Mr. Eric Provost reports

LAURENTIAN BANK ACCELERATES STRATEGIC SHIFT TO SPECIALTY COMMERCIAL BANK

Laurentian Bank of Canada has accelerated its 2024 strategic plan toward its specialty commercial bank model, resulting in its exit from the retail and SME (small and medium enterprises) banking business. This transformation will position Laurentian Bank as a commercially oriented bank, concentrating on commercial real estate lending, inventory and equipment financing, intermediary services, and capital markets activities.

• Laurentian Bank board of directors approves acceleration of its specialty commercial bank strategy, leading to an exit from retail and SME banking sectors.
• National Bank will acquire Laurentian Bank's retail and SME banking portfolios and syndicated loan portfolio, complementing its activities in Quebec.
• Fairstone Bank to acquire all issued and outstanding common shares of Laurentian Bank and combine commercial lending operations, leveraging both organizations' expertise to strengthen capabilities and expand market presence.

National Bank of Canada (directly or through one or more affiliates) has entered into a definitive agreement to acquire Laurentian Bank's retail and SME banking portfolios (the retail/SME transaction). Customers will benefit from National Bank's enhanced offering of retail and business banking solutions, including deposits, loans and investments. They will also be served through National Bank's leading digital services, expanded product and service offerings, and a broader branch network and business banking teams. Laurentian Bank and National Bank have also entered into a definitive agreement in respect of the sale to National Bank of Laurentian Bank's syndicated loan portfolio.

In parallel, Fairstone Bank of Canada, Canada's leading alternative lender and a Schedule I bank, has entered into a definitive agreement to acquire all issued and outstanding common shares of Laurentian Bank. Fairstone Bank will combine its commercial lending operations with Laurentian Bank's commercial specialization, leveraging the expertise of both organizations to strengthen capabilities and expand market presence. Laurentian Bank will retain its brand identity and head office in Montreal, continuing its legacy of over 175 years. Eric Provost will continue to serve as Laurentian Bank's president and chief executive officer, spearheading the accelerated execution of its strategic growth plan with a concentrated focus on commercial banking activities.

These co-ordinated transactions reflect a shared commitment to supporting a strong and competitive Canadian banking system, creating value for shareholders and customers, and reinforcing Quebec's leadership within the national financial landscape.

Until the transactions close, Laurentian Bank's daily operations will continue as usual and in the normal course, and stakeholders are not expected to see any immediate changes. At conversion, all branches of Laurentian Bank located in Quebec will be closed by Laurentian Bank. Both National Bank and Fairstone Bank have proven expertise in managing successful integrations, ensuring seamless continuity and superior service throughout the transition period.

Complementary strengths for enhanced service

The acquisition transaction will provide Fairstone Bank additional scale and accelerate growth in commercial real estate across the country, particularly in Quebec. It also adds complementary business lines in inventory and equipment financing. The Laurentian Bank brand will be retained.

"We view Quebec as a key market and are excited to continue building our presence with the expertise we're acquiring from Laurentian Bank," said Scott Wood, president and chief executive officer of Fairstone Bank. "This transaction strengthens Fairstone Bank's competitive position, diversifies revenue streams, and deepens our national lending footprint. It's a disciplined step forward that is very much aligned with our value creation plan."

"This announcement is aligned with the acceleration of Laurentian Bank's commercial specializations, as announced in our 2024 strategic plan," said Eric Provost, president and chief executive officer of Laurentian Bank. "Joining forces with Fairstone Bank will allow us to grow our specialized commercial business even further, while maintaining our brand identity and head office in Montreal, where we were founded over 175 years ago. Partnering with National Bank will allow our customers to benefit from a broader range of services and improved, modern technology."

"Leveraging our strong presence in Quebec, this transaction aligns with our domestic growth strategy and is a natural fit," stated Laurent Ferreira, president and chief executive officer of National Bank. "We look forward to welcoming Laurentian Bank's retail, SME and syndicated loan clients, who will soon benefit from National Bank's leading digital services, an expanded range of financial products, and access to our extensive branch network and business banking teams."

Commitment to employees and stakeholders

Fairstone Bank, Laurentian Bank and National Bank are committed to transparency and continuing communication with employees and stakeholders. They will work together to ensure a smooth transition. Detailed integration plans will be shared in due course to provide clarity and support throughout the transition period.

Pursuant to the National Bank transactions, Laurentian Bank's branches and employees will not be transferred to National Bank. Once the transactions are completed, affected Laurentian Bank employees who are interested will be able to apply for open roles at National Bank through a dedicated channel.

National Bank will preserve Laurentian Bank's longstanding commitment to community investment by doubling its corporate philanthropic program, ensuring continuity and amplifying impact for the future.

Shareholder support

La Caisse, which holds approximately 8 per cent of the Laurentian Bank shares, has entered into a voting and support agreement under which it has agreed to vote in favour of the acquisition transaction, subject to certain conditions.

"La Caisse is supportive of this transaction and considers it to be a positive outcome for shareholders in light of the competitive landscape and strategic review initiated by the board of Laurentian Bank," said Kim Thomassin, executive vice-president and head of Quebec of La Caisse.

