VersaBank (VBNK) September 2026 Annual General Meeting Transcript

I'll call the informal part of the meeting to order. So I'm very pleased to be here today at the Bank's Innovation Centre of Excellence in London, Ontario, for our shareholder vote on the proposed plan to realign the bank's corporate structure to that of a standard U.S. bank framework, which we're broadly referred to as the reorganization. following the formal portion of this meeting i'll return for some concluding comments as well as to answer some questions i now have the pleasure of turning the podium over to our chairman the honorable judge frank newbold of the board of directors of verse bank frank to proceed with the formal portion of the meeting thank you david now formally i'll uh

I will open the meeting, and in accordance with the bylaws, I will act as chair of today's meeting and Stacey Stokely will be secretary of the meeting.

And with the consent of the meeting, I appoint Arlene Agnew, representative of Odyssey Trust Company, joining us today as scrutineer. The secretaries confirmed that notice this meeting was duly given in accordance with bank act and the scrutineers have reported that the requisite quorum of shareholders is prescribed by the bank's bylaws are present in person or by proxy i therefore declare the meeting to be properly constituted for the transaction of business and call the meeting to order i further directed a copy of the notice of the meeting together proof of mailing be kept by the secretary with records of the meeting and that scrutineers report pmx to the minutes this is a very special and historic day for our bank in no small measure due to the work of our founder and president David Taylor and I want to thank David for all who's done we're here we have several directors here attending at the meeting and management I will now move to the agenda today we'll consider the matters of business set out in the management information proxy circular dated August the 4th, 2026, which I'll refer to as a circular and the notice of the meeting is called the circular and the former proxy were sent to registered and unregistered shareholders on or on August 24th, 2026. Unless there's an objection, I'll dispense with the reading of notice of meeting and specific individuals have been asked to move and second the resolutions i would like to comment on the voting procedure with respect to the reorganization which i refer to as a special resolution each shoulder each holder of common shares of the bank is entitled to one vote per common share only registered shareholders appearing on the bank's register or shareholders as provided by the transfer agent and those persons who are authorized proxy holders are eligible to vote at today's meeting. For this meeting, I propose to conduct a vote on the special resolution by a show of hands. Please note that any registered shareholder or proxy holder present in person is entitled to demand that a ballot be conducted either before or after the vote by a show of hands. If a ballot is required, then there will be a further procedure. The resolution, the meeting has been called in connection with the reorganization of VersaBank. In particular, our shareholders have been asked to consider and have thought advisable to pass a special resolution in order to approve a reorganization of VersaBank, whereby, among other things, VersaBank Corp., a Delaware corporation, will become a holding company that will succeed VersaBank as the publicly traded company in which existing shareholders hold their equity interests. The special resolution of the shareholders that are being asked to pass is attached to the Management Information Circular. and after careful consideration the board unanimously recommends that shareholders vote for this special resolution it must be approved by not less than 66 and two-thirds percent of the votes cast at this at this meeting i'll now ask tammy ashen to move the special resolution and sean clark to second the motion tammy i move that it be resolved that the special resolution attached as annex a to the management information circular be hereby passed in its entirety as a resolution of the bank and a seconder i second the motion thank you sean it's now open for discussion is there any discussion on the motion there being no further uh discussion uh it must be approved by an affirmative vote of not less than two-thirds of the votes cast by shareholders present in person nor by proxy all those in favor of the resolution please signify by raising your hand contrary minded if any i declare the resolution carried is there any further business as no one has any further business this concludes the formal business of the meeting and i ask tammy ashton

to move the final resolution mr chair i move that the formal business of the meeting be terminated Thank you.

That motion has been accepted, and I declare the formal business of the meeting terminated. And now I'm going to ask our founder and president, David Taylor, for a few remarks.

And thank you to our shareholders for this overwhelming confidence of the historic initiative that will be critical to the bank achieving its full potential on both sides of the border. with 99.7% of you voting in favour with more than 68% of the outstanding shares having voted. That's a very clear endorsement of the reorganisation and the numerous value-driving benefits we believe will be driven by our plan in both sides of the border, United States and Canada. I have spoken a lot recently about the opportunity in the United States. However, especially with the recent introduction of our real-time structured receivable program we are both very confident and excited about the significant renewed growth potential for our bank right here in Canada where it all began. In fact as the market leader in the point-of-sale industry in Canada even in the current economy we are targeting growth next year in absolute dollar terms about the same magnitude as we are in the United States. As it has been for for many decades, London will remain at the headquarters of VersaBank Canada and the home of our credit operations and we will continue to operate our deposit businesses out of Saskatoon University's Saskatchewan's Innovation Place which is located campus of the University of I am a proud graduate. Our reorganization will ensure that we are able to continue to lead the Canadian banking industry in terms of innovation and in turn continuing to support Canadian small businesses and consumer sectors by providing abundant reliable economical and efficient financing and thereby continuing to contribute in an outsized manner to the Canadian economy. With today's shareholder vote, our proposed reorganization now proceeds to the final requisite approvals, those by the Minister of Finance in Canada and by the Fed of the United States. We look forward to those decisions in due course. I'd be now happy to take your questions. John Drake, do you have a question, sir?

