBank shares. There are no appraisal or

​

 

3

 

dissenters’ rights available to shareholders in connection with the Reorganization under Delaware law. See “Appraisal and Dissenters’ Rights of VersaBank Shareholders”.

Q:

What are the tax consequences of the Reorganization to VersaBank shareholders?

​

A:

VersaBank shareholders should carefully read the information in this prospectus/circular under “Certain Canadian Federal Income Tax Considerations” and “U.S. Federal Income Tax Considerations” which qualifies the information set out below and should consult their own tax advisors.

​

Subject to the qualifications set forth in this prospectus/circular, VersaBank shareholders who are resident in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”) should be aware that the Reorganization will generally result in a taxable transaction for Canadian federal income tax purposes.

More specifically, such shareholders should generally realize a capital gain (or capital loss) upon the exchange of their Exchangeable Shares for Parent shares pursuant to the Reorganization. VersaBank shareholders who are not resident in Canada for purposes of the Tax Act and for whom their VersaBank shares and Exchangeable Shares are not “taxable Canadian property” ​(as defined in the Tax Act) will generally not be subject to tax under the Tax Act on the disposition of their VersaBank shares or Exchangeable Shares pursuant to the Reorganization.

Subject to the qualifications set forth in this prospectus/circular, for U.S. federal income tax purposes we intend to treat the conversion of VersaBank shares into Exchangeable Shares of VersaBank either as a tax-free reorganization under Section 368(a)(1)(E) and/or an exchange described in Section 1036 of the Internal Revenue Code of 1986, as amended (the “Code”) or as disregarded and the exchange of Exchangeable Shares for shares of the Parent as a tax-deferred exchange described in Section 351(a) of the Code (together, the “intended tax treatment”). If such treatment is sustained, holders of VersaBank shares generally would not recognize any gain or loss for U.S. federal income tax purposes on the conversion of VersaBank shares into Exchangeable Shares of VersaBank or the exchange of Exchangeable Shares for shares of the Parent. The intended tax treatment will not be binding on the IRS or any court, and there can be no assurance that the U.S. Internal Revenue Service (the “IRS”) will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth therein. No ruling has been requested from or rendered by the IRS in connection with the Reorganization. In the event that the IRS successfully challenges the intended tax treatment, the Reorganization could be a taxable transaction for U.S. federal income tax purposes and result in the recognition of taxable gain for U.S. holders (as defined below in “U.S. Federal Income Tax Considerations”). Accordingly, VersaBank shareholders should consult with their tax advisors with respect to the particular tax consequences of the Reorganization to them, including the consequences of a successful challenge by the IRS.

See “Certain Canadian Federal Income Tax Considerations” and “U.S. Federal Income Tax Considerations” for a general summary of certain Canadian federal income tax considerations and U.S. federal income tax considerations, respectively, relevant to VersaBank shareholders. Such summary is intended to provide only a general discussion and is not a complete analysis or description of all potential Canadian federal and U.S. federal income tax considerations and is not intended to be legal or tax advice.

VersaBank shareholders should consult their own tax advisors as to the tax consequences to them of the Reorganization having regard to their own particular circumstances.

Additional Questions & Answers About the Meeting

Q:

What is the purpose of the Meeting?

​

A:

The purpose of the Meeting is to (i) obtain shareholder approval for the Reorganization and (ii) transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.

​

Q:

Where and when will the Meeting be held?

​

A:

The Meeting will be held in person at 1979 Otter Place, London, Ontario on September 16, 2026, at 10:30 a.m. ET.

​

 

4

 

Q:

Who is entitled to vote at the Meeting?

​

A:

Only VersaBank’s Registered Shareholders as of the Record Date will be entitled to receive notice of and to vote at the Meeting or any adjournment or postponement thereof. VersaBank shareholders who are unable to or who do not wish to attend the Meeting are requested to date and sign the enclosed form of proxy promptly and return it to VersaBank’s transfer agent, Odyssey Trust Company, in accordance with the instructions provided in the enclosed form of proxy.

​

Q:

How can I attend the Meeting in person?

​

A:

In order to attend the Meeting in person, you must (i) be a Registered Shareholder or a duly appointed proxyholder and (ii) present government-issued photo identification (such as a driver’s license or passport). Shareholders 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 or duly appointed proxyholders are to register with VersaBank’s transfer agent, Odyssey Trust Company, upon their arrival at the Meeting.

​

Q:

Who is soliciting the vote of VersaBank shareholders?

​

A:

This prospectus/circular is furnished in connection with the solicitation of proxies by VersaBank’s management for use at the Meeting. VersaBank will pay for the associated costs of soliciting proxies. In addition to this prospectus/circular, VersaBank may engage a proxy solicitation agent to assist in the solicitation of proxies for the Meeting. VersaBank’s directors, officers and employees may also solicit proxies in person, by telephone or by other means of communication, none of whom will receive additional compensation for assisting with the solicitation. VersaBank may also reimburse brokerage firms, banks and other agents for the cost of distributing this proxy statement to Beneficial Owners (as defined below).

​

Q:

What are VersaBank shareholders being asked to consider and vote upon at the Meeting?

​

A:

The Meeting will be held to:

​

(1)

consider and, if deemed advisable, vote to approve a special resolution of VersaBank (the “Reorganization Resolution”), the full text of which is set forth in Annex A, to cause, among other things, the Parent to become a holding company that will succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests (the “Reorganization Proposal”), which is composed of:

​

(i)

an amendment to VersaBank’s by-laws and certain transactions that will:

​

(a)

create a new class of exchangeable shares (the “Exchangeable Shares”);

​

(b)

upon the creation of the Exchangeable Shares, cause the outstanding shares of VersaBank to be exchanged for Exchangeable Shares on a one-for-one basis;

​

(c)

Immediately following the conversion of each VersaBank share into the Exchangeable Shares, cause the Exchangeable Shares to be transferred automatically to the Parent for:

​

(A)

an equivalent number of newly issued shares of common stock of the Parent on a one-for-one basis in the case of Exchangeable Shares that are not Dissent Shares; or

​

(B)

the right to be paid fair value for Exchangeable Shares, in the case of Exchangeable Shares that are Dissent Shares; and

​

(d)

following the transfer described immediately above, convert all Exchangeable Shares into shares of VersaBank;

​

(ii)

the sale by VersaBank of all of its shares of VersaHoldings US Corp. to the Parent in exchange for the Versa Bancorp Note, which will be subsequently distributed to the Parent as a return of capital, resulting in a corresponding reduction of the stated capital of VersaBank in an amount equal to such return of capital; and

​

 

5

 

(2)

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

​

Q:

What vote is required to approve the Reorganization Proposal?

​

A:

The Reorganization Proposal must be approved by the affirmative vote of not less than two-thirds of the votes cast by the holders of VersaBank’s outstanding shares at the Meeting.

​

Q:

What constitutes a quorum at the Meeting?

​

A:

A quorum is present at the Meeting if the holders of at least 25% of the outstanding VersaBank shares that are entitled to vote at the meeting are present in person or represented by proxyholders.

​

Q:

What happens if a VersaBank shareholder sells or otherwise transfers their shares of VersaBank before the Meeting?

​

A:

The Record Date is earlier than the date on which the transactions that are the subject of the Reorganization Proposal are expected to be completed. If you transfer your shares of VersaBank after the Record Date but before the Meeting, you will retain your right to vote at the Meeting unless the transferee obtains a proxy from you to vote those shares. If you transfer your shares of VersaBank prior to the Record Date, you will have no right to vote those shares at the Meeting.

​

Q:

How many votes does each VersaBank shareholder have?

​

A:

Each common share held by each VersaBank shareholder as of the close of business on the Record Date is entitled to one vote in respect of each matter properly coming before the Meeting. As of the close of business on July 24, 2026, there were 32,416,007 outstanding VersaBank common shares. There were no preferred shares of VersaBank outstanding as of the Record Date.

​

Q:

When do proxies need to be submitted?

​

A:

To be counted, a properly executed proxy must be returned to Odyssey Trust Company in accordance with the instructions provided in the enclosed form of proxy not later than 10:30 a.m. ET on September 14, 2026, or if the Meeting is adjourned or postponed, not later than 10:30 a.m. ET on the day which is two business days preceding the date of the adjourned or postponed meeting (the “Proxy Submission Deadline”). The Proxy Submission Deadline may be waived by the chair of the Meeting at his discretion without notice.

​

Q:

What is the difference between holding shares of VersaBank as a Registered Shareholder and as a Beneficial Owner?

​

A:

“Beneficial Owners” are VersaBank shareholders who do not hold their VersaBank shares directly in their own name, but who hold their shares indirectly through a bank, trust company, securities broker, trustee or other entity (“Intermediaries”). Registered Shareholders are VersaBank shareholders who hold their VersaBank shares directly in their own name.

​

If your shares of VersaBank are registered directly in your name on the share register of VersaBank’s transfer agent, Odyssey Trust Company, you are a Registered Shareholder, and this prospectus/circular is being sent directly to you by VersaBank. You may vote the shares registered directly in your name via internet, mail, personal delivery or fax, as further described below.

If your shares of VersaBank are registered in the name of an Intermediary on the share register of Odyssey Trust Company, you are a Beneficial Owner, and this prospectus/circular is being sent to you by your Intermediary. Each Intermediary has its own mailing procedures, return instructions and deadlines for submitting proxies. Such deadlines for submission may be earlier than the Proxy Submission Deadline, and Beneficial Owners should follow such instructions closely to ensure that their shares are voted at the Meeting.

Beneficial Owners 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

 

6

 

documentation in order to be duly appointed as a proxyholder. Beneficial Owners should contact their Intermediary to determine what documentation the Intermediary requires in order for such Beneficial Owner or its nominee to be appointed as proxyholder and to attend and vote their shares at the Meeting. Only after the Intermediary appoints a Beneficial Owner or its nominee as a proxyholder can that Beneficial Owner 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 Beneficial Owners and asks for appropriate instructions respecting the voting of shares to be represented at the Meeting. Beneficial Owners are requested to complete and return the voting instruction form to Broadridge by mail in the envelope provided. Alternatively, Beneficial Owners 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 Beneficial Owner 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 their shares voted. Further, a Beneficial Owner receiving a voting instruction form from Broadridge cannot use that form to vote their shares in person at the Meeting. If you are a Beneficial Owner 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.

Q:

How can VersaBank shareholders vote?

​

A:

If you are a Registered Shareholder, a properly executed proxy must be submitted using one of the following methods:

​

(1)

visit www.odysseytrust.com\versabank and enter the control number printed with your address to the right of your proxy form. If you vote by internet, do not mail the enclosed proxy form;

​

(2)

by mail or personal delivery to Odyssey Trust Company, Attention: Proxy Department, Suite 1100, 67 Yonge St., Toronto, Ontario, Canada M5E 1J8; or

​

(3)

by fax to Odyssey Trust Company, to the attention of the Proxy Department at (800) 517-4553 (toll-free in North America).

​

If you are a Beneficial Owner, the Intermediary through which you hold your shares will send you instructions on how to vote your shares. Please read and follow such instructions carefully to ensure that your shares are voted at the Meeting.

Q:

Can VersaBank shareholders change their vote or revoke their proxy?

​

A:

Yes. In addition to any other manner permitted by law, a proxy may be revoked by a Registered Shareholder by:

​

(1)

executing a proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Registered Shareholder or their authorized attorney in writing or, if the Registered Shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the proxy bearing a later date at 140 Fullarton Street, Suite 2002, 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 to the chair of the Meeting on the day of the Meeting; or

​

(2)

personally attending the Meeting and voting.

​

If you are a Beneficial Owner and wish to revoke your proxy, you should follow the instructions provided by your Intermediary or contact your Intermediary.

 

7

 

Q:

What should VersaBank shareholders do if they receive more than one set of voting materials?

​

A:

VersaBank shareholders may receive more than one set of voting materials, including multiple copies of this prospectus/circular and multiple proxies or voting instructions. For example, if you hold your shares in more than one brokerage account, you will receive separate voting instructions for each brokerage account in which you hold shares. If you are a Registered Shareholder and your shares are registered in more than one name, you will receive more than one proxy. Please complete all proxies and voting instructions that you receive in order to cast your vote with respect to all of your shares of VersaBank.

​

Q:

What should VersaBank shareholders do now?

​

A:

You are urged to read carefully and consider the information contained in this prospectus/circular, including the section entitled “Risk Factors”, and the annexes attached hereto. Unless you intend to vote in person at the Meeting, you should vote as soon as possible in accordance with the instructions provided in this prospectus/circular and on the enclosed form of proxy or, if you hold your shares through an Intermediary, in accordance with the instructions provided by such Intermediary.

​

Q:

Who can help answer VersaBank shareholders’ questions?

​

A:

If you are a VersaBank shareholder and have questions about the Meeting or the Reorganization Proposal, or if you need additional copies of this prospectus/circular or the enclosed form of proxy, you should contact VersaBank, 140 Fullarton Street, Suite 2002, London, Ontario N6A 5P2, telephone: (519) 645-1919.

​

 

8

 

9

 

​

​

​

Digital Banking Canada

​

​

Digital Banking USA

​

​

DRTC

​

​

Digital Meteor

​

Three months ended April 30, 2026

​

​

​

​

71%

​

​

​

​

​

20%

​

​

​

​

​

7%

​

​

​

​

​

2%

​

​

Three months ended April 30, 2025

​

​

​

​

82%

​

​

​

​

​

8%

​

​

​

​

​

7%

​

​

​

​

​

3%

​

​

10

 

11

 

12

 

13

 

14

 

15

 

16

 

17

 

​

18

 

19

 

20

 

​

​

​

For the Six Months Ended April 30,

​

​

For the Year Ended October 31,

​

​

​

​

2026

​

​

2025

​

​

2025

​

​

2024

​

​

​

​

(in thousands of USD)

​

Interest Income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Credit Assets

​

​

​

$

108,958

​

​

​

​

$

93,465

​

​

​

​

$

194,880

​

​

​

​

$

194,393

​

​

Investment Securities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Taxable Interest

​

​

​

​

3,870

​

​

​

​

​

2,478

​

​

​

​

​

5,324

​

​

​

​

​

2,296

​

​

Other

​

​

​

​

6,664

​

​

​

​

​

5,946

​

​

​

​

​

11,558

​

​

​

​

​

13,932

​

​

Total Interest Income

​

​

​

$

119,492

​

​

​

​

$

101,889

​

​

​

​

$

211,762

​

​

​

​

$

210,621

​

​

Interest Expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Deposits

​

​

​

​

65,032

​

​

​

​

​

61,711

​

​

​

​

​

124,229

​

​

​

​

​

130,085

​

​

Subordinated Notes

​

​

​

​

1,967

​

​

​

​

​

1,961

​

​

​

​

​

3,929

​

​

​

​

​

4,166

​

​

Other

​

​

​

​

1,922

​

​

​

​

​

217

​

​

​

​

​

421

​

​

​

​

​

488

​

​

Total Interest Expense

​

​

​

$

68,921

​

​

​

​

$

63,889

​

​

​

​

$

128,579

​

​

​

​

$

134,739

​

​

Net Interest Income

​

​

​

$

50,571

​

​

​

​

$

38,000

​

​

​

​

$

83,183

​

​

​

​

$

75,882

​

​

Provisions for Credit Losses

​

​

​

​

865

​

​

​

​

​

1,225

​

​

​

​

​

3,446

​

​

​

​

​

85

​

​

Net Interest Income After Provision for Credit Losses

​

​

​

$

49,706

​

​

​

​

$

36,775

​

​

​

​

$

79,737

​

​

​

​

$

75,797

​

​

Non-Interest Income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other Income

​

​

​

$

5,157

​

​

​

​

$

3,905

​

​

​

​

$

8,180

​

​

​

​

$

8,550

​

​

Total Non-Interest Income

​

​

​

$

5,157

​

​

​

​

$

3,905

​

​

​

​

$

8,180

​

​

​

​

$

8,550

​

​

Non-Interest Expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Salaries and Employee Benefits