"Our support is also predicated on the fact that the proposed offer is attached to guarantees obtained regarding maintaining Laurentian Bank's commercial head office locally and moving Fairstone Bank's head office to Montreal, Que. In addition, with National Bank participating in the transaction, Laurentian Bank's retail clients will continue to be served by a solid and growing Quebec bank of which we are the largest shareholder," she added.

Complementary legal information

Acquisition transaction details

Under the terms of the acquisition transaction agreement, Fairstone Bank will acquire all of the issued and outstanding common shares of Laurentian Bank at a price per Laurentian Bank share of $40.50, in cash, representing a premium of approximately 20 per cent over the closing price of the Laurentian Bank shares of $33.76 on the Toronto Stock Exchange (the TSX) on Dec. 1, 2025, the last trading day prior to the announcement of the acquisition transaction, and a premium of approximately 22 per cent over the 20-day volume-weighted average trading price of the Laurentian Bank shares for the period ended on Dec. 1, 2025. The total cash consideration payable under the acquisition transaction is approximately $1.9-billion. The acquisition transaction will provide Laurentian Bank shareholders with immediate liquidity and certainty of value.

The acquisition transaction is subject to approval of 66.67 per cent of the votes cast by Laurentian Bank shareholders at a special meeting of Laurentian Bank shareholders expected to be held in the first quarter of 2026 to approve an amendment to Laurentian Bank's bylaws to provide for the acquisition of the Laurentian Bank shares pursuant to the terms of the acquisition transaction agreement. The acquisition transaction agreement contains customary non-solicitation covenants on the part of Laurentian Bank, subject to customary fiduciary out provisions, as well as right to match provisions in favour of Fairstone Bank. A termination fee of $40-million would be payable by Laurentian Bank to Fairstone Bank in certain circumstances, including in the context of a superior proposal supported by Laurentian Bank's board of directors. A reverse termination fee of $40-million would be payable by Fairstone Bank to Laurentian Bank in certain circumstances where key regulatory approvals are not obtained prior to the outside date.

The acquisition transaction is subject to the closing of the retail/SME transaction and will close on the date of, and immediately following, the closing of the retail/SME transaction, subject to customary closing conditions, including receipt of key regulatory approvals. The acquisition transaction is not subject to any financing condition.

Assuming the timely receipt of all required key regulatory approvals and shareholder approval, and the satisfaction of other customary closing conditions, the transactions are expected to close by late 2026.

Following completion of the transactions, it is expected that the Laurentian Bank shares will be delisted from the Toronto Stock Exchange. However, Laurentian Bank's non-cumulative Class A preferred shares, Series 13, non-cumulative five-year fixed rate reset, Class A preferred shares, Series 17, 5.30 per cent limited recourse capital notes, Series 1, and 5.095 per cent subordinated non-viability contingent capital notes are expected to remain outstanding in accordance with their terms following the completion of the transactions. Laurentian Bank's non-cumulative, Class A preferred shares, Series 13, will continue to be listed on the TSX and, as a result, Laurentian Bank will continue to be a reporting issuer under applicable Canadian securities laws following completion of the transactions.

National Bank transactions details

Immediately prior to the closing of the acquisition transaction, National Bank will acquire certain assets and assume certain liabilities related to the retail and SME banking sector being exited by Laurentian Bank in the retail/SME transaction pursuant to a definitive asset purchase agreement entered into concurrently with the acquisition transaction agreement. As at July 31, 2025, the retail loans and deposits totalled approximately $3.3-billion and $7.6-billion, respectively, while the SME loans and deposits totalled approximately $800-million and $600-million, respectively.

In addition, the retail/SME agreement provides that National Bank will assume the distribution agreement for certain mutual funds. As at July 31, 2025, the underlying mutual funds totalled approximately $3.4-billion.

The closing of the retail/SME transaction is conditional on all conditions precedent to the closing of the acquisition transaction having been satisfied or waived and will occur immediately prior to the closing of the acquisition transaction. The retail/SME agreement includes terms and conditions that are customary for transactions of this nature. The retail/SME transaction is not subject to the approval of Laurentian Bank shareholders and is subject to customary closing conditions, including receipt of key regulatory approvals.

None of the employees or retail branches of Laurentian Bank will be transferred to National Bank. Laurentian Bank will be responsible for closing its branches and terminating the employment of certain employees (or reassigning them to other lines of business or to Fairstone Bank or its affiliates) prior to the closing of the retail/SME transaction.

A termination fee of $10-million would be payable by Laurentian Bank to National Bank in certain circumstances, including in the context of a termination of the retail/SME agreement resulting from a termination of the acquisition transaction agreement to accept a superior proposal. A reverse termination fee of $10-million would be payable by National Bank to Laurentian Bank in certain circumstances where key regulatory approvals are not obtained prior to the outside date.

Separately, concurrently with the execution of the retail/SME agreement, Laurentian Bank and National Bank have also entered into a definitive loan purchase agreement in respect of the syndicated loan transaction. As at July 31, 2025, the syndicated loans totalled approximately $900-million. The closing of the syndicated Loan transaction is not conditional upon the closing of the retail/SME transaction or the acquisition transaction. The syndicated loan transaction is expected to close in approximately three months, subject to customary closing conditions.