In view of the fact that the United States Congress has decided to delay, I guess is the best word, the passage of the Clarity Act. Can you give us any sort of update on the stable coin which VersaBank owns and is in a pilot program with?

Can you give us any information on that?

And the second question is, what about the sales growth in the United States? Does it meet your expectations, or is there more work to do?

Two really good questions. And a while back, when the so-called Genius Act came out, I was asked to be a lunchtime speaker at the Florida Bankers Association, and I was speaking to my fellow bankers, and I referred to it as the Moron Act. And I still stand by those words, and I'm not displeased that it's faltered. And, of course, the Clarity Act, it was just another add-on that would create more confusion. I'm not unhappy that it's faltered also. So we believe that only fully licensed financial institutions should be issuing, taking people's hard-earned money. As I said at that meeting, that we have a cultural imperative to ensure our depositors get their money back with interest. And of course, you know that stablecoins are prohibited from paying interest and they don't have FDIC insurance either or CDIC insurance. So I think those reasonable heads prevailed. And now it's up to us bankers to produce stablecoins if that's what customers want. But ultimately, it'll be a deposit token because it comes with interest and insurance. You'll still see us a little bit doing some stablecoin business. There's some programs that were underway, and they still have a little bit of momentum with them. so don't be surprised if you see a press release coming out sooner or later about a stable coin initiative but i think eventually they'll they'll evolve into tokenized deposits with respect to our growth in the united states it has exceeded expectations it's been extremely well received particularly with the real-time purchase of receivables that's the game changer and biggest guys in the united states say that this is revolution uh there's a trillion dollar market of asked back securities and um pretty well they rendered it's it's rendered obsolete uh we we can now uh buy the receivables from uh the point of sale of company partners uh we can do it in 10 minutes but one of the biggest partners said to me david you can do it every day that's that's all we need and not only that we're buying them we're pricing them too and that was a big deal because they they don't like being left in the wind with interest rates going up or down and interest rates go up rapidly and it means the receivables they're holding on to for 60 90 days have declined the value we've taken a loss and we can price instantly basically so it's a hell of a deal on both sides of the border uh we're signing up as fast as we can At another meeting, I predicted we'd do about $3 billion additional U.S. dollars in the United States. And I also said, where's our Canadian guys? They're right there, that they can do $3 billion Canadian too. And I'm sure I hope they can. With this restructuring, it's allowed us to have access to the largest capital markets in the world by far. Last count between the NASDAQ and the New York Stock Exchange, we're looking at $80 trillion in the U.S. That's a big gap. And there's nowhere on the planet that comes close to those numbers. And, of course, with these new programs, we're extremely well-received. So, hey, John, long-winded way to answer the question, but it's good times.

One of the things I understand of the receivable program is that you don't, the aggregators do not have until they aggregate a sufficient volume of loans to then go to the bank and sell them to the bank that they no longer now need to use their own capital because the bank's capital can be used from ab initio in the process.

Absolutely. That's a huge advantage. Those that invest in point-of-sale companies can recapture some of their capital now. So just firstly, mathematically, their return on equity doubled. And then they save all the inventory expenses, whether warehousing the lines, the interest that they're spending to save all that. It's a fantastic deal. So it's a classic win-win. Win for us, we get high-quality receivables in a hurry. And win for our partners, they get the reliable economical funding that they've been dreaming of. Some people said to me in the early days, well, can't they fund it from the market? And I said, yeah, in an eight-year cycle, there's two years probably the market's frothy and they get all the money they want. But there's those two years where they can't get a nickel. and hitching their wagon to VersaBank, they know they've got funding forever more, right through the liquidity crisis, right through the COVID-19 times, supporting our point-of-sale people. I mean, that trickles down, of course, to Canadian small business that needed capital. So we're proud to be doing that and hopefully we can do a lot more with this restructuring. Any other good questions coming? There's one, Robert Nash.