​

​

​

$

15,689

​

​

​

​

$

12,574

​

​

​

​

$

27,171

​

​

​

​

$

24,304

​

​

General and Administrative

​

​

​

​

16,530

​

​

​

​

​

8,575

​

​

​

​

​

24,092

​

​

​

​

​

14,700

​

​

Premises and Equipment

​

​

​

​

2,622

​

​

​

​

​

2,284

​

​

​

​

​

5,026

​

​

​

​

​

3,564

​

​

Other Non-Interest Expense

​

​

​

​

1,498

​

​

​

​

​

1,131

​

​

​

​

​

2,602

​

​

​

​

​

2,476

​

​

Total Non-Interest Expense

​

​

​

$

36,339

​

​

​

​

$

24,564

​

​

​

​

$

58,891

​

​

​

​

$

45,044

​

​

Income Before Income Tax Expense

​

​

​

$

18,524

​

​

​

​

$

16,116

​

​

​

​

$

29,026

​

​

​

​

$

39,303

​

​

Income Tax Expense

​

​

​

$

5,065

​

​

​

​

$

4,199

​

​

​

​

$

8,853

​

​

​

​

$

12,104

​

​

Net Income

​

​

​

$

13,459

​

​

​

​

$

11,917

​

​

​

​

$

20,173

​

​

​

​

$

27,199

​

​

21

 

​

​

​

As of

​

​

​

​

April 30, 2026

​

​

October 31, 2025

​

​

​

​

(in thousands of USD)

​

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and Cash Equivalents

​

​

​

$

417,030

​

​

​

​

$

415,225

​

​

Investment Securities Available-for-Sale

​

​

​

​

72,187

​

​

​

​

​

54,641

​

​

Investment Securities Held-to-Maturity

​

​

​

​

132,634

​

​

​

​

​

99,583

​

​

Credit Assets, Net of Allowance for Credit Losses

​

​

​

​

4,035,648

​

​

​

​

​

3,519,007

​

​

Premises and Equipment, Net

​

​

​

​

20,615

​

​

​

​

​

17,160

​

​

Goodwill

​

​

​

​

8,249

​

​

​

​

​

8,204

​

​

Intangible Assets, Net

​

​

​

​

8,331

​

​

​

​

​

9,811

​

​

Other Assets

​

​

​

​

28,896

​

​

​

​

​

19,841

​

​

Total Assets

​

​

​

$

4,723,590

​

​

​

​

$

4,143,472

​

​

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

Deposits

​

​

​

​

4,046,656

​

​

​

​

​

3,464,083

​

​

Subordinated Notes Payable

​

​

​

​

73,905

​

​

​

​

​

73,890

​

​

Cash Reserves on Credit Assets

​

​

​

​

182,877

​

​

​

​

​

207,477

​

​

Other Liabilities

​

​

​

​

18,243

​

​

​

​

​

19,809

​

​

Total Liabilities

​

​

​

$

4,321,681

​

​

​

​

$

3,765,259

​

​

Shareholders’ Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

Common Shares

​

​

​

$

263,310

​

​

​

​

$

259,429

​

​

Additional Paid-in Capital

​

​

​

​

807

​

​

​

​

​

1,889

​

​

Retained Earnings

​

​

​

​

158,089

​

​

​

​

​

145,808

​

​

Accumulated Other Comprehensive Income (Loss), Net of Tax

​

​

​

​

(20,297)

​

​

​

​

​

(28,913)

​

​

Total Shareholders’ Equity

​

​

​

$

401,909

​

​

​

​

$

378,213

​

​

​

​

​

For the Six Months Ended April 30,

​

​

For the Year Ended October 31,

​

​

​

​

2026

​

​

2025

​

​

2025

​

​

2024

​

​

​

​

(in thousands of USD)

​

Net Cash Provided By (Used In) Operating Activities

​

​

​

$

12,544

​

​

​

​

$

15,200

​

​

​

​

$

35,519

​

​

​

​

$

24,750

​

​

Net Cash Provided By (Used In) Investing Activities

​

​

​

​

(509,351)

​

​

​

​

​

(52,770)

​

​

​

​

​

(364,571)

​

​

​

​

​

(328,456)

​

​

Net Cash Provided By (Used In) Financing Activities

​

​

​

​

494,182

​

​

​

​

​

121,496

​

​

​

​

​

583,205

​

​

​

​

​

369,830

​

​

22

 

​	​	​	For the Six Months Ended April 30, 2026				​
Net interest income after provision for credit losses	​	​	​	$	49,706	​	​
Net income	​	​	​	$	13,459	​	​
Basic and diluted net income (loss) per share	​	​	​	$	0.42	​	​
Weighted average shares outstanding, basic and diluted	​	​	​	​	32,029,275	​	​

​	​	​	For the Year Ended October 31, 2025				​
Net interest income after provision for credit losses	​	​	​	$	79,737	​	​
Net income	​	​	​	$	15,238	​	​
Basic and diluted net income (loss) per share	​	​	​	$	0.48	​	​
Weighted average shares outstanding, basic and diluted	​	​	​	​	31,506,701	​	​

​	​	​	As at April 30, 2026				​
Total assets	​	​	​	$	4,723,590	​	​
Total liabilities	​	​	​	$	4,323,432	​	​
Total shareholders’ equity	​	​	​	$	400,158	​	​

23

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made statements under the captions “Summary”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Business” and in other sections of this prospectus/circular that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue”, the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the caption entitled “Risk Factors”. You should specifically consider the numerous risks outlined under “Risk Factors”.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

•

our future financial performance, including our ability to maintain profitability;

​

•

anticipated trends, growth rates and challenges in our business and the markets in which we operate, including point-of-sale financing;

​

•

our failure to adhere to complex and evolving governmental laws and regulations;

​

•

increased expenses associated with being subject to the Exchange Act, Nasdaq listing rules, the Public Company Accounting Oversight Board and other U.S. regulation as a U.S. domestic reporting company and a domestic U.S. bank holding company;

​

•

our management team’s limited experience managing a U.S. domestic reporting company;

​

•

our dependence on revenue from SRP lending in Canada and our exposure to fluctuations in general business and economic conditions within Canada;

​

•

the success of our strategy to develop our SRP in the U.S. market;

​

•

our exposure to fluctuations in interest rates and/or foreign exchange rates;

​

•

our ability to access short-term funding, including brokered deposits, or any unforeseen outflow of cash;

​

•

our ability to fund our operations and meet our obligations as they become due;

​

•

our ability to implement and change our business strategies, including our ability to introduce new products and services, enter new markets and capitalize on growth opportunities;

​

•

the actual or perceived soundness or condition of other financial institutions;

​

•

the adequacy of our allowance for credit losses to absorb losses inherent in the loan portfolio;

​

•

the effectiveness of our risk management framework;

​

•

the effects of and changes in trade and monetary and fiscal policies and regulations of the Bank of Canada and the U.S. Federal Reserve, including the interest rate policies and the implementation of tariffs and other protectionist trade policies;

​

•

changes in the financial performance and/or condition of our borrowers;

​

•

changes in consumer spending, borrowing, and saving habits;

​

•

timely development and acceptance of new products and services and perceived overall value of these products and services by users;

​

 

24

 

•

competition among depository and other financial institutions;

​

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees, capital requirements and insurance premiums;

​

•

any challenges by the IRS to the intended tax treatment of the Reorganization;

​

•

our ability to realize any benefit from the Reorganization or the proposed organizational structure; and

​

•

the other risk factors described under “Risk Factors”.

​

The foregoing list may not contain all of the forward-looking statements made in this prospectus/​circular. The forward-looking statements contained in this prospectus/circular are not guarantees of future performance and our actual results of operations, financial condition or liquidity and the development of the industry and markets in which we operate may differ materially from the forward-looking statements contained in this prospectus/circular. In addition, even if our results of operations, financial condition or liquidity and events in the industry and markets in which we operate are consistent with the forward-looking statements contained in this prospectus/circular, they may not be predictive of results or developments in future periods.

Any forward-looking statement speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise.

 

25

 

RISK FACTORS

Investing in our shares involves a high degree of risk. You should carefully consider the risks described below with all of the other information included in this prospectus/circular before deciding to invest in our shares. Additionally, new risks may emerge at any time, and we cannot predict those risks or estimate the extent to which they may affect financial performance.

If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of our shares could decline and you could lose all or part of your investment.

Risks Related to the Reorganization

As a result of the Reorganization, we will face new challenges and administrative responsibilities, which could increase costs and adversely affect our business, financial condition and results of operations.

Upon consummation of the Reorganization, we will no longer be a “foreign private issuer” and will be required to comply with all of the provisions applicable to a U.S. domestic issuer under the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Nasdaq listing rules, and the rules and regulations implemented by the SEC. The expenses incurred by U.S. domestic issuers for reporting and corporate governance purposes have been increasing. While we are already subject to a complex regulatory environment, and other savings will be available to us, becoming subject to different regulation may result in increased costs and more time-consuming activities.

As a result of becoming subject to different regulation upon consummation of the Reorganization, we will need to:

•

institute a more comprehensive compliance framework;

​

•

prepare financial statements in accordance with GAAP, in addition to International Financial Reporting Standards;

​

•

update, evaluate and maintain a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC, as and when such requirements, rules and regulations become applicable to us;

​

•

prepare and distribute periodic public reports in compliance with our obligations under U.S. securities laws;

​

•

revise our existing internal policies, such as those relating to disclosure controls and procedures and insider trading;

​

•

comply with SEC rules and guidelines requiring registrants to provide their financial statements in interactive data format using Inline eXtensible Business Reporting Language;

​

•

involve and retain to a greater degree outside counsel and accountants in the above activities; and

​

•

enhance our investor relations function.

​

While VersaBank is already a highly regulated financial services institution, upon Reorganization we may, for example, experience higher-than-anticipated operating expenses and higher independent auditor and consulting fees, and we will need to hire additional qualified personnel to continue to satisfy applicable public-company requirements. We are currently required to expend considerable time and resources with respect to our compliance with public company regulations, and following the consummation of the Reorganization, we expect that the costs associated with such compliance will increase. Any such costs could adversely affect our business, financial condition and results of operations.

In addition, our ultimate parent company is currently VersaBank, a Canadian bank subject to OSFI’s consolidated regulation and supervision. While VersaBank is currently a U.S. bank holding company subject to regulation by the U.S. Federal Reserve, as a foreign bank certain U.S. bank regulatory requirements do not apply to it and U.S. Federal Reserve supervision is generally limited to the U.S. activities of its non-bank

 

26

 

subsidiaries, with the OCC serving as the primary supervisor of VersaBank USA. Upon consummation of the Reorganization, our ultimate parent holding company will become a domestic U.S. bank holding company that is subject to the U.S. Federal Reserve’s consolidated regulation and supervision. Compliance with additional U.S. regulatory requirements and the U.S. Federal Reserve’s supervisory expectations may require significant attention from our senior management and could divert their attention away from the day-to-day management of our business. As such, the laws, regulations and supervisory expectations applicable to us may differ following the Reorganization in ways that may adversely affect our business, financial condition and results of operations.

Our management team will be new to managing a U.S. domestic reporting company, and our business, financial condition and results of operations could be adversely affected if our management does not successfully execute our business plan and developmental strategies.

Our management team has limited experience managing a U.S. domestic reporting company, preparing financial statements in accordance with GAAP and complying with the increasingly complex laws pertaining to U.S. public companies. Our management team may not successfully or efficiently manage our transition to being a U.S. domestic issuer subject to regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. We will remain listed on the TSX for a period of time following the consummation of the Reorganization, and we expect to continue to be subject to certain Canadian securities laws that require us to file reports and other information on SEDAR+, and will therefore be subject to increased, and at times, competing, governance and reporting obligations. These new obligations will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.

Further, some members of our management team are expected to join the Parent to facilitate our transition to being a U.S. domestic issuer and will need to be successfully integrated in order to effectively execute our business plan and developmental strategies. The process of transitioning our new members into our business is complex and time-consuming. This may impact our ability to collectively respond to issues in a quick and efficient manner. If our management team is unable to develop a business strategy that can be executed in a successful manner, it could adversely impact our business, financial condition and results of operations.

The rights of the Parent shareholders under Delaware law will differ from the rights of VersaBank shareholders under the Bank Act.

If the Reorganization is consummated, existing VersaBank shareholders will become shareholders of the Parent. The proposed certificate of amendment (the “Proposed Charter Amendment”) to the certificate of incorporation, as amended of the Parent (the “Charter”) and the proposed bylaws of the Parent (the “Proposed Bylaws” and, together with the Proposed Charter Amendment, the “Proposed Organizational Documents”) to be in effect following the Reorganization and the Delaware General Corporation Law (the “DGCL”) contain provisions that differ in some respects from those in VersaBank’s existing organizational documents and Canadian law and, therefore, some rights of the shareholders following the Reorganization could differ from the rights that VersaBank shareholders currently have. For example, the Bank Act requires the approval of two-thirds of the votes cast by shareholders for significant corporate actions that Delaware law only requires a simple majority for. Additionally, approval by the Minister of Finance (Canada) is required for certain corporate actions, such as an amendment to the incorporating instrument. As a result, some of these differences could provide less protection to shareholders and give more discretion to the Parent’s directors and officers.

For a more detailed description of the current rights of VersaBank shareholders and how they may differ following the Reorganization, see “The Reorganization Proposal — Change in Governing Law”. Forms of the Proposed Organizational Documents are attached as Annexes C and D, and we urge you to read them.

 

27

 

Provisions in the Parent’s Charter, Proposed Bylaws and the DGCL might discourage, delay or prevent a change of control of the Parent or changes in management.

The Parent’s Charter and Proposed Bylaws contain provisions that could discourage, delay or prevent a change in control of the Parent or changes in management that the shareholders of the Parent may deem advantageous. These provisions include:

•

the ability of the Parent’s board of directors to amend the bylaws, which may allow the Parent’s board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt;

​

•

the ability of a majority of the Parent’s board of directors then in office to fill vacancies and newly created directorships at their sole discretion;

​

•

the limitation of the liability of, and the indemnification of, the Parent’s directors and officers;

​

•

the ability of the Parent’s board of directors to control the procedures for the conduct and scheduling of board of directors and shareholder meetings;

​

•

advance notice procedures with which shareholders must comply to nominate candidates to the Parent’s board of directors or to propose matters to be acted upon at a shareholders’ meeting, which could preclude shareholders from bringing matters before annual or special meetings of shareholders and delay changes in the Parent’s board of directors, and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Parent; and

​

•

require supermajority approvals to remove the protective provisions listed above or to amend the Charter and the Proposed Bylaws.

​

Such provisions could impede any merger, consolidation, takeover or other business combination involving the Parent or any of its subsidiaries or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Parent or its subsidiaries. See “The Reorganization Proposal — Change in Governing Law”.

The Proposed Bylaws will designate a state or federal court located within the State of Delaware as the exclusive forum for substantially all disputes between the Parent and its shareholders, and the federal district courts of the United States as the exclusive forum for the resolution of any complaints asserting a cause of action under the Securities Act or the Exchange Act, which could limit shareholders’ ability to choose the judicial forum for disputes with the Parent or its directors, officers or employees.

The Proposed Bylaws, which will be in effect upon consummation of the Reorganization, will provide that, unless the Parent consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Parent, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or shareholder of the Parent to the Parent or the Parent’s shareholders, (iii) any action arising pursuant to any provision of Delaware law, the Charter, Proposed Charter or the Proposed Bylaws, or as to which Delaware law confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware does not have jurisdiction, the federal district court for the District of Delaware).

Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to these provisions. These exclusive forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with the Parent or its directors, officers, or other employees, which may discourage lawsuits against the Parent and its directors, officers and other employees. The enforceability of similar choice of forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. For example, in December 2018, the Court of Chancery of the State of Delaware determined that a provision stating that federal district courts of the

 

28

 

United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. Although this decision was reversed by the Delaware Supreme Court in March 2020, courts in other states may still find these provisions to be inapplicable or unenforceable. If a court were to find the exclusive forum provisions in the Proposed Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could adversely affect our business, financial condition and results of operations.

There can be no assurance that the Company will actually realize any of the benefits expected from the Reorganization or realize such benefits within the anticipated timeframe.

Anticipated benefits of the Reorganization include lower costs, increased access to capital, and expanded growth opportunities. However, the Reorganization is complex and time-consuming, and there can be no assurance that we will realize any of the expected benefits within the anticipated timeframe or at all. If the anticipated benefits are not achieved, we will have expended significant management time and substantial financial and other resources in connection with the Reorganization without corresponding returns to the Company or its shareholders. Any such failure to realize the expected benefits could adversely affect our business, financial condition, results of operations, and the trading price of our common stock.

The IRS may successfully challenge the intended tax treatment of the Reorganization, in which case the Reorganization could be a taxable transaction for U.S. federal income tax purposes.

In the opinion of Davis Polk & Wardwell LLP, the conversion of VersaBank shares into Exchangeable Shares of VersaBank will qualify as either a tax-free reorganization under Section 368(a)(1)(E) and/or an exchange described in Section 1036 of the Code, as amended (the “Code”) or as disregarded and the exchange of Exchangeable Shares for shares of the Parent will qualify as a tax-deferred exchange described in Section 351(a) of the Code (together, the “intended tax treatment”).