The National Bank transactions will be fully settled in cash and cash equivalents, with the final consideration based on outstanding balances at closing. If the purchase price was calculated as at July 31, 2025, the result would approximate net book value.

The National Bank transactions are expected to be accretive to National Bank's adjusted earnings per share by approximately 1.5 per cent to 2 per cent in the first year following the closing of the retail/SME transaction and marginally accretive to adjusted return on equity, before any potential revenue synergies. Collectively, the National Bank transactions are expected to reduce National Bank's Common Equity Tier 1 ratio by approximately 25 to 30 basis points, of which approximately five basis points relate to the syndicated loan transaction, with the regulatory capital treatment expected to be under the standardized approach at each closing.

For further details on the National Bank transactions, please refer to National Bank's transaction fact sheet made available on National Bank's website.

Board support, fairness opinions and Laurentian Bank shareholder meeting matters

The transactions are the result of a comprehensive negotiation process between Laurentian Bank, Fairstone Bank and National Bank.

The Laurentian Bank board established a special committee of independent directors to oversee, support and assist management in connection with the transactions. Each of J.P. Morgan Securities Canada Inc., as lead financial adviser to Laurentian Bank, and Blair Franklin Capital Partners Inc. provided a verbal fairness opinion to the special committee and the Laurentian Bank board to the effect that, as of Dec. 2, 2025, subject to the assumptions, limitations and qualifications communicated to the special committee and the Laurentian Bank board, and to be contained in their respective written fairness opinions, the consideration to be received by Laurentian Bank shareholders for their Laurentian Bank shares under the acquisition transaction is fair, from a financial point of view, to such shareholders.

The special committee, after receiving the fairness opinions as well as legal and financial advice, and after considering several factors which will be outlined in public filings to be made by Laurentian Bank, has unanimously recommended to the Laurentian Bank board to approve the transactions and recommend to Laurentian Bank shareholders to vote in favour of the acquisition transaction at the Meeting.

The Laurentian Bank board has evaluated the transactions with Laurentian Bank's management and legal and financial advisers and has unanimously determined, after receiving the fairness opinions and the unanimous recommendation of the special committee, and after considering several factors which will be outlined in public filings to be made by Laurentian Bank, that the transactions are in the best interests of Laurentian Bank and that the acquisition transaction is fair to Laurentian Bank shareholders, and to recommend that the Laurentian Bank shareholders vote in favour of the acquisition transaction at the meeting.

La Caisse, the board members of Laurentian Bank and its executive office members have entered into voting and support agreements pursuant to which they have agreed, among other things, to support and to vote all Laurentian Bank shares held in favour of the acquisition transaction, subject to certain customary conditions.

Important additional information and where to find it

Copies of the fairness opinions, as well as additional details regarding the terms and conditions of the transactions and the rationale for the recommendations made by the special committee and the Laurentian Bank board, will be set out in the management information circular to be mailed to Laurentian Bank shareholders in connection with the meeting and filed by Laurentian Bank on its profile on SEDAR+. Copies of the acquisition transaction agreement, the retail/SME agreement, and the form of support and voting agreement will be available under Laurentian Bank's profile on SEDAR+.

Advisers

J.P. Morgan is acting as lead financial adviser and Osler, Hoskin & Harcourt LLP is acting as legal counsel to Laurentian Bank. Norton Rose Fulbright is acting as counsel to Laurentian Bank on diverse regulatory matters. Blair Franklin is acting as independent financial adviser to the special committee. National Bank Capital Markets is acting as financial adviser and both Torys LLP and Stikeman LLP are acting as legal advisers to Fairstone Bank. McCarthy Tetrault LLP is acting as legal adviser to National Bank.

About Laurentian Bank

Founded in Montreal in 1846, Laurentian Bank is committed to serving its customers and fostering deep relationships with specialized groups. Laurentian Bank runs operations across Canada -- primarily in Quebec and Ontario -- as well as in the United States and competes where it sees market opportunity and has an edge, while harnessing the power of partnerships and collaboration.

About Fairstone Bank of Canada

Fairstone Bank and its subsidiaries, including Fairstone Financial Inc. and Home Trust Company, deliver innovative, accessible and reliable financial solutions that enable Canadians to reach their financial goals. Collectively, Fairstone offers residential and commercial mortgages, consumer deposits and GICs, retail and automobile financing, credit cards, and digital lending, in addition to unsecured and secured personal loans on-line and at more than 255 branches coast to coast. With a long-established history, Fairstone is proud to be Canada's leading alternative lending bank.

About National Bank of Canada

With $553-billion in assets as at July 31, 2025, National Bank is one of Canada's six systemically important banks. The bank has approximately 34,000 employees in knowledge-intensive positions and operates through three business segments in Canada: Personal and commercial banking, wealth management, and capital markets. A fourth segment, U.S. specialty finance and international, complements the growth of its domestic operations. Its securities are listed on the Toronto Stock Exchange (TSX: NA).

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