Thank you. The restructuring, I mean, it's really exciting to go down to the U.S. Could you just sort of explain, we've got VersaBank Canada, is that a subsidiary, and Oxy is happy with that, the way you've structured, and then the U.S., and then, you know, the wonderful stuff that you're doing with the tokens and everything.

Yeah, well, VersaBank will become a whole lot of VersaBancorp, an aspect of this company, but VersaBank can't. It will still stay at 140 Fullerton. It will be headed up by John Asman sitting right behind you. It will do what it always has done, and it will have access to a lot more capital, which is always in the strength for a bank that's growing rapidly. I think we're the fastest administration in the country by far. and it was bank scroll they need more capital so first bank canada stays right where it is first bank USA is headquartered in Minneapolis and it stays where it is the holding company is their classic modern company it's cloud operated where I live in Florida half the years here half the year some of our people of deeper florida some live all over we um we're sort of uh uh theoretically the address will a little bit on the stable coins uh this facility here is the our tech center and we have a similar one in saskatchewan that looks after deposits but this facility you can be proud of because it's leading edge in the world for providing those those stable coins the the custodies, and the state-of-the-art, which is the tokenized deposit. There's Jeff Wagman. That's one I recognize him.

Not a problem. Just a question now with the restructuring. VersaBank shares trade on Toronto and on the Stat. How will the new share structure look? Will you keep a Toronto listing? Where will the liquidity be?

Well, good question. your VBNK shares likely will be swapped into the number, the symbol I'm looking at is VRA. So likely your VBNKs will become VRSAs and VRSAs will be listed on the TSX and on the NASDAQ. So for those of you that like trading on the front stock exchange, the difference will be you've got a different symbol and you're still basically owning the same bank you had before. It's just the structure is different. Presently, the Canadian bank owns the subsidiaries in sort of a totem pole structure. The new structure is the holding company. This is their classic U.S. banking structure. Holds the banks individually so that each bank can operate in its regulatory environment very efficiently because they're different. The regulatory environment in the States is different than the Red Canada, almost the same. And who knows, I might dream of a UK bank. Who knows? I was with the governors of the Bank of England not so long ago, and I was dreaming about my Barclays heritage, talking about, yeah, when they shipped me off to London, Ontario to open a branch for Barclays here, which some of you are very good customers of, if life unfolds as it should, I'll have recreated the International Bank with the UK. There'll be a subsidiary. Of course, regulatory approval is required. But the model we have is very compelling for countries. Trickling down reliable economical capital to small businesses and consumers is what everybody dreams of. That's what they want. And our model does that. So I'd expect there'll be other countries. UK I think might be the next one that would like to see this too we've written certainly stages but you know it's one of those things where that that government governors and regulators sort of dream of capital to the masses at but economical prices stimulates economies some economies need stimulating.

Pretty ambitious.

I'm thinking before the end of October. Tammy's passed out in the background there. She's, you can do it Tammy. Yeah sometime fairly soon. We need those two regulatory approvals and it's Minister of Finance in Ottawa and then we need the Fed to approve. I'm actually seeing both of those wonderful people fairly soon next week in DC and, of course, in Ottawa. It looks to me that they're both fully endorsing the program and that it means good things for both countries. More capital for the Canadian Bank to do more of what it's already been doing and more in the States that very much wants to see this new revolutionary method of financing point-of-sale companies come to be. The fences are very high. The cut-off date for the Russell 2000 is October 31st, and then you go on about, I think, December 15th, something around there. So all being well, we'll be a Russell 2000 company, which is a big deal. You've arrived when you're Russell 2000. Another big deal that I was mentioning to Richard, Richard, if you're right there, that this is a little historical milestones. When I started this thing with half a million dollars, that was the book value of Pacific and Western Trust. Now it's today, I think it's a billion. So we've gone up 2,000 times during that period of time, which isn't a record. Elon Musk has gone a little better than that. Jeff Bezos has done a little better. Warren hasn't done quite that well, But for those of you know, I mentioned I'm a pilot with these airplanes around here. We've got something in common with Elon Musk. Both of us have experienced unscheduled catastrophic assembly. But I'm hoping to have something more in common. Join the billion club. Today we're at market capital. Canadian, though. Next step is US. All righty. No more questions. Well, thank you very much. It's wonderful. This is a milestone event, of course. It's just the evolution of the bank, and it means good things for we shareholders and good things for the countries we operate in, too, because, as we know, everybody needs capital for small businesses, particularly in Canada, and that's what we do. And in the States, they're lapping up, too. Thank you.