If such treatment is sustained, holders of VersaBank shares generally would not recognize any gain or loss for U.S. federal income tax purposes on the conversion of VersaBank shares into Exchangeable Shares of VersaBank or the exchange of Exchangeable Shares for shares of the Parent. The intended tax treatment will not be binding on the IRS or any court, and there can be no assurance that the U.S. Internal Revenue Service (the “IRS”) will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth therein. No ruling has been requested from or rendered by the IRS in connection with the Reorganization. In the event that the IRS successfully challenges the intended tax treatment, the Reorganization could be a taxable transaction for U.S. federal income tax purposes and result in the recognition of taxable gain for U.S. holders (as defined below in “U.S. Federal Income Tax Considerations”). Accordingly, you should consult with your tax advisor with respect to the particular tax consequences of the Reorganization to you, including the consequences of a successful challenge by the IRS.

Our effective tax rate may change as a result of the Reorganization, including due to the imposition of U.S. federal income taxes on our non-U.S. operations.

Following the Reorganization, the Parent will be the U.S. owner of VersaBank and will indirectly own 100% of the equity of certain non-U.S. corporate subsidiaries currently owned, directly or indirectly, by VersaBank. These non-U.S. subsidiaries of the Parent, including VersaBank, will be treated as controlled foreign corporations for U.S. tax purposes (“CFCs”), and as the United States shareholder of such CFCs, the Parent will be subject to U.S. federal income taxation with respect to the earnings of such CFCs. Under the present structure, although certain of VersaBank’s non-U.S. subsidiaries are CFCs, VersaBank itself is not a CFC, and there is no entity in the VersaBank group that currently is subject to United States federal income taxation resulting from the status of the non-U.S. subsidiaries as CFCs. Accordingly, because of the Reorganization, the VersaBank group of companies will have additional U.S. federal income tax liability, potentially in significant amounts, with respect to the group’s non-U.S. operations.

Specifically, under U.S. CFC rules, a “United States shareholder” of a CFC generally must include annually as ordinary income its pro rata share of its CFC’s “subpart F income” and “global intangible low-taxed income” ​(following the effective date of the OBBBA (defined below), “net CFC tested income”) and, to the extent an exemption is not available, amounts attributable to investments by the CFC in “United States property,” even if no distributions are made by the non-U.S. subsidiaries to the shareholder. It is

 

29

 

possible for such income to be offset by foreign tax credits, to the extent available. Additionally, although U.S. federal tax rules include a broad exemption from U.S. federal income tax for dividends received by U.S. corporations such as the Parent from their non-U.S. subsidiaries, there may be circumstances in which actual or deemed distributions from VersaBank to the Parent are taxable to the Parent for U.S. federal income tax purposes.

VersaBank currently owns equity interests, directly or indirectly, in U.S. subsidiaries of the VersaBank group of companies. After the Reorganization, VersaBank is transferring one of these subsidiaries, VersaHoldings US Corp., to the Parent. VersaBank has not determined whether or when to transfer the equity of the other subsidiary, DRTC, to the Parent. VersaBank’s ownership of such entity will result in a “sandwich” structure (where the Parent as a U.S. entity owns VersaBank, a non-U.S. entity, which itself owns a U.S. entity). Such equity ownership of U.S. affiliates by a CFC after the Reorganization constitutes an investment in United States property by VersaBank that could give rise to deemed dividend taxable income to the Parent. VersaBank is currently assessing the ongoing costs of maintaining that sandwich structure, compared to the potential U.S. tax costs to the Parent of unwinding the structure shortly after the Reorganization. Among other things, if the sandwich structure is maintained, VersaBank and the Parent may be subject to additional U.S. tax leakage on any cash flows that are sourced from VersaBank’s U.S. operating subsidiaries.

Further, on July 4, 2025, the bill referred to as the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law in the United States. The OBBBA made certain changes regarding the taxation of CFC income. There are still significant aspects of the OBBBA that are unclear or for which further guidance is expected, and both the timing and contents of any such future guidance are uncertain.

Changes to the U.S. federal income tax laws are proposed regularly and there can be no assurance that, if enacted, any such changes would not have an adverse impact on us. There can be no assurance that any such proposed changes will be introduced as legislation, or if they are introduced that they would be enacted, and if enacted what form they would take. Moreover, we could become subject to income tax in one or more countries, including the United States, as a result of activities performed by it, adverse developments or changes in law, contrary conclusions by the relevant tax authorities or other causes. The imposition of any of these income taxes could materially reduce our earnings and after-tax returns. In light of these factors, we cannot assure you that our effective income tax rate will not change in future periods, including as a result of and following the Reorganization.

In addition, U.S. tax laws significantly limit our ability to redomicile outside of the U.S. once the Reorganization is complete. Accordingly, if our effective tax rate were to increase as a result of the Reorganization, it may be difficult to mitigate the effects of such increase afterwards.

The Reorganization is subject to certain conditions precedent and required approvals, some of which are outside of our control.

The completion of the Reorganization is subject to various conditions precedent, some of which are outside our control, including the approval of VersaBank shareholders, the U.S. Federal Reserve, the Superintendent, the Minister of Finance (Canada) and the TSX, among others. There can be no assurance that all of the conditions precedent to the Reorganization will be satisfied or waived on the timeline contemplated herein, or at all. The TSX has conditionally approved the listing of the Parent’s shares. Listing is subject to fulfilling all of the listing requirements of the TSX. The Competition Act Approval has been obtained.

Specifically, before the Reorganization may be completed, approvals must be obtained from bank regulatory authorities in the United States and Canada. There can be no assurance as to the timing and outcome of receipt of regulatory approvals. Moreover, the approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of our consolidated business or require changes to the terms of the transactions contemplated by the Reorganization. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the Reorganization, imposing additional material costs on or materially limiting our revenues following the Reorganization or otherwise reduce the anticipated

 

30

 

benefits of the Reorganization if the Reorganization were consummated successfully within the expected time frame. In addition, there can be no assurance that any such conditions, limitations, obligations or restrictions will not result in the delay or abandonment of the Reorganization. For additional information regarding conditions imposed in connection with VersaBank’s 2024 acquisition of our U.S. banking subsidiary, see the risk factor headed “The banking industry is highly regulated, and compliance with the regulatory framework, including stringent capital requirements, and any future legislative or regulatory changes could have an adverse effect on our business, financial condition and results of operations.”

The TSX has conditionally approved the listing of the Parent’s shares. Listing is subject to fulfilling all of the listing requirements of the TSX. The Parent intends to file a Company Event Notification with Nasdaq to notify Nasdaq of a Substitution Listing Event relating to the Reorganization and to assume the ticker symbol “VBNK” currently used by VersaBank. Shortly after completion of the Share Exchange, VersaBank shares will be delisted from the TSX and Nasdaq. In addition, following the Reorganization, (x) Parent will become the successor issuer to VersaBank pursuant to Rule 12g-3(a) promulgated under the Exchange Act and (y) VersaBank may apply to cease to be a reporting issuer in all jurisdictions in Canada in which it is a reporting issuer and terminate its reporting obligations in Canada.

Our internal controls over financial reporting may not be effective, and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant adverse effect on our business, financial condition and results of operations.

We are not currently required to publish a formal assessment of the effectiveness of our internal control over financial reporting under the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, and will not be required to do so until we file our second annual report on Form 10-K. Our independent auditors may be required to issue an attestation report on the effectiveness of our internal control over financial reporting as early as when we file our second report on Form 10-K. We may incur significant expenses and devote substantial management effort in the process of ensuring compliance with the attestation requirements of Section 404 of the Sarbanes-Oxley Act.

If we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our independent auditors may issue an adverse opinion due to ineffective internal control over financial reporting, and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a result, there could be a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal controls system and the hiring of additional personnel. Any such action could negatively affect our business, financial condition and results of operations.

Risks Related to Our Business

A substantial amount of our interest income is currently derived from our Canadian SRP business, and our growth is susceptible to fluctuations in general business and economic conditions within Canada.

Although we plan to continue investing in partnerships across diverse industries and high-quality credit opportunities in the United States, a substantial portion of our interest income is currently derived from SRP lending in Canada. As a result, our earnings are significantly affected by general business and economic conditions in Canada, as well as factors that may impact the SRP financing market in both Canada and the United States. These factors include, among others, unemployment levels, consumer spending trends and inflation rates.

Our success depends in part on sustained demand for SRP lending. If demand for SRP financing declines, fails to grow, or grows more slowly than we expect, our business, financial condition and results of operations could be adversely affected. In addition, to preserve and expand our relationships with existing and prospective SRP partners in Canada and the United States, we may be required over time to offer more

 

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competitive pricing or other terms, which could result in narrower margins on the structured receivables in which we invest. Accordingly, despite our recent growth, we may be unable to maintain historical growth rates, and our network of SRP lending partners and their consumer base could shrink over time.

Moreover, our structured purchase program, which depends on the continued demand and growth of SRP lending, may be less profitable than we expect or take longer than anticipated to achieve target margins. If we do not realize the anticipated benefits of our investments in our structured purchase program, particularly in the United States, or if we are forced to accept reduced margins to remain competitive or are unable to retain our existing partners, our business, financial condition and results of operations could be adversely affected.

Economic conditions in both Canada and the United States may further amplify these risks. In Canada, economic growth has remained modest, with subdued consumer spending, elevated household indebtedness and cautious business investment, which may reduce SRP transaction volumes and slow the growth of our SRP financing portfolio. In the United States, although economic growth has been comparatively stronger, interest rates remain elevated and credit conditions tighter than historical norms, which may dampen consumer demand for financed purchases and similarly moderate the expansion of our SRP financing activities. Across both markets, ongoing inflation uncertainty, potential shifts in monetary policy, trade and tariff risks, and any deterioration in consumer or small-business credit quality could adversely affect receivable performance, loss rates and margins. Collectively, these factors could materially adversely affect the performance of our SRP business and our overall financial condition and results of operations.

Our ability to successfully develop and scale our structured purchase program depends in part on expanding our reach in the United States, and failure to do so could adversely affect our business, financial condition and results of operations. Our structured purchase program is based on consumers obtaining SRP loans from our SRP lending partners and our ability to invest in the related cash flows through transactions that are seamless, convenient and fund quickly. Our ability to expand our presence in the United States, including attracting and retaining U.S.-based SRP lending partners, depends on a number of factors, including our ability to continue to provide, and be perceived as providing, a superior customer experience and expeditious funding, competitive responses from other financial and non-financial institutions operating in U.S. markets, and our ability to maintain and scale systems, policies and procedures to manage a growing number of partner relationships. Maintaining and enhancing our customer experience and funding capabilities may require us to incur additional costs, including investments in technology and infrastructure, increased customer service capabilities, hiring additional personnel or paying higher compensation to attract and retain employees. In addition, we may be required to offer pricing or other terms that are more favorable to our SRP lending partners, which could result in reduced margins on the receivables in which we invest. Any of these factors could reduce our interest income or profitability. We also face competition from financial and non-financial institutions in the United States that may offer comparable or superior customer experiences, greater convenience or faster funding, or do so at a lower cost, which may limit our ability to attract or retain SRP lending partners. Moreover, in order to successfully manage growth in the United States, we may need to adopt new or revise existing policies, procedures and controls, enhance reporting systems, or hire additional personnel. If we fail to effectively implement these measures or to scale our operations in line with growth, our business could be adversely affected.

If we are unable to expand our reach in the U.S. market, including by attracting and retaining SRP lending partners in the United States and managing such growth effectively, our business, financial condition and results of operations could be adversely affected.

Our business is partially dependent on the real estate market in Canada, as a significant percentage of our loan portfolio is secured by real estate.

As of April 30, 2026, approximately 17% of our loan portfolio was comprised of real estate loans, which consist of business-to-business loans primarily for the construction of multi-family residential properties in Canada. Real property values in Canada may be different from real property values in the United States and may be affected by a variety of factors outside of our control and the control of our borrowers, including national and local economic conditions. Declines in Canadian real estate values, including the prices of residential and commercial properties, could result in deterioration in borrower credit quality, increased loan delinquencies, defaults and charge-offs.

 

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In addition, real estate construction and development loans involve risks not typically present in other types of lending, including construction cost overruns, delays or failure to complete projects, general contractor credit risk and risks related to the ultimate sale, leasing or use of completed properties. Declines in real property values in Canada could reduce the value of any collateral we realize following a default on these loans and could adversely affect our ability to continue to grow our loan portfolio consistent with our underwriting standards.

While the majority of our real estate loans are insured by the Government of Canada, we may nevertheless have to foreclose on real estate assets if borrowers default on their loans, in which case we are required to record the related asset to the then fair market value of the collateral, which may ultimately result in a loss. An increase in the level of nonperforming assets increases our risk profile and may affect the capital levels regulators believe are appropriate in light of the ensuing risk profile. Our failure to effectively mitigate these risks could have an adverse effect on our business, financial condition and results of operations.

Residential real estate markets are also sensitive to macroeconomic conditions, including unemployment levels, consumer spending trends and inflation. Although the Canadian federal government has announced a Canada Housing Plan intended to address housing supply constraints, certain segments of the residential real estate market have experienced price softening and increased inventory, particularly in high-rise condominium developments in larger Canadian municipalities. In addition, the Canadian real estate financing market remains highly competitive, particularly in the insured lending space. If we are unable to effectively manage these risks or maintain our competitive position, our business, financial condition and results of operations could be adversely affected.

We are subject to interest rate risk, and changes in interest rates could adversely affect our business, financial condition and results of operations.

Our profitability, like that of most financial institutions of our type, depends largely on our net interest income which is the difference between interest income earned on interest-earning assets, such as loans, and interest expense paid on interest-bearing liabilities, such as deposits and borrowings. Changes in interest rates may increase or decrease our net interest income because different types of assets and liabilities may react differently, and at different times, to market interest rate movements.

Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Bank of Canada and the U.S. Federal Reserve. Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and the interest we pay on deposits and borrowings, but such changes could affect our ability to originate loans and obtain deposits, the fair value of our financial assets and liabilities, and the average duration of our assets and liabilities. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and other investments fall more quickly than the interest rates paid on deposits and other borrowings. Any substantial, unexpected or prolonged change in market interest rates could have an adverse effect on our business, financial condition and results of operations.

In addition, an increase in interest rates could also have a negative impact on our results of operations by reducing the demand for SRP funding, decreasing the ability of borrowers to repay their current credit asset obligations. These circumstances could not only result in increased loan defaults, foreclosures and charge-offs, but also reduce collateral values and necessitate further increases to the allowance for credit losses, which could have an adverse effect on our business, financial condition and results of operations. While the U.S. Federal Reserve has recently lowered the target range for the federal funds rate, it has indicated that it will assess incoming data, the evolving outlook and the balance of risks in making any future decisions regarding the federal funds rate. Changes to the target range are inherently unpredictable. A decrease in the general level of interest rates may affect us through, among other things, increased prepayments on our loan portfolio. Our asset-liability management strategy may not be effective in mitigating exposure to the risks related to changes in market interest rates.

 

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The interest rate environment continues to evolve, with policy rates remaining elevated relative to longer-term historical norms. During the fiscal year ended October 31, 2025, we experienced a moderation in interest rates and a reduced impact of the atypically inverted yield curve that existed throughout fiscal year 2024. The flattening and gradual upward sloping of the yield curve, which is generally more favorable to our margins, contributed to an expansion in our net interest margin. In addition, relatively elevated interest rates and broader economic conditions have contributed to growth in lower-cost deposits from Licensed Insolvency Trustee firms, attributable to increased volumes of Canadian consumer and commercial bankruptcy and restructuring proceedings. These conditions may not persist, and changes in the interest rate environment could adversely affect our future results.

We operate in a competitive financial services industry and face increasing competition from a variety of traditional and new financial services providers.

We have many competitors. Our principal competitors are commercial and community banks, credit unions, savings and loan associations and consumer finance companies, including large national financial institutions that operate in our markets, and financial technology companies (often referred to as “fintechs”). While we believe our proprietary technology sets us apart from our competition, making our loan, investment and deposit products more attractive to our partners, our competition could adopt similar technology allowing them to more effectively compete with us. Also, non-bank entities can engage in many activities similar to ours or offer products and services desirable to our customers without being subject to the same types of regulation, supervision and restrictions that are applicable to banks, which could allow non-bank entities to more effectively compete with us. We expect competition may increase as a result of legislative, regulatory and technological changes.

Additionally, like many of our competitors, we rely on customer deposits through deposit brokers as our primary source of funding for our lending and investment activities, and we continue to seek and compete for customer deposits to maintain this funding base. Our future growth will largely depend on our broker network’s ability to retain and grow our deposit base. Although we have historically maintained a high deposit broker retention rate, this requires our continued investment in our proprietary technology to work with our deposit brokers seamlessly and conveniently. Our failure to compete effectively in our markets could restrain our growth, which could have an adverse effect on our business, financial condition and results of operations.

