Slide 1: Investor Presentation
NASDAQ: VBNK TSX: VBNK Investor Presentation September 2023 Banking on the Future!
Slide 2: Advisory
2 Advisory The Bank occasionally makes forward-looking statements about its objectives, operations and targeted financial results. These statements may be written or verbal and may be included in such things as press releases, corporate presentations, annual reports and other disclosure documents an
Slide 3: A Fully Digital North American Bank
3 A Fully Digital North American Bank Operating leverage of a technology Highly efficient: company with earnings visibility of a bank Branchless, partner (B2B) model 1 Highly risk-mitigated model: Very sticky deposits/History of virtually no loan losses A North Track record of significant American e
Slide 4: Branchless Partner (B2B) Model Based on Proprietary Banking Technology
Branchless Partner (B2B) Model Based 4 on Proprietary Banking Technology Significant operating leverage derived • All deposits/loans managed digitally from scalability of technology • No direct interaction with end users • Very high asset-to-employee ratio platform & partner model Deposit Lending Pa
Slide 5: Deposits: Unlimited Low-Cost, Very Stable Sources
5 Deposits: Unlimited Low-Cost, Very Stable Sources >220 Partners Provide Access to • Objective to minimize cost of deposit funding Millions of Depositors • All Wealth Management deposits are term deposits • Very “sticky” deposit base Insolvency Professionals (>100 Offices) Deposit Composition (Q3 2
Slide 6: Ultra Low-Risk Digital Model
6 Ultra Low-Risk Digital Model Organization-Wide Very Sticky Deposits Focus on Risk Mitigation • Insolvency Professionals: Long-term relationships based on unique, high- • Technology-based value add, integrated technology approach to risk • Wealth Management: 100% term deposit receipts/Depositors ha
Slide 7: Loans: Very Low Risk Lending Channels
7 Loans: Very Low Risk Lending Channels >275 Partners Provide Access to • Low-cost deposits enable low-risk lending Millions of Borrowers • 30-year history of virtually no loan losses Loan Composition (Q2 Point-of-Sale Financing (Loans and Leases) 2023) • Reliable, attractive alternative financing o
Slide 8: Momentum in Profitability and Long-Term Earnings Capacity
8 Momentum in Profitability and Long-Term Earnings Capacity 110,000 $106M 6,000 100,000 5,000 90,000 $82M 80,000 $3.98B 4,000 70,000 $65M $3.27B 60,000 $52M $54M $54M 3,000 $2.42B $49M $50M 50,000 $44M $1.94B $1.81B $1.79B 2,000 40,000 $1.73B $35M $27M $26M $26M $28M $40M 30,000 1,000 20,000 $28M $1
Slide 9: Q3 2023 Key Metrics & Highlights: Record Results
9 Q3 2023 Key Metrics & Highlights: Record Results Consolidated Digital Banking: Strong loan portfolio growth to YoY Sequential another record: $3.66B Total Revenue 26% 1% Net Income 75% 3% Record quarterly revenue, net interest income, EPS 90% - net income and EPS1 Net Interest Margin 38 bps 30 bps
Slide 10: Digital Banking Growth Strategy: Momentum for the Future
10 Digital Banking Growth Strategy: Momentum for the Future 1 2 3 Further Reduce Grow Loan Portfolio Pursue Accretive Acquisitions Cost of Funding via New Near-Term Opportunities to Leverage Scalability of to Expand Net Interest Margin and Existing Offerings Platform & Enter New Markets Generate cap
Slide 11: U.S. Receivables Purchase Program: A New Financing Solution for a High-Growth but Underserved Market
U.S. Receivables Purchase Program: A New Financing 11 Solution for a High-Growth but Underserved Market Strong growth in U.S. Point-of-Sale financing Same attractive, reliable activity driven by technology & increasing consumer alternative solution that has been preference for non-credit card/non-ba
Slide 12: Acquisition of OCC-Chartered, National US Bank: Transformational Next Step in Long-Term Growth Strategy
Acquisition of OCC-Chartered, National US Bank: 12 Transformational Next Step in Long-Term Growth Strategy Definitive Agreement to Platform for significant growth in the United States Acquire Minnesota-based • Provides access to U.S. deposits to fuel growth of the Stearns Bank Holdingford U.S. Recei
Slide 13: Near-Term Targets
Capitalizing on the Significant Operating Leverage 13 in Our Core Digital Banking Operations Near-Term Targets Period of Investment in Future Growth $3.98 Total Assets >$4B >$5B $3.27 62% $3.66 9.30% $2.42 $2.99 11.15% 10.29% 8.68% 55% 8.20% 8.28% $1.79 $1.73 $1.81 $1.94 52% Efficiency Ratio $1.59 4
Slide 14: DRT Cyber: "Free Option" on Digital Banking Valuation
14 DRT Cyber: “Free Option” on Digital Banking Valuation One of North America’s Comprehensive Suite of Services: Premiere IT Security • External network, web and mobile app penetration testing Assurance Services Firms • Physical social engineering engagements • Supervisory control & data acquisition
Slide 15: Why VersaBank? Why Now?
15 Why VersaBank? Why Now? At inflection point for operating leverage, earnings growth and ROCE generation based on expected continued strong growth in Canada and entry into the U.S Proposed acquisition of national, chartered US bank provides access to $1.8T market for highly unique Receivables Purc
Slide 16: Banking on the Future!
16 Banking on the Future! VersaBank Choice Through Innovation