Mr. David Taylor reports

VERSABANK TO SELL ITS ONLY BANK BRANCH IN HOLDINGFORD, MINNESOTA, TO STEARNS BANK

VersaBank has entered into a definitive agreement for the sale of certain assets associated with its only bank branch in Holdingford, Minn., to Stearns Bank National Association. The Holdingford sale has been approved by the Office of the Comptroller of the Currency (OCC).

"The sale of our only retail bank branch back to Stearns Bank is consistent with our highly efficient branchless, partner-based, digital banking model and the resulting cost savings will contribute to our operating leverage as we continue to steadily ramp up our structured receivable program business in the U.S.," said David Taylor, founder and president of VersaBank. "The efficiency of our U.S. operations has already surpassed that of our Canadian operations. As a cloud-based bank with one of the most unique operating models in North America, we are well positioned to continue to drive an enhanced efficiency ratio to industry-leading levels."

"We are privileged and proud to have had the opportunity to serve our Holdingford customers over the past 20 months. We thank you for the opportunity to be part of the community and look forward to a seamless transition back to the incredible team at Stearns Bank."

"It has been a continued pleasure working with the VersaBank team. We are proud of the Holdingford team for their stability and commitment throughout this transition, maintaining a strong community presence over the past 20 months. Our organizations share core values, and we look forward to continued collaboration between our two banks, both of which are committed to making a meaningful difference," stated Heather Plumski, president of Stearns Bank.

The Holdingford sale will have de minimis impact on VersaBank's tangible book value and is expected to result in a one-time, non-cash intangible asset write-off of approximately $1.7-million in the second quarter of fiscal 2026. Otherwise, the transaction, which is anticipated to close in Q2 2026, is expected to have de minimis financial implications for the bank beyond the contribution to efficiency.

About VersaBank

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

VersaBank's common shares trade on the Toronto Stock Exchange and the Nasdaq Stock Market under the symbol VBNK.

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