Our liquidity could be impaired by an inability to access funding, including brokered deposits.

We raise our deposits primarily through a network of independent deposit brokers across Canada and the United States. While we have established and maintain good working and mutually beneficial relationships with a diverse group of deposit brokers so as not to become overly reliant on any single deposit broker, any failure to secure sufficient deposits from our broker network could negatively impact our business, financial condition and results of operations.

Liquidity risk could impair our ability to fund our operations and meet our obligations as they become due.

Liquidity is essential to our business. We require sufficient liquidity to fund asset growth, support our, structured purchase program, meet customer deposit maturities, make payments on our debt obligations and other cash commitments under both normal operating conditions and unpredictable circumstances, including events causing industry or general financial market stress. Liquidity risk can increase due to several factors, which include, but are not limited to, an overreliance on a particular source of funding, changes in the liquidity needs of our depositors, adverse regulatory actions against us or a downturn in the markets in which our credit assets are concentrated.

While we have no obligation to fund our SRP partners and do not offer demand accounts directly to consumers, market conditions or other events could negatively affect the level or cost of funding needed to meet contractual obligations, fund asset growth, invest in receivables and fund new business transactions at a reasonable cost, in a timely manner, and without adverse consequences. Our inability to raise funds, or its increased cost of funding, could have an adverse effect on our business, financial condition and results of operations, and could eventually result in the closure of the Company.

 

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We may also borrow funds from third-party lenders, such as other financial institutions, and have access to other funding avenues, including brokered deposits. Our access to funding sources in amounts adequate to finance our activities or on acceptable terms could be impaired by factors that affect our business specifically or the financial services industry or economy in general. Our access to funding sources could also be affected by a decrease in the level of our business activity as a result of a downturn in our primary markets or by one or more adverse regulatory actions against us.

Any substantial, unexpected or prolonged change in the level or cost of liquidity could impair our ability to fund operations and meet our obligations as they become due and could have an adverse effect on our business, financial condition and results of operations. Although we have historically been able to replace maturing deposits and advances if desired, we may not be able to replace such funds in the future if our financial condition or market conditions change. Current sources of liquidity may not be available or, if available, sufficient to provide adequate funding for our operations and to support our continued growth. The unavailability of sufficient funding could have an adverse effect on our business, financial condition and results of operations.

We may be adversely affected by changes in the actual or perceived soundness or condition of other financial institutions.

Financial services institutions may be interconnected as a result of trading, investment, liquidity management, clearing, counterparty and other relationships. Within the financial services industry, loss of public confidence, including through default by any one institution, could lead to liquidity challenges or to defaults by other institutions. Concerns about, or a default by or failure of, one institution could lead to significant liquidity problems and losses or defaults by other institutions, as the commercial and financial soundness of many financial institutions is closely related as a result of these credit, trading, clearing and other relationships. Even the perceived lack of creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or defaults by various institutions. This systemic risk may adversely affect financial intermediaries, such as clearing agencies, banks, exchanges and funding providers with which we interact on a daily basis, any of which could have an adverse effect on our access to liquidity or otherwise have an adverse effect on our business, financial condition or results of operations. Moreover, the speed at which information spreads through news, social media and other sources on the Internet and the ease with which customers transact may amplify the onset and negative effects from such perceptions, such as rapid deposit withdrawals or other outflows. The failure of other banks and financial institutions and the measures taken by governments and regulators in response to these events, including increased regulatory scrutiny and heightened supervisory expectations, could adversely impact our business, financial conditions and results of operations.

We are dependent on the use of data and modeling in both our management’s decision-making and in meeting regulatory expectations.

The use of statistical and quantitative models and other quantitatively based analyses is endemic to bank decision-making and regulatory compliance processes, and the employment of such analyses is becoming increasingly widespread in our operations. We are dependent on models and the data that underlie them for determining the pricing of various products, grading loans and extending credit, measuring interest rate and other market risks, predicting or estimating losses, assessing capital adequacy, calculating economic and regulatory capital levels, and estimating the value of financial instruments and balance sheet items. We anticipate that model-derived insights will be used more widely in our decision-making in the future. While these quantitative techniques and approaches improve our decision-making, they also create the possibility that faulty data or flawed quantitative approaches could yield adverse outcomes or regulatory scrutiny. Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making, which could have an adverse effect on our business, financial condition and results of operations.

Our allowance for credit losses may be inadequate to absorb losses inherent in the loan portfolio.

Experience in the banking industry indicates that a portion of our loans will become delinquent, and that some may only be partially repaid or may never be repaid at all. We may experience losses for reasons

 

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beyond our control, such as the impact of general economic conditions on customers and their businesses. Accordingly, we maintain an allowance for credit losses that represents management’s judgment of probable losses and risks inherent in our loan portfolio. In determining the size of our allowance for credit losses, we rely on an analysis of our loan portfolio considering historical loss experience, holdback on deposit, volume and types of loans, trends in classification, volume and trends in delinquencies and nonaccruals, economic conditions and other pertinent information. The determination of the appropriate level of the allowance for credit losses is inherently highly subjective and requires us to make significant estimates of and assumptions regarding current credit risk and future trends, all of which may change materially. Although we endeavor to maintain our allowance for credit losses at a level adequate to absorb any inherent losses in the loan portfolio, these estimates of loan losses are necessarily subjective and their accuracy depends on the outcome of future events.

Deterioration of economic conditions affecting borrowers, new information regarding existing loans, inaccurate management assumptions, identification of additional problem loans, temporary modifications, loan forgiveness, automatic forbearance and other factors, both within and outside of our control, may result in our experiencing higher levels of nonperforming assets and charge-offs, and incurring loan losses in excess of our current allowance for credit losses, requiring us to make material additions to our allowance for credit losses, which could have an adverse effect on our business, financial condition and results of operations.

Additionally, banking regulators, as an integral part of their supervisory function, periodically review the allowance for credit losses. These regulatory agencies may require us to increase our provision for loan losses or to recognize further loan charge-offs based upon their judgments, which may be different from ours. If we need to make significant and unanticipated increases in the loss allowance in the future, or to take additional charge-offs for which we have not established adequate reserves, our business, financial condition and results of operations could be adversely affected at that time.

Our risk management framework may not be effective in mitigating risks or losses to us.

Our risk management framework is composed of various processes, systems, strategies, and governances, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, interest rate, operational and compliance risks. Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment. Our risk management framework may not be effective under all circumstances and may not adequately mitigate any risk or loss to us. If our risk management framework is not effective, we could suffer unexpected losses and our business, financial condition and results of operations could be adversely affected. We may also be subject to potentially adverse regulatory consequences.

We depend on the accuracy and completeness of information provided by partners, customers and counterparties.

In deciding whether to extend credit or enter into other transactions with partners, customers and counterparties, we may rely on information furnished by or on behalf of partners, customers and counterparties, including financial information. We may also rely on representations of partners, customers and counterparties as to the accuracy and completeness of that information. In deciding whether to extend credit, we may rely upon customers’ representations that their financial statements present fairly the financial condition, results of operations and cash flows of the customer. We also may rely on our customers’ representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our customers. We employ various processes to verify the accuracy of information provided to us, such as independently pulling credit reports, asset verifications, property appraisals and background checks, but such processes may contain limitations. Our business, financial condition and results of operations could be adversely affected if we rely on misleading, false, inaccurate or fraudulent information.

 

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Risks Related to Our Industry and Regulation

The banking industry is highly regulated, and compliance with the regulatory framework, including stringent capital requirements, and any future legislative or regulatory changes could have an adverse effect on our business, financial condition and results of operations.

The banking industry is extensively regulated and supervised under U.S. and Canadian federal, state and local laws and regulations. For example, following the completion of the Reorganization, we will be subject to consolidated regulation and supervision by the U.S. Federal Reserve. See the risk factor headed “We are subject to interest rate risk, which could adversely affect our business, financial condition and results of operations”. U.S. and Canadian banking laws are intended primarily for the protection of depositors, customers, the U.S. and Canadian deposit insurance funds and the banking and financial system as a whole, and not for the protection of security holders. The laws and regulations applicable to us govern a variety of matters, including permissible types, amounts, and terms of loans and investments we may make, the maximum interest rate that may be charged, the amount of reserves we must hold against deposits we take, the types of deposits we may accept, maintenance of adequate capital and liquidity, changes in the control of us, restrictions on dividends, and the establishment of new offices. We must obtain approval from our regulators before engaging in certain activities or acquisitions, and there is the risk that such approvals may not be obtained, either in a timely manner or at all, or may be subject to conditions.

For example, because bank holding companies are generally restricted to engaging in the business of banking and activities closely related to banking, in connection with obtaining the U.S. Federal Reserve’s approval of VersaBank’s 2024 acquisition of our U.S. banking subsidiary, VersaBank committed to divesting certain assets that were deemed not permissible for a bank holding company two years from the acquisition. To comply with this commitment, we plan to divest the cybersecurity assets within DRTC and DBG. In addition, the OCC also imposed conditions on its approval, including that VersaBank USA must obtain non-objection of the OCC before engaging in any significant deviation or change from its business plan or operations. As a result, we are required to receive supervisory non-objection from the OCC prior to launching RBTD commercially in the United States. We will also seek confirmation from our regulators that RBTDs are eligible for Canadian and U.S. federal deposit insurance and are eligible to pay interest. We may need to obtain OCC non-objection before undertaking other new business activities through VersaBank USA in the future. Such conditions, limitations, obligations or restrictions and any failure to comply with the foregoing or obtain regulatory extensions or consents could materially adversely affect our business, financial condition or results of operations.

Our regulators also have the ability to compel us to take, or restrict us from taking, certain actions entirely, such as actions that our regulators deem to constitute an unsafe or unsound banking practice. Our failure to comply with any applicable laws or regulations, or regulatory policies and interpretations of such laws and regulations, could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which could have a material adverse effect on our business, financial condition or results of operations.

Banking laws and regulations, as well as interpretations and implementations of these laws and regulations, are continually undergoing substantial review and change. Financial institutions generally have also been subjected to increased scrutiny from regulatory authorities. Changes in U.S. presidential administrations or U.S. or Canadian government control also increase the likelihood of further changes to laws, regulations and supervisory practices affecting financial institutions, which could include more stringent requirements and greater scrutiny from regulatory authorities. These changes and increased scrutiny have resulted and may continue to result in increased costs of doing business and may in the future result in decreased interest income and net income, reduce our ability to effectively compete to attract and retain customers, or make it less attractive for us to continue providing certain products and services. Any future changes in laws and regulations, as well as the interpretations and implementations, or modifications or repeals, of such laws and regulations, could affect us in substantial and unpredictable ways, including those listed above or other ways that could have a material adverse effect on our business, financial condition or results of operations. Recent political developments, including those relating to the financial regulatory agenda of the current U.S. presidential administration, have resulted in additional uncertainty with respect to new

 

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laws or regulations or changes in the interpretations or enforcement of existing laws or regulations, including potential deregulation in some areas.

Our inability to remain in compliance with regulatory requirements could have a material adverse effect on our operations in a given market and on our reputation generally. No assurance can be given that applicable laws or regulations will not be amended or construed differently or that new laws and regulations will not be adopted, either of which could materially adversely affect our business, financial condition or results of operations.

Monetary policies and regulations of the Bank of Canada and the U.S. Federal Reserve could have an adverse effect on our business, financial condition and results of operations.

Our earnings and growth are affected by the policies of the Bank of Canada and the U.S. Federal Reserve. An important function of both the Bank of Canada and the U.S. Federal Reserve is to regulate the money supply and credit conditions. Among the instruments used by the Bank of Canada and the U.S. Federal Reserve to implement these objectives are open market purchases and sales of government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits. The monetary policies and regulations of the Bank of Canada and the U.S. Federal Reserve have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The effects of such policies could have an adverse effect on our business, financial condition and results of operations but cannot be predicted.

Regulators periodically examine our business and may require us to remediate adverse examination findings or take enforcement action against us.

The U.S. Federal Reserve, the OCC, the Federal Deposit Insurance Corporation (“FDIC”), OSFI and other Canadian regulators periodically examine our business, including compliance with laws and regulations. If as a result of an examination, the U.S. Federal Reserve, OCC, FDIC, OSFI or other Canadian regulators were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate. These actions may include requiring us to remediate any such adverse examination findings. Evolving regulatory requirements can impose additional compliance burdens, leading to increased operational costs and potential penalties for non-compliance.

In addition, these agencies have the power to take enforcement action against us to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation of law or regulation or unsafe or unsound practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to direct the sale of subsidiaries or other assets, to limit dividends and distributions, to restrict our growth, to assess civil money penalties against us or our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is imminent risk of loss to depositors, to terminate our deposit insurance and place us into receivership or conservatorship. Any regulatory enforcement action against us could have an adverse effect on our business, financial condition and results of operations.

We are subject to stringent capital requirements, which could have an adverse effect on our operations.

Financial institutions are subject to extensive and complex capital requirements, which are subject to change. For example, as a result of the Reorganization, we will become subject to the U.S. Federal Reserve’s consolidated capital requirements. These requirements may affect our ability to lend, grow deposit balances, make acquisitions and distribute capital, including the payment of dividends. From time to time, banking regulators, such as the U.S. Federal Reserve, implement changes to these regulatory capital requirements. Failure to maintain adequate capital levels, whether due to adverse developments in our business or the economy or to changes in the applicable requirements, could subject us to a variety of restrictions and/or remedial actions imposed by our regulators. These include limitations on the ability to pay dividends or

 

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repurchase shares and the issuance of a capital directive to increase capital. Such limitations or capital directive could have an adverse effect on our business, financial condition and results of operations.

We may be unable to raise additional capital.

We may desire additional capital in the future to support our growth and strategic objectives or to meet regulatory or other internal requirements. Our ability to access the capital markets will depend on a number of factors, including our consolidated financial condition, our business prospects and the state of the financial markets. If capital is not available on favorable terms, we may have to curtail our growth until market conditions become more favorable. Any diminished ability to raise additional capital could restrict our ability to grow, require us to take actions that would affect our earnings negatively or otherwise adversely affect our business and our ability to implement our business plan, capital plan and achieve our strategic goals. Such events could have an adverse effect on our business, financial condition and results of operations.

While our exclusively business-to-business model does not include providing financing directly to consumers, we are subject to numerous banking and other laws and regulations designed to protect consumers, and failure to comply with such laws could lead to a wide variety of sanctions.

The Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations, including U.S. state laws and regulations, prohibit discriminatory lending practices by U.S. financial institutions, including VersaBank USA. The Federal Trade Commission Act prohibits unfair or deceptive acts or practices, and the Dodd-Frank Act prohibits unfair, deceptive, or abusive acts or practices by financial institutions. The U.S. Department of Justice federal and state banking agencies, and other federal and U.S. state agencies, including the Consumer Financial Protection Bureau (“CFPB”), are responsible for enforcing these fair and responsible banking laws and regulations in the United States. Because we have less than $10 billion in assets, most consumer protection aspects of the Dodd-Frank Act are applied to VersaBank USA by the OCC instead of the CFPB. However, we are subject to rules promulgated by the CFPB, and CFPB rulemaking has the potential to have a significant impact on our operations. VersaBank is subject to Canadian banking laws and regulations designed to protect consumers, including the Bank Act and the consumer protection provisions set out therein. The Bank Act is primarily enforced by OSFI; however, the Financial Consumer Agency of Canada (“FCAC”) also administers sections of the Bank Act that have been designated as consumer provisions. The FCAC also monitors Canadian banks’ compliance with codes of conduct and public commitments.

A challenge to our compliance with these banking laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion and restrictions on entering new business lines. Private parties may also have the ability to challenge our performance under fair lending laws in private litigation, including through class action litigation. Such actions could have an adverse effect on our business, financial condition and results of operations.

We are subject to laws regarding privacy, information security and protection of personal information, and any violation of these laws or other incident involving personal, confidential or proprietary information of individuals could damage our reputation and otherwise adversely affect our business.

Our business requires the collection and retention of large volumes of customer data, including personally identifiable information (“PII”), in various information systems that we maintain and in those maintained by third-party service providers. We also maintain important internal company data, such as PII about our employees and information relating to our operations. We are subject to complex and evolving laws and regulations governing the privacy and protection of PII of individuals (including customers, employees, and other third parties). For example, our business is subject to the Gramm-Leach-Bliley Act (the “GLBA”) which, among other things: (i) imposes certain limitations on our ability to share non-public PII about our customers with non-affiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with non-affiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our

 

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activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches. Various banking regulators and states have also enacted data breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notifications in the event of a security breach.

Ensuring that our collection, use, transfer and storage of PII complies with all applicable laws and regulations can increase our costs. Furthermore, we may not be able to ensure that customers and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means. If personal, confidential or proprietary information of customers or others were to be mishandled or misused (in situations where, for example, such information was erroneously provided to parties who are not permitted to have the information, or where such information was intercepted or otherwise compromised by third parties), we could be exposed to litigation or regulatory sanctions under privacy and data protection laws and regulations. Concerns regarding the effectiveness of our measures to safeguard PII, or even the perception that such measures are inadequate, could cause us to lose customers or potential customers and thereby reduce our revenues. Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise have an adverse effect on our business, financial condition and results of operations.

Upon consummation of the Reorganization, we will be a bank holding company and will be dependent upon our subsidiaries for cash flow, and our ability to make cash distributions will be restricted.

Upon consummation of the Reorganization, we will be a bank holding company with no material activities other than activities incidental to holding the common stock of our subsidiaries. Our principal source of funds to pay distributions on our common stock and service any of our obligations, other than further issuances of securities, is dividends received from our subsidiaries. Furthermore, our subsidiaries will not be obligated to pay dividends to us, and any dividends paid to us would depend on the earnings or financial condition of our subsidiaries, various business considerations and applicable law and regulation. As is generally the case for banking institutions, our profitability is subject to the fluctuating cost and availability of money, changes in interest rates and economic conditions in general. In addition, various regulations limit the amount of dividends that may be paid without regulatory approval. For example, VersaBank and VersaBank USA are subject to Canadian and U.S. laws and regulations, respectively, that may restrict dividend payments or authorize regulatory bodies to prohibit or limit dividends to us. Limitations on our ability to receive dividends from our subsidiaries, including VersaBank and VersaBank USA, could have a material adverse effect on our liquidity and ability to pay dividends on and make repurchases of our capital stock.

The U.S. Federal Reserve may require us to commit capital resources to support our subsidiaries.

The U.S. Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary U.S. banks and to commit resources to support its U.S. subsidiary banks, such as VersaBank USA. Under the “source of strength” doctrine that was codified by the Dodd-Frank Act, the U.S. Federal Reserve may require a bank holding company to make capital injections into a U.S. subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a U.S. subsidiary bank. Accordingly, we could be required to provide financial assistance to VersaBank USA if it experiences financial distress.

A capital injection may be required at a time when our resources are limited, and we may be required to borrow the funds or raise capital to make the required capital injection. Any loan by a bank holding company to its U.S. subsidiary bank is subordinate in right of payment to deposits and certain other indebtedness of such U.S. subsidiary bank. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a U.S. subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s

 

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general unsecured creditors, including the holders of any note obligations. Thus, any borrowing by a bank holding company for the purpose of making a capital injection to a U.S. subsidiary bank may become more difficult and expensive relative to other corporate borrowings.

We face a risk of noncompliance with the BSA and its implementing regulations and other laws and regulations that impose AML requirements, which could lead to civil and criminal enforcement actions.

The BSA and its implementing regulations and other laws and regulations that impose AML obligations require U.S. financial institutions to, among other duties, implement and maintain an effective AML and countering the financing of terrorism (“AML/CFT”) compliance program and file reports, such as suspicious activity reports and currency transaction reports. Our federal and state banking regulators in the United States, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), and other government agencies are authorized to impose significant civil money penalties for violations of the BSA and its implementing regulations and other applicable AML requirements. We are also subject to increased scrutiny of compliance with the regulations issued and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), which is responsible for administering U.S. economic sanctions programs. In addition, VersaBank is subject to AML/CFT requirements under Canadian law and regulation, including the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”) and its regulations as enforced by government agencies such as the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”). If our compliance programs are deemed deficient, we could be subject to liability, including fines, civil money penalties and other regulatory actions, which may include restrictions on our business operations and our ability to pay dividends, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Failure to maintain and implement adequate AML/CFT and sanctions compliance programs could also have significant reputational consequences for us. Any of these circumstances could have an adverse effect on our business, financial condition and results of operations.

General Risk Factors

Our business may be adversely affected if we are unable to adequately establish, maintain, protect and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of such rights.

Our intellectual property, including our trademarks, software and platform, is important to our business. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products and services or using similar brands, potentially resulting in the loss of our competitive advantage and a decrease in our interest income, which would adversely affect our business, financial condition and results of operations.

We rely on a combination of intellectual property rights, such as trademarks, trade secrets (including know-how), patents and copyrights, in addition to confidentiality provisions to establish, maintain, protect and enforce our proprietary rights. While we generally enter into confidentiality agreements with our employees and third parties to protect our trade secrets, know-how, business strategy and other proprietary information, such confidentiality agreements could be breached or otherwise may not provide meaningful protection for our trade secrets, know-how and other confidential information. Similarly, while we seek to enter into agreements with all of our employees who develop intellectual property during their employment to assign the rights in such intellectual property to us, we may fail to enter into such agreements with all relevant employees, such agreements may be breached or may not be self-executing, and we may be subject to claims that such employees misappropriated relevant rights from their previous employers. Accordingly, we cannot guarantee that the steps we have taken to protect our intellectual property will be adequate to prevent infringement of our rights or misappropriation of our technology, trade secrets or know-how. Furthermore, intellectual property laws and our procedures and restrictions provide only limited protection, and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated.

If we fail to protect our intellectual property rights adequately, we may lose an important advantage in the markets in which we compete. Our efforts to protect these rights may be insufficient or ineffective, and

 

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any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. Other parties may also independently develop technologies, products and services that are substantially similar or superior to ours. We also may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. If it became necessary for us to resort to litigation to protect our intellectual property rights, any proceedings could be burdensome and costly, and we may not prevail. Further, adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets. If we fail to successfully obtain, maintain and enforce our intellectual property rights, our competitive position could suffer, which could harm our business, financial condition and results of operations.

We are dependent on our management team and key employees.

Our success depends, in large part, on the retention of our management team and key employees. Our management team and other key employees, including those who conduct our structured purchase program and other business development activities, have significant industry experience. We cannot ensure that we will be able to retain the services of any members of our management team or other key employees. While we have employment agreements in place with certain members of our management team, they may still elect to leave or retire at any time. The loss of any of our management team or our key employees could adversely affect our ability to execute our business strategy, and we may not be able to find adequate replacements on a timely basis, or at all.

Our future success also depends on our continuing ability to attract, develop, motivate and retain key employees. Qualified individuals are in high demand, and we may incur significant costs to attract and retain them. Because the market for qualified individuals is highly competitive, we may not be able to attract and retain qualified officers or candidates. Failure to attract and retain a qualified management team and qualified key employees could have an adverse effect on our business, financial condition and results of operations.

Our success is largely dependent on our ability to successfully execute our business strategy.

There can be no assurance that we will be able to continue to grow and remain profitable in future periods, or, if profitable, that our overall earnings will remain consistent with our prior results of operations, or increase in the future. A downturn in economic conditions in our markets, heightened competition from other financial services providers, an inability to retain or grow our core deposit base and partner network, regulatory and legislative considerations, and failure to attract and retain high-performing talent, among other factors, could limit our ability to grow assets, or increase profitability, as rapidly as we have in the past.

Sustainable growth requires that we manage our risks by following prudent loan underwriting standards, balancing loan and deposit growth without materially increasing interest rate risk or compressing our net interest margin, maintaining more than adequate capital at all times, managing a growing number of partner and customer relationships, scaling technology platforms, hiring and retaining qualified employees and successfully implementing our strategic initiatives. We must also successfully implement improvements to, or integrate, our management information and control systems, procedures and processes in an efficient and timely manner and identify deficiencies in existing systems and controls. In particular, our controls and procedures must be able to accommodate an increase in loan volume in various markets and the infrastructure that comes with expanding operations, including new branches. Our growth strategy may require us to incur additional expenditures to expand our administrative and operational infrastructure.

If we are unable to effectively manage and grow our operations, we may experience compliance and operational problems, have to slow the pace of growth, or have to incur additional expenditures beyond current projections to support such growth. We may not have, or may not be able to develop, the knowledge or relationships necessary to be successful in new markets. Our failure to sustain our historical rate of growth, adequately manage the factors that have contributed to our growth or successfully enter new markets could have an adverse effect on our business, financial condition and results of operations.

Our reputation is critical to our business, and damage to it could have an adverse effect on us.

A key differentiating factor for our business is the strong reputation we are building in our markets. Maintaining a positive reputation is critical to attracting and retaining customers and employees. Adverse

 

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perceptions of us could make it more difficult for us to execute on our strategy. Harm to our reputation can arise from many sources, including actual or perceived employee misconduct, errors or misconduct by our third-party vendors or other counterparties, litigation or regulatory actions, our failure to meet our high customer service and quality standards and compliance failures.

In particular, it is not always possible to prevent employee error or misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified. Our necessary dependence upon processing systems to record and process transactions and our large transaction volume may further increase the risk that employee errors, tampering or manipulation of those systems will result in losses that are difficult to detect. Employee error or misconduct could also subject us to financial claims. If our internal control systems fail to prevent or detect an occurrence, any resulting loss is not insured or exceeds applicable insurance limits or insurance coverage is denied or not available, it could have an adverse effect on our business, financial condition and results of operations.

Additionally, as a financial institution, we are inherently exposed to operational risk in the form of theft and other fraudulent activity by employees, customers and other third parties targeting us and our customers or data. Such activity may take many forms, including electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud. Negative publicity about us, whether or not accurate, may also damage our reputation, which could have an adverse effect on our business, financial condition and results of operations.

Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations.

We outsource some of our operational activities and accordingly depend on relationships with third-party providers for services such as core systems support, informational website hosting, internet services and other processing services. Our business depends on the successful and uninterrupted functioning of our information technology and telecommunications systems, many of which also depend on third-party providers. The failure of these systems, a cybersecurity breach involving any of our third-party service providers or the termination or change in terms of a third-party software license or service agreement on which any of these systems is based could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. Replacing vendors or addressing other issues with our third-party service providers could entail significant delay, expense and disruption of service.

As a result, if these third-party service providers experience difficulties, are subject to cybersecurity breaches, or terminate their services, and we are unable to replace them with other service providers, particularly on a timely basis, our operations could be interrupted. If an interruption were to continue for a significant period of time, our business, financial condition and results of operations could be adversely affected. Even if we were able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations.

Furthermore, third-party service providers, and banking organizations’ relationships with those providers, are subject to demanding regulatory requirements and attention by bank regulators. Our regulators may hold us responsible for any deficiencies in our oversight or control of our third-party service providers. As a result, if our regulators assess that we have not exercised adequate oversight and control over our third-party service providers or that such providers have not performed adequately, we could be subject to administrative penalties, fines or other forms of regulatory enforcement action as well as requirements for consumer remediation, any of which could have an adverse effect on our business, financial condition and results of operations.

 

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System failure or cybersecurity breaches of our network security could subject us to increased operating costs, as well as litigation, damage to our reputation and other potential losses.

Failures in, or breaches of, our computer systems and network infrastructure, or those of our third-party vendors or other service providers or our customers, including as a result of cyber attacks, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure or a similar catastrophic event. Any damage or failure that causes an interruption in our operations could have an adverse effect on our business, financial condition and results of operations. In addition, our operations are dependent upon our ability to protect our computer systems and network infrastructure against damage from cybersecurity breaches and other disruptive problems caused by the internet or other users. Cybersecurity breaches and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability to us and damage to our reputation, and may discourage current and potential customers from using our digital banking services. Our security measures, including firewalls and penetration testing, may not prevent or detect future potential losses from system failures or cybersecurity breaches.

In the normal course of business, we collect, process, and retain sensitive and confidential information regarding our customers. Although we devote significant resources and management focus to ensuring the integrity of our systems through information security and business continuity programs, our facilities and systems, and those of our third-party service providers, are vulnerable to external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, or other similar events. We and our third-party service providers have experienced these types of events in the past and expect to continue to experience them in the future. These events could interrupt our business or operations, result in significant legal and financial exposure, supervisory liability, regulatory enforcement action, damage to our reputation, loss of customers and business or a loss of confidence in the security of our systems, products and services. The techniques used in cyber attacks change rapidly and are increasingly sophisticated, including through the use of generative artificial intelligence and deepfakes, and we expect in the future through the use of quantum computing, and we may not be able to anticipate cyber attacks or data security breaches. Any of these occurrences could have an adverse effect on our business, financial condition and results of operations.

Information security risks for financial institutions like us have increased recently in part because of new technologies, the use of the internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. In addition to cyber attacks or other security breaches involving the theft of sensitive and confidential information, hackers recently have engaged in attacks against large financial institutions that are designed to disrupt key business services, such as consumer-facing websites. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources. Our early detection and response mechanisms may be thwarted by sophisticated attacks and malware designed to avoid detection.

Our ability to conduct our business could be disrupted by natural or man-made disasters.

Acts of terrorism, pandemic viruses, war, terrorism, civil unrest, violence, or other man-made disasters could cause disruptions to our business or to the economies of Canada and the United States as a whole. The occurrence of natural or man-made disasters could destroy, or cause a decline in the value of, mortgaged properties or other assets that serve as our collateral and increase the risk of delinquencies, defaults, foreclosures and losses on our loans, damage our banking facilities and offices, negatively impact regional economic conditions, adversely affect our customers, result in a decline in loan demand and loan originations, result in drawdowns of deposits by customers impacted by disasters and negatively impact the implementation of our growth strategy. Natural or man-made disasters could also disrupt our business operations more generally and have an adverse effect on our business, financial condition and results of operations.

 

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Litigation and regulatory actions, including possible enforcement actions, could subject us to significant fines, penalties, judgments or other requirements resulting in increased expenses or restrictions on our business activities.

In the normal course of business, from time to time, we have in the past been and may in the future be named as a defendant in various legal actions arising in connection with our current or prior business activities. Legal actions could include claims for substantial compensatory or punitive damages or claims for indeterminate amounts of damages. Further, in the future our regulators may impose consent orders, civil money penalties, matters requiring attention, or similar types of supervisory criticism. We may also, from time to time, be the subject of subpoenas, requests for information, reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding our current or prior business activities. Any such legal or regulatory actions may subject us to substantial compensatory or punitive damages, significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. Our involvement in any such matters, whether tangential or otherwise and even if the matters are ultimately determined in our favor, could also cause significant harm to our reputation and divert management attention from the operation of our business. Further, any settlement, consent order or adverse judgment in connection with any formal or informal proceeding or investigation by government agencies may result in litigation, investigations or proceedings as other litigants and government agencies begin independent reviews of the same activities. As a result, the outcome of legal and regulatory actions could have an adverse effect on our business, financial condition and results of operations.

We are subject to an extensive body of accounting rules and best practices. Periodic changes to such rules may change the treatment and recognition of critical financial statement line items.

The nature of our business makes us sensitive to the large body of accounting rules in the United States. From time to time, the governing bodies that oversee changes to accounting rules and reporting requirements may release new guidance for the preparation of our consolidated financial statements. These changes can materially impact how we record and report our financial condition and results of operations. In some instances, we could be required to apply a new or revised standard retroactively, resulting in the restatement of prior period financial statements. These changes could adversely affect our capital, regulatory capital ratios, ability to make larger loans, earnings and performance metrics. Any such changes could have an adverse effect on our business, financial condition and results of operations.

 

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PROPOSED ORGANIZATIONAL STRUCTURE

Organizational Structure Prior to the Reorganization

VersaBank is a Canadian Schedule I chartered bank subject to the provisions of the Bank Act. Prior to the Reorganization, VersaBank’s operations have been primarily conducted through VersaBank, VersaBank USA and DRTC. The following diagram reflects all material subsidiaries as of April 30, 2026, each of which is wholly-owned by VersaBank.

The Reorganization

VersaBank intends, subject to the approval of VersaBank shareholders, to effectuate a series of transactions that would cause Versa Bancorp, the Parent, to succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests, thereby domesticating the Company as a U.S. reporting issuer incorporated in Delaware.

In connection with the Reorganization, VersaBank will adopt an amendment to its by-laws and effect the Share Exchange. Following the Share Exchange, VersaBank will sell all of its shares of VersaHoldings US Corp. to the Parent in exchange for the Versa Bancorp Note, which will be subsequently distributed to the Parent as a return of capital.

The following diagram depicts the Company’s organizational structure immediately following the consummation of the Reorganization. The following diagram reflects all material subsidiaries as of April 30, 2026, as if the Reorganization had occurred on such date.

 

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Effect of the Reorganization on Our Organizational Structure

Upon completion of the Reorganization, Versa Bancorp, the Parent, will be the holding company and ultimate parent company for all of the Company’s operations. All of the Company’s activities will continue to be conducted primarily through VersaBank (which will become a Schedule II bank under the Bank Act), VersaHoldings US Corp. and DRTC, and the Parent’s principal assets following the reorganization will consist of shares of VersaBank and VersaHoldings US Corp. and an indirect interest in DRTC.

VersaBank’s shares are currently traded on TSX and Nasdaq under the symbol “VBNK”. The TSX has conditionally approved the listing of the Parent’s shares. Listing is subject to fulfilling all of the listing requirements of the TSX. The Parent intends to file a Company Event Notification with Nasdaq to notify Nasdaq of a Substitution Listing Event relating to the Reorganization and to assume the ticker symbol “VBNK” currently used by VersaBank. Shortly after completion of the Share Exchange, VersaBank shares will be delisted from the TSX and Nasdaq. In addition, following the Reorganization, (x) Parent will become the successor issuer to VersaBank pursuant to Rule 12g-3(a) promulgated under the Exchange Act and (y) VersaBank may apply to cease to be a reporting issuer in all jurisdictions in Canada in which it is a reporting issuer and terminate its reporting obligations in Canada.

All of VersaBank’s issued and outstanding 5.00% Fixed-to-Floating Rate Subordinated Notes due 2031 (the “2031 Notes”) will remain outstanding in accordance with their terms.

 

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THE SPECIAL MEETING OF SHAREHOLDERS

The Meeting

The Meeting will be held at 1979 Otter Place, London, Ontario on September 16, 2026, at 10:30 a.m. ET to:

(1)

consider and, if deemed advisable, vote to approve the Reorganization Resolution, the full text of which is attached to this prospectus/circular as Annex A, to cause, among other things, the Parent, a Delaware corporation, to become a holding company that will succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests, which is composed of:

​

(i)

an amendment to VersaBank’s by-laws, which is attached to this prospectus/circular as Annex B, and certain transactions that will:

​

(a)

create the Exchangeable Shares;

​

(b)

upon the creation of the Exchangeable Shares, cause the outstanding shares of VersaBank to be exchanged for Exchangeable Shares on a one-for-one basis;

​

(c)

immediately following the conversion of each VersaBank share into the Exchangeable Share, cause the Exchangeable Shares to be transferred automatically to the Parent for:

​

(A)

an equivalent number of newly issued shares of common stock of the Parent on a one-for-one basis in the case of Exchangeable Shares that are not Dissent Shares; or

​

(B)

the right to be paid fair value for Exchangeable Shares, in the case of Exchangeable Shares that are Dissent Shares; and

​

(d)

following the transfer described immediately above, convert all Exchangeable Shares into shares of VersaBank; and

​

(ii)

the sale by VersaBank of all of its shares of VersaHoldings US Corp. to the Parent in exchange for the Versa Bancorp Note, which will be subsequently distributed to the Parent as a return of capital, resulting in a corresponding reduction of the stated capital of VersaBank in an amount equal to such return of capital; and

​

(2)

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

​

The Reorganization Proposal must be approved by the affirmative vote of not less than two-thirds of the votes cast by the holders of VersaBank’s outstanding shares at the Meeting.

Only VersaBank’s Registered Shareholders as of the close of business on August 10, 2026 (the “Record Date”) will be entitled to receive notice of and to vote at the Meeting or any adjournment or postponement thereof. VersaBank shareholders who are unable to or who do not wish to attend the Meeting are requested to date and sign the enclosed form of proxy promptly and return it to VersaBank’s transfer agent, Odyssey Trust Company, in accordance with the instructions provided in the enclosed form of proxy.

Each common share held by each VersaBank shareholder as of the close of business on the Record Date is entitled to one vote in respect of each matter properly coming before the Meeting. As of the close of business on July 24, 2026, there were 32,416,007 outstanding VersaBank common shares. There were no preferred shares of VersaBank outstanding as of the Record Date.

To the knowledge of the directors and executive officers of VersaBank, as of April 30, 2026, no person beneficially owned or exercised control or direction over VersaBank shares carrying more than 10% of the votes attached to all of the outstanding shares of VersaBank other than GBH, which beneficially owned 8,511,652 VersaBank shares, or approximately 26.54% of the issued and outstanding shares of VersaBank.

 

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As of July 24, 2026, the directors and executive officers had the right to vote approximately 1,748,025 VersaBank shares, representing approximately 5.39% of the issued and outstanding shares of VersaBank entitled to vote at the Meeting. It is expected that each of the directors and executive officers will vote “FOR” the Reorganization Proposal.

The Record Date is earlier than the date on which the transactions that are the subject of the Reorganization Proposal are expected to be completed. If you transfer your shares of VersaBank after the Record Date but before the Meeting, you will retain your right to vote at the Meeting unless the transferee obtains a proxy from you to vote those shares. If you transfer your shares of VersaBank prior to the Record Date, you will have no right to vote those shares at the Meeting.

A quorum is present at the Meeting if the holders of at least 25% of the outstanding VersaBank shares that are entitled to vote at the meeting are present in person or represented by proxyholders.

The Reorganization Proposal

See “The Reorganization Proposal” for more information.

The board of directors of VersaBank unanimously recommends that you vote “FOR” the approval of the Reorganization Proposal.

Solicitation of Proxies

This prospectus/circular is furnished in connection with the solicitation of proxies by VersaBank’s management for use at the Meeting. VersaBank will pay for the associated costs of soliciting proxies. In addition to this prospectus/circular, VersaBank may engage a proxy solicitation agent to assist in the solicitation of proxies for the Meeting. VersaBank’s directors, officers and employees may also solicit proxies in person, by telephone or by other means of communication, none of whom will receive additional compensation for assisting with the solicitation. VersaBank may also reimburse brokerage firms, banks and other agents for the cost of distributing this proxy statement to Beneficial Owners.

The prospectus/circular and other proxy-related materials are being set to both Registered Shareholders and Beneficial Owners. VersaBank is not sending proxy related materials directly to Beneficial Owners and is not relying on the notice-and-access provisions of applicable securities laws for the delivery of proxy-related materials to either Registered Shareholders or Beneficial Owners. Instead, VersaBank will deliver proxy-related materials to Intermediaries, and they will be asked to promptly forward the proxy-related materials to Beneficial Owners. If you are a Beneficial Owner, your Intermediary should send you a voting instruction form or form of proxy with this prospectus/circular. The Bank has elected to pay for the delivery of the proxy-related materials to objecting Beneficial Owners.

Appointment of Proxies

The persons named in the enclosed form of proxy and voting instruction forms are directors and officers of VersaBank. 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 Company (the “Depositary”) 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.

Registered owners of shares on the Record Date, as recorded on VersaBank’s share register (“Registered Shareholders”), who plan to attend and vote their VersaBank 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 should register with VersaBank’s transfer agent, Odyssey Trust Company, upon their arrival at the Meeting.

 

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Voting by Proxyholder

Shares represented by proxies will be voted by the persons designated in the enclosed form of proxy for or against the matter specified in the proxy in accordance with the direction of the shareholders appointing them. If you specify a choice with respect to any matter to be acted upon, your VersaBank shares will be voted accordingly. The proxy confers discretionary authority on the persons named therein with respect to:

(1)

each matter or group of matters identified therein for which a choice is not specified;

​

(2)

any amendment to or variation of any matter identified therein; and

​

(3)

any other matter that properly comes before the Meeting.

​

As of the date of this prospectus/circular, our management knows of no such amendment, variation or other matter expected to come before the Meeting. If any other matters properly come before the Meeting, the persons named in the form of proxy will vote on them in accordance with their best judgment.

In the event that a choice is not made with respect to the Reorganization Proposal, the proxyholder will vote “FOR” the Reorganization Proposal.

Transfer Agent

You can contact Odyssey Trust Company, VersaBank’s transfer agent (i) by telephone at (888) 290-1175 (toll-free in North America), (ii) by fax at (800) 517-4553 (toll-free in North America), (iii) by mail at Suite 1100, 67 Yonge St., Toronto, Ontario, Canada M5E 1J8 or (iv) by email at shareholders@odysseytrust.com.

Registered Shareholders

If you are a Registered Shareholder, a properly executed proxy must be submitted using one of the following methods:

(1)

visit www.odysseytrust.com\versabank and enter the control number printed with your address to the right of your proxy form. If you vote by internet, do not mail the enclosed proxy form;

​

(2)

by mail or personal delivery to Odyssey Trust Company, Attention: Proxy Department, Suite 1100, 67 Yonge St., Toronto, Ontario, Canada M5E 1J8; or

​

(3)

by fax to Odyssey Trust Company, to the attention of the Proxy Department at (800) 517-4553 (toll-free in North America).

​

To be counted, a properly executed proxy must be returned to Odyssey Trust Company in accordance with the instructions provided in the enclosed form of proxy not later than 10:30 a.m. ET on September 14, 2026, or if the Meeting is adjourned or postponed, not later than 10:30 a.m. ET on the day which is two business days preceding the date of the adjourned or postponed meeting (the “Proxy Submission Deadline”). The Proxy Submission Deadline may be waived by the chair of the Meeting at his discretion without notice.

Revocation of Proxy

In addition to any other manner permitted by law, a proxy may be revoked by a Registered Shareholder by:

(1)

executing a proxy bearing a later date or by executing a valid notice of revocation, either of the foregoing to be executed by the Registered Shareholder or their authorized attorney in writing or, if the Registered Shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and by delivering the proxy bearing a later date at 140 Fullarton Street, Suite 2002, 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 to the chair of the Meeting on the day of the Meeting; or

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(2)

personally attending the Meeting and voting.

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A revocation of a proxy will not affect a matter on which a vote is taken before the revocation.

A Registered Shareholder attending the Meeting has the right to vote by attending the Meeting and, if he or she does so, his or her proxy is nullified with respect to the matters such person votes upon and any subsequent matters thereafter to be voted upon at the Meeting or any adjournment thereof.

Beneficial Owners

“Beneficial Owners” are VersaBank shareholders who do not hold their VersaBank shares directly in their own name, but who hold their shares indirectly through a bank, trust company, securities broker, trustee or other entity (“Intermediaries”).

If your shares of VersaBank are registered in the name of an Intermediary on the share register of Odyssey Trust Company, you are a Beneficial Owner, and this prospectus/circular is being sent to you by your Intermediary. Each Intermediary has its own mailing procedures, return instructions and deadlines for submitting proxies.

If you are a Beneficial Owner, the Intermediary through which you hold your shares will send you instructions on how to vote your shares. Such deadlines for submission may be earlier than the Proxy Submission Deadline, and Beneficial Owners should follow such instructions closely to ensure that their shares are voted at the Meeting.

Beneficial Owners 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 duly appointed as a proxyholder. Beneficial Owners should contact their intermediary to determine what documentation the Intermediary requires in order for such Beneficial Owner or its nominee to be appointed as proxyholder and to attend and vote their shares at the Meeting. Only after the Intermediary appoints a Beneficial Owner or its nominee as a proxyholder can that Beneficial Owner or its nominee vote shares directly at the Meeting.

The majority of Intermediaries now delegate responsibility for obtaining instructions from clients to Broadridge. Broadridge typically prepares a special voting instruction form, mails those forms to Beneficial Owners and asks for appropriate instructions respecting the voting of shares to be represented at the Meeting. Beneficial Owners are requested to complete and return the voting instruction form to Broadridge by mail in the envelope provided. Alternatively, Beneficial Owners 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 Beneficial Owner 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 their shares voted. Further, a Beneficial Owner receiving a voting instruction form from Broadridge cannot use that form to vote their shares in person at the Meeting. If you are a Beneficial Owner 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.

Voting

VersaBank shareholders may receive more than one set of voting materials, including multiple copies of this prospectus/circular and multiple proxies or voting instructions. For example, if you hold your shares in more than one brokerage account, you will receive separate voting instructions for each brokerage account in which you hold shares. If you are a Registered Shareholder and your shares are registered in more than one name, you will receive more than one proxy. Please complete all proxies and voting instructions that you receive in order to cast your vote with respect to all of your shares of VersaBank.

Procedure for the Exchange of Shares

Prior to the consummation of the Reorganization, such number of VersaBank shares as is required pursuant to the Reorganization will be deposited with the Depositary for the benefit of VersaBank shareholders.

 

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The share certificates that represent the VersaBank shares to be deposited with the Depositary shall be surrendered to the Depositary for cancellation. Upon surrender of the certificate for cancellation, together with the duly completed and executed Letter of Transmittal and such additional documents and instruments as the Depositary may reasonably require, the VersaBank shareholder surrendering such certificate will be entitled to receive, and the Depositary will deliver to such VersaBank shareholder, the Consideration which such VersaBank shareholder has the right to receive for such VersaBank shares pursuant to the Reorganization, and any certificate so surrendered will be cancelled.

Any exchange or transfer of VersaBank shares pursuant to the Reorganization will be free and clear of any liens or other claims of third parties of any kind.

Letter of Transmittal

A Letter of Transmittal will be mailed, together with this prospectus/circular, to each Registered Shareholder as of the Record Date. Each Registered Shareholder must forward a duly completed and executed Letter of Transmittal, with accompanying VersaBank share certificates and such other documents and instruments as the Depositary may reasonably require, in order to receive the shares of the Parent to which such VersaBank shareholder is entitled pursuant to the Reorganization. It is recommended that VersaBank shareholders complete, sign and return the Letter of Transmittal and accompanying documents to the Depositary as soon as possible. All deposits of VersaBank shares made under a Letter of Transmittal are irrevocable. The Letter of Transmittal is filed as Exhibit 99.2 to the registration statement of which this prospectus/circular forms a part.

Any use of the mail to transmit a certificate for VersaBank shares and the related Letter of Transmittal is at the risk of the VersaBank shareholder. If these documents are mailed, it is recommended that registered mail, properly insured, be used.

Whether or not VersaBank shareholders forward the certificates representing their VersaBank shares, upon the consummation of the Reorganization, VersaBank shareholders will cease to be VersaBank shareholders and will only be entitled to receive that number of shares of the Parent to which they are entitled under the Reorganization, or in the case of VersaBank shareholders who properly exercise the right to receive fair value for their VersaBank shares in accordance with the dissent procedures (the “Dissent Rights”). See “Appraisal and Dissenters’ Rights of VersaBank Shareholders”.

The instructions for surrendering certificates representing VersaBank shares and depositing such share certificates with the Depositary are set forth in the Letter of Transmittal. The Letter of Transmittal provides instructions with regard to lost certificates.

Return of VersaBank Shares

If the Reorganization is not completed, any deposited VersaBank shares will be returned to the depositing VersaBank shareholder at VersaBank’s expense upon written notice to the Depositary from VersaBank, by returning the deposited VersaBank shares (and any other relevant documents) by first class insured mail in the name of and to the address specified by the VersaBank shareholder in the Letter of Transmittal or, if such name and address is not so specified, in such name and to such address as shown on the register maintained by VersaBank’s transfer agent, Odyssey Trust Company.

Lost Certificates

If any certificate representing VersaBank shares has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Parent or the Depositary will issue in exchange for such lost, stolen or destroyed certificate, the Consideration in accordance with such holder’s Letter of Transmittal. When authorizing such Consideration in exchange for any lost, stolen or destroyed certificate, the Person to whom such Consideration is to be delivered will, as a condition precedent to the delivery of such Consideration, give a bond satisfactory to the Parent and the Depositary (each acting reasonably) in such sum as the Parent may direct (acting reasonably), or otherwise indemnify the Parent in a manner satisfactory to the Parent (each acting reasonably) against any claim that may be made against the Parent with respect to the certificate alleged to have been lost, stolen or destroyed.

 

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Cancellation of Rights

Following the consummation of the Reorganization, any share certificate of VersaBank shares that is not surrendered prior to the consummation of the Reorganization will be deemed to represent only the right to receive upon surrender the Consideration to which the holder is entitled to receive. Any such certificate that is not duly surrendered on or before the day that is three years less one day from the date of the consummation of the Reorganization will cease to represent a claim by or interest of any former holder of VersaBank shares of any kind or nature against or in VersaBank or the Parent. On such date, all Parent shares to which such holder is entitled will be deemed to have been surrendered to the Parent for cancellation.

Withholding Rights

VersaBank, the Parent and the Depositary, as applicable, shall be entitled to deduct and withhold from any amount otherwise payable or deliverable to any Person under the Reorganization, such amounts as VersaBank, Versa Holdings and the Depositary are required to deduct and withhold, or reasonably believe to be required to deduct and withhold, from such amount otherwise payable or deliverable under any provision of any laws in respect of taxes. Any such amounts will be deducted, withheld and remitted from the amount otherwise payable or deliverable pursuant to the Reorganization and shall be treated for all purposes under the Reorganization as having been paid to the Person in respect of which such deduction, withholding and remittance was made; provided that such deducted and withheld amounts are actually remitted to the appropriate Governmental Entity. To satisfy the amount required to be deducted or withheld from any payment made pursuant to the Reorganization, VersaBank, the Parent and the Depositary, as applicable, may sell or otherwise dispose of any portion of the shares of the Parent deliverable to such holder as is necessary to provide sufficient funds to enable VersaBank, the Parent or the Depositary to comply with such deduction and withholding requirements.

Depositary

VersaBank has retained the services of the Depositary for the receipt of the Letter of Transmittal and the certificates representing VersaBank shares. The Depositary will receive reasonable and customary compensation for its services in connection with the Reorganization, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities, including liabilities under securities laws and expenses in connection therewith.

Expenses of the Reorganization

VersaBank estimates that it will incur expenses in the aggregate amount of $10.4 million in connection with the Reorganization, including legal, tax, accounting, filing and printing costs, and the cost of preparing and mailing this prospectus/circular.

Whether you plan to attend the Meeting or not, please read this prospectus/circular carefully and vote your shares by dating and signing the enclosed form of proxy promptly and returning it to VersaBank’s transfer agent, Odyssey Trust Company, in accordance with the instructions provided in the enclosed form of proxy.

For questions about voting your shares, the Meeting or the Reorganization Proposal, you should contact VersaBank, 140 Fullarton Street, Suite 2002, London, Ontario N6A 5P2, telephone: (519) 645-1919.

 

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THE REORGANIZATION PROPOSAL

Overview of the Reorganization

Subject to the approval of VersaBank shareholders, VersaBank is proposing to effectuate a series of transactions that would cause the Parent to succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests, thereby domesticating the Company as a U.S. reporting issuer incorporated in Delaware.

In summary, under the proposed terms of the Reorganization, VersaBank will adopt an amendment to its by-laws and effect the Share Exchange. Following the Share Exchange, VersaBank will sell all of its shares of VersaHoldings US Corp. to the Parent in exchange for the Versa Bancorp Note, which will be subsequently distributed to the Parent as a return of capital.

The Reorganization Proposal must be approved by the affirmative vote of not less than two-thirds of the votes cast by the holders of VersaBank’s outstanding shares at the Meeting. If the Reorganization Proposal is approved and all required regulatory approvals are received, the Reorganization is expected to be consummated as early as October 26, 2026.

Background to the Reorganization

As part of their ongoing evaluation of VersaBank’s business, VersaBank’s senior management and VersaBank’s board of directors regularly review, consider and assess VersaBank’s operations, financial performance and industry conditions. One of VersaBank’s long-term objectives is to increase opportunities for future access to capital and index inclusion.

Principal Reasons for the Reorganization

After careful consideration, the board of directors of VersaBank believes that the Reorganization is in the best interests of VersaBank and its shareholders. The Reorganization is intended to enhance long-term shareholder value and better position VersaBank to execute on its strategic priorities. In making its recommendation, the board of directors of VersaBank considered a number of key factors, including:

•

Improved Access to U.S. Capital Markets and Investors — upon the consummation of the Reorganization, the Parent will succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests, thereby domesticating the Company as a U.S. reporting issuer incorporated in Delaware. The Reorganization is expected to increase VersaBank’s visibility and familiarity with U.S. institutional investors and research analysts. We also anticipate that being a U.S. reporting issuer may, over time, enhance trading liquidity.

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•

Alignment with Strategic Growth Objectives — the Reorganization supports VersaBank’s long-term U.S. growth strategy and reflects VersaBank’s increasing focus on U.S.-based operations and funding structures. The board of directors of VersaBank believes that positioning the ultimate parent company of VersaBank’s group, Versa Bancorp, in the United States would better align its corporate structure with its business focus and growth trajectory.

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•

Enhanced Capital Raising Flexibility — the board of directors of VersaBank believes that the Reorganization will improve the Company’s ability to raise capital in the United States, which is essential to funding its long-term growth initiatives, including expansion of its receivables purchase program (SRP) and other strategic financing solutions. The board of directors of VersaBank believes that having a structure that is more customary for a U.S. bank holding company may enable the Company to access a broader and deeper pool of capital on more competitive terms.

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•

Potential for U.S. Index Inclusion — the management of VersaBank believes that, over time, the Reorganization may facilitate the inclusion of the shares of the Parent in more prominent U.S. stock indices, which could attract additional passive investment flows and improve VersaBank’s trading profile.

​

•

Continued Commitment to Canada — VersaBank will continue to maintain its Canadian banking operations, and the extent of its regulatory oversight by OSFI will not be materially impacted by the

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Reorganization. VersaBank remains firmly committed to its Canadian customers, employees and communities, and does not expect the Reorganization to have any material impact on its operations in Canada. Upon the consummation of the Reorganization, VersaBank will become a Schedule II chartered bank under the Bank Act, and the shares of the Parent will be listed on the TSX in substitution for the VersaBank shares that are currently listed on the TSX.

In the course of its deliberations, the board of directors of VersaBank, in consultation with VersaBank’s management and its legal, tax and other professional advisors, also considered a variety of risks and other potentially negative factors related to the Reorganization. These include, among others, risks relating to implementation of the Reorganization, potential market or regulatory uncertainty, and impacts on shareholders or VersaBank’s reporting obligations. These risks are described in greater detail under the heading “Risk Factors”.

However, in light of the number and complexity of the factors considered, the board of directors of VersaBank did not find it practicable to, nor did it attempt to, quantify, rank or assign relative weights to the specific factors considered in making its recommendation to vote “FOR” the Reorganization Proposal. Individual members of the board of directors of VersaBank may have given different weights to different factors. The board of directors of VersaBank reached its recommendation based on the totality of the information presented to, and considered by, it through its deliberations.

The foregoing summary of the information and factors considered by the board of directors of VersaBank is forward-looking in nature. This information should be read in light of the factors set forth under sections entitled “— Background to the Reorganization”, “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors”.

The Reorganization

Subject to the approval of VersaBank shareholders, the board of directors of VersaBank expects to adopt a resolution to amend the by-laws of VersaBank to create the Exchangeable Shares to facilitate the Reorganization.

Upon adoption of the by-law amendment to create the Exchangeable Shares, VersaBank will create the Exchangeable Shares, each VersaBank share will be automatically exchanged, without further action by the holder, for one Exchangeable Share, and the Parent will file the Proposed Organizational Documents with the Secretary of State of the State of Delaware.

Immediately following the conversion of each VersaBank share into the Exchangeable Shares, each Exchangeable Share will be transferred automatically to the Parent in exchange for, in the case of Exchangeable Shares other than Exchangeable Shares held by Dissenting Shareholders, an equivalent number of newly issued shares of common stock of the Parent on a one-for-one basis. Each Exchangeable Share issued in respect of a Dissenting Shareholder will instead be transferred to the Parent in exchange for the right to receive the fair market value for such shares, as determined in accordance with Section 277 of the Bank Act or as agreed between VersaBank and the Dissenting Shareholder. See “Appraisal and Dissenters’ Rights of VersaBank Shareholders”. Following the Share Exchange, all Exchangeable Shares will be converted into shares of VersaBank on a one-for-one basis.

Following the completion of the foregoing transactions, (i) VersaBank will amend its Stock Option Plan to provide that all outstanding awards will be convertible, exercisable or settleable, as applicable, into shares of Versa Bancorp rather than shares of VersaBank, and Versa Bancorp will assume VersaBank’s obligations under the Stock Option Plan as so amended (including the obligation to issue shares of the Parent upon exercise or settlement of outstanding awards), and (ii) VersaBank will sell all of its shares of VersaHoldings US Corp. to the Parent in exchange for the Versa Bancorp Note.

VersaBank will file an election to cease to be a “public corporation” under the Tax Act and will thereafter distribute the Versa Bancorp Note to the Parent as a return of capital. As a result of such distribution, the Versa Bancorp Note will be cancelled.

As a result of such transactions, the Parent will become the parent company of VersaBank. While VersaBank will continue to be a Canadian chartered bank governed by the Bank Act, its publicly traded

 

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parent corporation, the Parent, will be governed by the DGCL. Accordingly, shareholders are urged to carefully review the information set forth in the section entitled “— Change in Governing Law”.

Pursuant to the Registration Statement of which this prospectus/circular forms a part, the Parent is registering the shares of its common stock to be issued pursuant to the Share Exchange.

Exchangeable Shares

The Exchangeable Shares shall rank junior to any class of preferred shares of VersaBank and rank equally with the common shares of VersaBank 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 VersaBank.

Subject to the Bank Act, holders of Exchangeable Shares shall be entitled to receive notice of and to attend and vote at all meetings of the shareholders of VersaBank on the same basis as a holder of VersaBank shares.

Once the Reorganization Proposal receives the required approvals, each VersaBank share shall be exchanged automatically and without any further action on the part of the holder into one Exchangeable Share. Immediately thereafter, each such Exchangeable Share (other than an Exchangeable Share issued to a Dissenting Shareholder) shall be transferred automatically to the Parent in exchange for one newly issued share of the Parent.

Each Exchangeable Share issued to a Dissenting Shareholder shall instead be transferred automatically to the Parent upon the consummation of the Reorganization in exchange for the right to be paid the fair value of such Dissenting Shareholder’s VersaBank shares, as determined under Section 277 of the Bank Act or as agreed between VersaBank and the Dissenting Shareholder.

The Exchangeable Shares shall be convertible into VersaBank shares at the option of the holder at any time and from time to time following the consummation of the Reorganization on a one-for-one basis.

No fractional shares will be issued in connection with the Reorganization.

This summary of the Exchangeable Shares is qualified in its entirety by reference to the full text of the rights, privileges, restrictions and conditions of the Exchangeable Shares, which are set forth in the Reorganization By-Law Amendment attached hereto as Annex B.

Stock Exchange Considerations

The TSX has conditionally approved the listing of the Parent’s shares. Listing is subject to fulfilling all of the listing requirements of the TSX. The Parent intends to file a Company Event Notification with Nasdaq to notify Nasdaq of a Substitution Listing Event relating to the Reorganization and to assume the ticker symbol “VBNK” currently used by VersaBank. Shortly after completion of the Share Exchange, VersaBank shares will be delisted from the TSX and Nasdaq. In addition, following the Reorganization, (x) Parent will become the successor issuer to VersaBank pursuant to Rule 12g-3(a) promulgated under the Exchange Act and (y) VersaBank may apply to cease to be a reporting issuer in all jurisdictions in Canada in which it is a reporting issuer and terminate its reporting obligations in Canada.

Treatment of VersaBank Notes

All of VersaBank’s issued and outstanding 2031 Notes will be unaffected by the Reorganization and will remain outstanding in accordance with their terms.

Treatment of VersaBank’s Stock Option Plan

Following the completion of the Share Exchange, VersaBank will amend its Stock Option Plan to (i) amend the definition of “Company” to include Versa Bancorp, (ii) provide for a fixed number of shares reserved for issuance (such number not to exceed 10% of the total issued and outstanding shares of Versa Bancorp as of the effective date) which will replenish as shares covered by exercised awards will become available for subsequent grants; and (iii) make such other conforming amendments as may be necessary or appropriate to provide that all outstanding awards under the Stock Option Plan will be convertible, exercisable

 

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or settleable, as applicable, into shares of the Parent rather than shares of VersaBank. The plan maximum will not increase as a result of the amendments and the Stock Option Plan will remain an “evergreen” plan, which requires shareholder approval every three years pursuant to the rules of the TSX. Concurrently with such amendment, Versa Bancorp will assume VersaBank’s obligations under the Stock Option Plan as so amended, including the obligation to issue shares of the Parent (or pay the cash equivalent thereof, as applicable) upon the exercise or settlement of any outstanding awards. As a result, each stock option, performance share unit, restricted share unit and deferred share unit will represent the right to receive a share of the Parent (or its cash equivalent, as applicable) rather than a share of VersaBank (or its cash equivalent, as applicable), and any exercise price paid upon the exercise of stock options will be paid to the Parent.

Certain Canadian Securities Law Matters

The shares of the Parent to be issued pursuant to the Reorganization will be issued pursuant to an exemption from the prospectus and registration requirements of applicable Canadian Securities Laws under Section 2.11 of National Instrument 45-106 — Prospectus Exemptions and will generally not be subject to any resale restrictions under applicable Canadian Securities Laws, provided that the following conditions are satisfied: (i) the issuer of such shares, pursuant to Section 2.9 of National Instrument 45-102 — Resale of Securities (“NI 45-102”), is and has been a reporting issuer in a jurisdiction of Canada for the four months immediately preceding the trade (upon completion of the Reorganization, the Parent will be deemed to have been a reporting issuer from the time that VersaBank became a reporting issuer, satisfying this requirement); (ii) the trade is not a control distribution; (iii) no unusual effort is made to prepare the market or to create a demand for the security that is the subject of the trade; (iv) no extraordinary commission or consideration is paid to a person or company in respect of the trade; (v) if the selling securityholder is an insider or officer of the issuer, the selling securityholder has no reasonable grounds to believe that the issuer is in default of securities legislation (each as set out in Section 2.6(3) of NI 45-102); and (vi) such holder is not a person or company engaged in or holding itself out as engaging in the business of trading securities or such trade is made in accordance with applicable dealer registration requirements or in reliance upon an exemption from such requirements. VersaBank shareholders should consult with their own financial and legal advisors with respect to any restrictions on the resale of Parent shares received upon the consummation of the Reorganization.

Following the completion of the Reorganization, VersaBank may apply to the applicable Canadian securities regulatory authorities to cease to be a reporting issuer in each province and territory in which it is currently a reporting issuer, once it is eligible to do so. Until such time as the applicable securities regulatory authorities grant such relief, VersaBank will remain a reporting issuer in each province and territory in which it is currently a reporting issuer.

Ongoing Reporting Obligations

Upon the consummation of the Reorganization, the Parent will become a reporting issuer in each of the provinces that VersaBank is currently a reporting issuer. The Parent will also become a U.S. reporting issuer subject to Section 13 or 15(d) of the Exchange Act and will be required to file periodic reports and other information with the SEC. The Parent can satisfy many of its Canadian continuous disclosure obligations by complying with applicable U.S. requirements and filing copies of its SEC documents concurrently with Canadian securities regulatory authorities via SEDAR+. In addition, unless otherwise exempt, insiders of the Parent will be required to file insider reports on both the System for Electronic Disclosure by Insiders (“SEDI”) and with the SEC.

Certain U.S. Regulatory Matters

Upon consummation of the Reorganization, the following regulatory changes will occur.

•

The Company will no longer be a “foreign private issuer” and will be required to comply with all of the provisions applicable to a U.S. domestic issuer under the Exchange Act, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act, the Nasdaq listing rules, and the rules and regulations implemented by the SEC.

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•

The Parent, as the ultimate parent holding company, will be a domestic U.S. bank holding company subject to consolidated regulation and supervision by the U.S. Federal Reserve, including the U.S. Federal Reserve’s regulatory capital requirements.

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•

VersaBank will be held by the Parent as a foreign bank subsidiary under the authority of Subpart A of Regulation K and will be subject to the requirements and restrictions applicable to such subsidiaries. In addition, VersaBank will cease to be a qualifying foreign banking organization under Subpart B of Regulation K and, as a result, will have a more narrow scope of authority to engage in non-banking activities outside the United States.

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Bank Regulatory Approvals

To complete the Reorganization, the Parent and GBH must obtain applicable approvals or consents from the U.S. Federal Reserve, the Parent must obtain an approval from the Minister of Finance (Canada), and VersaBank must obtain approvals from the Superintendent.

The approval of an application means only that the statutory and regulatory criteria for approval have been satisfied or waived. It does not mean that the approving authority has determined that the consideration to be received by holders of VersaBank common stock and options to purchase VersaBank common stock in the Reorganization is fair. Regulatory approval does not constitute an endorsement or recommendation of the Reorganization.

VersaBank and the Parent believe that the Reorganization does not raise significant regulatory concerns and that they will be able to obtain all requisite regulatory approvals. However, there can be no assurance that all of the regulatory approvals described below will be obtained and, if obtained, there can be no assurances regarding the timing of the approvals, the companies’ abilities to obtain the approvals on satisfactory terms or the absence of litigation challenging such approvals. In addition, there can be no assurance that such approvals will not impose conditions or requirements that, individually or in the aggregate, would or could reasonably be expected to have an adverse effect on the financial condition, results of operations, assets or business of the surviving corporation following completion of the Reorganization. There can likewise be no assurances that U.S. or Canadian federal, state, provincial, regulatory or competition authorities will not attempt to challenge the Reorganization or, if such a challenge is made, what the result of such challenge will be.

U.S. Federal Reserve Approvals

Section 3 Application — The Parent and GBH

The Parent’s acquisition of shares of VersaBank USA as part of the Reorganization are subject to approval by the U.S. Federal Reserve pursuant to Section 3 of the BHC Act. In addition, GBH’s acquisition of shares of Parent as part of the Reorganization are subject to approval by the U.S. Federal Reserve pursuant to Section 3 of the BHC Act if GBH will “control” Parent following the Reorganization. Under the BHC Act, control exists if a company directly or indirectly or acting through one or more persons owns, controls or has power to vote twenty-five percent (25%) or more of any class of voting securities of another company; controls in any manner the election of a majority of the directors or trustees of the other company; or if the U.S. Federal Reserve determines that the company directly or indirectly exercises a controlling influence over the management or policies of the other company. As of July 24, 2026, GBH beneficially owned 24.34% of VersaBank’s shares. The U.S. Federal Reserve takes into consideration a number of factors when acting on applications under Section 3 of the BHC Act. These factors include the financial and managerial resources (including consideration of the competence, experience and integrity of the officers, directors and principal shareholders, as well as the pro forma capital ratios) and future prospects of the reorganized organization. The U.S. Federal Reserve also considers the effectiveness of the applicant in combatting money laundering, the convenience and needs of the communities to be served, as well as the extent to which the proposal would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. For foreign organizations, such as GBH, acquiring bank holding companies under Section 3 of the BHC Act, the U.S. Federal Reserve also takes into consideration the applicant’s home country supervision.

In considering an application under Section 3 of the BHC Act, the U.S. Federal Reserve also reviews the records of performance of the relevant insured depository institutions under the Community Reinvestment Act, pursuant to which the U.S. Federal Reserve must also take into account the record of performance of the applicant in meeting the credit needs of the entire community, including low- and moderate-income

 

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customers and communities, served by its depository institution subsidiary. In its most recent Community Reinvestment Act performance evaluation, VersaBank USA (then known as Stearns Bank Holdingford, N.A.) received a “Satisfactory” rating.

The BHC Act and U.S. Federal Reserve regulations also require published notice of, and the opportunity for public comment on, the Section 3 applications to the U.S. Federal Reserve. The U.S. Federal Reserve takes into account the views of third-party commenters, particularly on the subject of the relevant party’s (or parties’) Community Reinvestment Act performance and record of service to their communities. The U.S. Federal Reserve is authorized to hold one or more public hearings or meetings if the agencies determine that such hearings or meetings would be appropriate. The receipt of written comments or any public meeting or hearing could prolong the period during which the applicable application is under review by the U.S. Federal Reserve.

The filing of the applicable applications to the U.S. Federal Reserve are expected to occur on August 14, 2026.

Section 4 Application

The Parent’s indirect acquisition of shares of VersaFinance US Corp. is subject to the approval of the U.S. Federal Reserve pursuant to Section 4 of the BHC Act. The U.S. Federal Reserve takes into consideration a number of factors when acting on applications under Section 4 of the BHC Act. These factors include the financial and managerial resources of the companies involved, the effect of the proposal on competition in the relevant markets, the risk to the stability of the United States banking or financial system, and the public benefits that would result from the proposed acquisition for which an application is submitted.

The filing of the application to the U.S. Federal Reserve is expected to occur on August 14, 2026.

Regulation K Application

The Parent’s acquisition of shares of VersaBank, as the Parent’s initial investment in a foreign subsidiary under the U.S. Federal Reserve’s Subpart A of Regulation K and as part of the Reorganization, is subject to the approval, referred to as specific consent, of the U.S. Federal Reserve pursuant to Regulation K. The U.S. Federal Reserve takes into consideration a number of factors when acting on applications under the specific consent procedures, including the permissibility of VersaBank’s activities.

The filing of the application to the U.S. Federal Reserve is expected to occur on August 14, 2026.

Bank Act Approvals

Minister of Finance (Canada)

In Canada, Part VII of the Bank Act sets out constraints on the ownership of banks. Specifically, Section 373(1) of the Bank Act states that no person, or entity controlled by a person, shall, without the approval of the Minister of Finance (Canada), purchase or otherwise acquire any share of a bank, or otherwise acquire control of any entity that holds any share of a bank, if the acquisition would cause the person to have a significant interest in any class of shares of the bank. “Significant interest” is defined in the Bank Act as holding greater than 10% of the outstanding shares of a class of shares of a bank. In addition, Section 377.1(1) of the Bank Act states that no person shall, without the approval of the Minister of Finance (Canada), acquire control of a bank with equity of less than $12 billion. The Reorganization will include an acquisition of control of VersaBank by the Parent. As a result, an application under Sections 373(1) and 377.1(1) of the Bank Act was submitted on May 8, 2026.

Superintendent

Approval of the Superintendent will be required pursuant to Section 494(4) of the Bank Act for VersaBank to enter into related-party asset transactions as part of a restructuring in respect of its sale of issued and outstanding shares of VersaHoldings US Corp. to the Parent in exchange for the Versa Bancorp Note. In addition, approval of the Superintendent will be required pursuant to Section 65(1) of the Bank Act for VersaBank to issue shares in consideration of property in connection with the conversion of VersaBank’s common shares into the Exchangeable Shares. Finally, approval of the Superintendent will be

 

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required pursuant to Section 75(4) of the Bank Act for VersaBank to reduce its stated capital and distribute the amount of such reduction as a return of capital to the Parent following the Share Exchange. As a result, an application under Sections 65(1), 75(4) and 494(4) of the Bank Act was submitted on May 8, 2026.

Change in Governing Law

VersaBank, is currently governed by Canadian law as a Schedule I chartered bank under the Bank Act. Upon consummation of the Reorganization, the Parent will become the parent company of VersaBank, and the Parent will be governed by the DGCL. The Bank Act differs in some material respects from the laws generally applicable to corporations and their shareholders under the DGCL. In addition, VersaBank’s current governing documents differ in certain material respects from the Charter and the Proposed Bylaws. Set forth below is a summary chart outlining important similarities and differences in corporate governance and shareholder rights associated with each of VersaBank and the Parent according to applicable law, VersaBank’s existing governing documents, the Charter and the Proposed Bylaws. This summary is not intended to be complete and is qualified in its entirety by reference to the Proposed Organizational Documents attached to this prospectus/circular as Annexes C and D, VersaBank’s existing governing documents, the DGCL and the Bank Act.

 

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REORGANIZATION AGREEMENT

The following summary of certain material provisions of the Reorganization Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Reorganization Agreement, which is attached to this prospectus/circular as Annex E.

The parties to the Reorganization Agreement will be VersaBank and the Parent.

Conditions Precedent to the Reorganization

The respective obligations of the parties to the Reorganization Agreement to complete the Reorganization are subject to the satisfaction, or mutual waiver by VersaBank and the Parent on or before the date that the Reorganization is consummated, of each of the following conditions:

•

the Reorganization Resolution shall have been approved at the Meeting by VersaBank shareholders;

​

•

all approvals and consents, regulatory or otherwise, which are necessary or advisable in connection with the consummation of the transactions contemplated in the Reorganization shall have been obtained (including, without limitation, the U.S. Federal Reserve Approvals and the Bank Act Approvals);

​

•

the Competition Act Approval shall have been obtained;

​

•

no preliminary or permanent injunction, restraining order, cease trading order or order or decree of any Governmental Entity, and no law, regulation, policy, directive or order shall have been enacted, promulgated, made, issued or applied to cease trading or enjoin, prohibit or impose material limitations on the Reorganization or the transactions contemplated in the Reorganization Agreement, and no such action, proceeding or order shall, to the best of the knowledge of VersaBank or the Parent, be pending or threatened;

​

•

the conditional approval of the listing of the Parent’s shares on the TSX;

​

•

the Registration Statement remains effective; and

​

•

the time period for the exercise of any Dissent Rights conferred upon VersaBank shareholders in respect of the Reorganization shall have expired, and VersaBank shareholders shall have not exercised (or otherwise be deemed to have exercised) Dissent Rights with respect to that number of VersaBank shares that would make it inadvisable to proceed with the implementation of the Reorganization, as determined by VersaBank in its sole discretion.

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Implementation and Terms of the Reorganization

In the Reorganization Agreement, VersaBank will agree to covenants related to the Meeting in order to complete the Reorganization.

Termination

The Reorganization Agreement may be terminated at any time prior to the date the Reorganization is consummated (i) by mutual written agreement of the parties thereto, (ii) by VersaBank for any reason on written notice to the Parent, (iii) by any party thereto if the Reorganization has not been completed prior to April 30, 2027, or (iv) by any party if the Meeting is duly convened and held and the Reorganization Resolution is voted on by VersaBank shareholders and not approved by VersaBank shareholders.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations is based on and should be read in conjunction with our (i) unaudited consolidated interim financial statements, which have been prepared in accordance with Generally Accepted Accounting Principles in the United States for the quarter ended April 30, 2026, which have been prepared in accordance with Generally Accepted Accounting Principles in the United States, (ii) consolidated financial statements for each of the years ended October 31, 2025 and 2024, and (iii) “Unaudited Pro Forma Combined Financial Information” and the related notes thereto. Unless otherwise indicated, all dollar amounts referenced in this discussion and analysis are expressed in U.S. dollars. This discussion includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties that could cause actual events or conditions to differ materially from those expressed or implied herein. For a discussion of some of those risks and uncertainties, see the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” We assume no obligation to update any of these forward-looking statements except to the extent required by law. Many of the amounts and percentages in this discussion and analysis have been rounded for convenience of presentation.

Unless the context otherwise requires, all references in this section to the “Company” “we,” “us,” or “our” refer to VersaBank and its subsidiaries.

Overview

We are a Canadian Schedule I chartered bank regulated by the OSFI in Canada. Our wholly owned subsidiary, VersaBank USA, is a federally chartered bank in the United States regulated by the OCC. Through our wholly owned subsidiary DRTC, we leverage internally developed IT security assurance services, supervisory control and data acquisition system assessments, and IT security training to provide innovative cybersecurity products and solutions to address the rapidly growing volume of cyber threats.

We became one of the world’s first fully digital financial institutions by adopting a highly efficient business-to-business banking model. We conduct deposit gathering and credit asset origination activities predominantly via technology-enabled electronic deposit and lending solutions for financial intermediaries, enabling them to excel in their core businesses. Our primary credit asset products include our SRP and Commercial Real Estate portfolios. Our primary deposit products are demand and term deposit accounts, all of which are eligible for insurance by the Canada Deposit Insurance Corporation (“CDIC”) or FDIC, subject to the applicable limits and restrictions.

Q2 2026 Operating Highlights

The three and six months ended April 30, 2026, reflect trends of solid operating performance through balance sheet growth. These operations resulted in the following highlights:

Strong balance sheet growth:

•

We grew total assets by $195,324 thousand and $580,118 thousand during the three and six months ended April 30, 2026, an increase of 4% and 14%, respectively, from October 31, 2025.

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•

Net credit assets increased $223,652 thousand and $516,641 thousand during the three and six months ended April 30, 2026, an increase of 6% and 15%, respectively, from October 31, 2025.

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•

Total deposits increased by $181,695 thousand and $582,573 thousand during the three and six months ended April 30, 2026, an increase of 5% and 17%, respectively, from October 31, 2025.

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Subsequent Events

On January 7, 2026, the Bank entered into a Purchase and Assumption Agreement with Stearns Bank National Association. Under the Agreement, the Bank agreed to sell certain assets associated with the Bank’s branch located at 580 Main Street, Holdingford, Minnesota, with Stearns Bank National Association

 

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agreeing to assume certain deposit liabilities related to that location. The transaction closed on May 1, 2026. This transaction had an immaterial impact on the Bank’s Consolidated Financial Statements.

Fiscal 2025 Operating Highlights

The year ended October 31, 2025, reflects trends of solid operating performance through balance sheet growth. These operations resulted in the following highlights:

Strong balance sheet growth:

•

We grew our assets by $673,883 thousand during the year ended October 31, 2025, an increase of 19% from October 31, 2024 primarily due to the growth of the Digital Banking operations’ credit asset portfolios, which increased $489,046 thousand during the year, an increase of 16% from October 31, 2024.

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•

Total deposits increased by $494,902 thousand during the year ended October 31, 2025, an increase of 17% from October 31, 2024, which funded the corresponding asset growth.

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Results of Operations

Comparison of the Three and Six Months Ended April 30, 2026 and 2025

Net income.   Net income decreased 11% to $5,505 thousand from $6,219 thousand for the three months ended April 30, 2026 and 2025, respectively. The decrease was primarily due to higher non-interest expenses driven by reorganization-related expenditures, a $1.6 million intangible asset write-down relating to the sale of Stearns branch assets, higher general operating costs consistent with increased business activities, partially offset by higher revenues driven by growth in VersaBank’s SRP portfolios.

Net income increased 13% to $13,459 thousand from $11,917 thousand for the six months ended April 30, 2026 and 2025, respectively. The increase was primarily due to higher revenues from continuing growth in VersaBank’s SRP portfolios, offset partially by higher non-interest expenses.

Net interest income.   Net interest income increased 31% to $25,860 thousand from $19,812 thousand for the three months ended April 30, 2026 and 2025, respectively, driven primarily by:

•

Higher interest income by $10,370 thousand to $60,541 thousand driven by strong SRP Financing portfolio interest growth, primarily attributable to portfolio expansion in Canada and the US.

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Offset partially by:

•

Lower interest income by $811 thousand from the lower yield Multi-Family Residential Loans (“MFRL”) portfolio. The lower yields reflect the planned transition of certain higher-yielding, higher risk-weighted MFRL exposures to lower-yielding, lower risk-weighted MFRL, consistent with VersaBank’s strategy to optimize regulatory capital usage and improve returns on capital deployed; and,

​

•

Higher interest expense by $4,322 thousand to $34,681 thousand attributable primarily higher corresponding deposit balance growth to support the credit asset growth.

​

Net interest income increased 33% to $50,571 thousand from $38,000 thousand for the six months ended April 30, 2026 and 2025, respectively, driven primarily by higher interest income by $17,603 thousand to $119,492 thousand driven by strong SRP Financing portfolio interest growth, primarily attributable to portfolio expansion in Canada and the US.

Offset partially by:

•

Lower interest income by $1,368 thousand from the lower yield MFRL portfolio; and,

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•

Higher interest expense by $5,032 thousand to $68,921 thousand attributable primarily higher corresponding deposit balance growth to support the credit asset growth.

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Net interest margin (non-GAAP).   Net interest margin (“NIM”) decreased to 229 basis points from 230 basis points for the three months ended April 30, 2026 and 2025, respectively, largely attributable to:

 

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The continued growth in the SRP portfolios, which is composed of lower regulatory risk-weighted, lower yielding assets; and,

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•

The impact of the planned transition of some higher yielding, higher risk-weighted MFRL to lower yielding, lower regulatory risk-weighted MFRL as part of VersaBank’s strategy to capitalize on opportunities for lower-risk weighted credit assets with a higher return on capital.

​

Offset partially by:

•

An improvement in the Company’s cost of funds due to lower rates on renewals of maturing deposits over the course of fiscal 2025; and,

​

•

The normalization of the yield curve from the atypically inverted yield curve that existed in the early part of fiscal 2025.

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The following table summarizes interest income on earning assets and related average yields, as well as interest expense on interest-bearing liabilities and related average rates paid for the periods presented:

(1)

Calculated as interest income divided by average interest-earning assets

​

(2)

Calculated as interest expense divided by average interest-bearing liabilities

​

(3)

Calculated as yield on interest-earning assets less cost of interest-bearing liabilities

​

(4)

Calculated as net interest income divided by average interest-earning assets

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(5)

Percentages calculated based upon annualized amounts

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NIM increased to 228 basis points from 222 basis points for the six months ended April 30, 2026 and 2025, respectively, largely attributable to:

•

An improvement in the Company’s cost of funds due to lower rates on renewals of maturing deposits over the course of fiscal 2025; and,

​

•

The normalization of the yield curve from the atypically inverted yield curve that existed in the early part of fiscal 2025.

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Offset partially by:

•

The continued growth in the SRP portfolios, which is composed of lower regulatory risk-weighted, lower yielding assets; and,

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•

The impact of the planned transition of some higher yielding, higher risk-weighted MFRL to lower yielding, lower regulatory risk-weighted MFRL as part of VersaBank’s strategy to capitalize on opportunities for lower-risk weighted credit assets with a higher return on capital.

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(1)