2018 ANNUAL & SPECIAL Meeting of Shareholders 04-25-18 ’s Fintech Warehouse

2 Officers Title Officers Title Vice President, Real Estate David Taylor President & Chief Executive Officer Jean-Paul Beker Lending

Shawn Clarke Chief Financial Officer Steve Creery Vice President,

Vice President, Information Technology Nick Kristo Chief Risk Officer & SVP, Credit Wooi Koay

Executive Head & SVP, Aly Lalani Vice President, Treasurer Jonathan Taylor Deposit Services & HR Vice President, Finance & Andy Min Executive Head & SVP, Corporate Accounting Michael Dixon e-Commerce Vice President, Real Estate Scott Mizzen Lending Executive Head & SVP, Ross Duggan Vice President, Structured & Commercial Lending David Thoms Corporate Finance Vice President, General Counsel & Cameron Mitchell Corporate Secretary Joanne Johnston Chief Internal Auditor

Officers

3 Board of Directors Title

Honourable Thomas A. Hockin Chairman

David Taylor President & CEO

Robbert-Jan Brabander Director

David Bratton Director

R.W. (Dick) Carter Director

Arnold Hillier Director

Colin Litton Director

Susan McGovern Director

Paul Oliver Director

Honourable Maurizio Bevilacqua Director

Avery Pennarun Director Board of Directors

4 Auditors

5 State of the Art Financial Technology aimed at lucrative niche markets

6 Appointment of Auditors

7 State of the Art Financial Technology aimed at lucrative niche markets

8 Director Nominees Title

Honourable Thomas A. Hockin Chairman

David Taylor President & CEO

Robbert-Jan Brabander Director

David Bratton Director

R.W. (Dick) Carter Director

Arnold Hillier Director

Colin Litton Director

Susan McGovern Director

Paul Oliver Director

Avery Pennarun Director

Director Nominees

9 State of the Art Financial Technology aimed at lucrative niche markets

10 The 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 and communications. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved.A number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the Canadian economy in general and the strength of local economies within Canada in which we conduct operations; the effect of changes in interest rates; the effects of competition in the markets in which we operate; capital market fluctuations; and the impact of changes in laws and regulations. When relying on forward-looking statements to make decisions, investors and others should carefully consider these factors and other uncertainties or potential events. The Bank makes no undertaking to update any forward-looking statement that is made from time to time by the Bank.

Advisory

11 State of the Art Financial Technology aimed at lucrative niche markets

12 David Taylor, President & CEO

Introduction & Performance Review: We aspire to be our clients preferred F2017 Business Line Performance provider of innovative financial Banksolutions. Financial Performance

Strategic Review:  The Way Ahead  Key Growth Drivers

Management Presentation 13 We aspire to be the preferred provider of innovative financial solutions to our clients.

Vision

To deliver a competitive and sustainable rate of return to shareholders by delivering ideally suited financial products, services and innovative solutions to our clients in certain niche markets not well served by the large Mission

14 Design, develop and maintain Leverage existing financial product state-of-the-art, banking software distribution channels in order to maximize transaction capacity, in order to minimize investment in physical velocity and operational efficiency and infrastructure and human resources. delivery new products

Strategic Priorities

15 $1.4B $.87 $1.7B $1.4B $208M $19.5M $0.87 DEPOSITS

ASSETS DEPOSITS SHAREHOLDERS’ NET EARNINGS CASHNET INCOME EARNINGS EQUITY PER2017 SHARE

2017 Results 16 National Insolvency Professional Network

National Deposit Broker Network of 115 Financial Institutions

Deposits

17 Commercial Deposit Balances Insolvency Professional Offices $MM

140 $400

120 $350

$300 100

$250 80 $200 60 329 $150 86 40 228 72 $100 51 20 43 122 28 $50 85 4 6 52 0 $0

April 2012 VersaBank launches Web based chequing accounts January 2018 86 Trustee Offices and over $329M on Deposit Low Cost Commercial Deposits

18 2.90%

2.70%

2.50%

2.30%

Cost of fundsof Cost 2.10%

1.90%

1.70%

1.50% Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17

Cost of Funds Trend

19 • Commercial Banking • E- Commerce Lending

20 COMMERCIAL BANKING – REAL ESTATE

Lending

21 E-COMMERCE - RECEIVABLES PURCHASE PROGRAM

Lending

22 E-COMMERCE A variety of consumer and small business loan and lease receivables purchased electronically from partners operating throughout Canada

Lending – Receivable Purchase Program

23 Our Receivable Purchase Program continues to grow as we establish new relationships and increase purchases from our 20 existing partners. $M 900

800

700

600

500 839 400 784 811

300 608

200 392

100 187 109 0 2012 2013 2014 2015 2016 2017 2018 - Q1

Loan & Lease Receivable Purchases

24 NIM for Q1 F18 2.87% up from 2.54% in Q1 F17

Other Assets Other Assets Liquid Assets $122 $61 Liquid Assets $85 $135 7% 5% 4% 8%

39% 42% 49% 46%

Commercial Commercial Banking E-Commerce Banking E-Commerce $693 $839 $721 $823 Jan 31, 2017 Jan 31, 2018 Balance Sheet Mix

25 Net Interest Income (NII) Net Interest Margin (NIM) Compound Annual Growth Rate (CAGR)

NIM- 5yr CAGR 15 % $M 50 3.50% 45 3.00% 40 2.87% 2.57% 35 2.50% 2.31% 2.21% 30 1.96% 2.00% Big 5 Bank 25 1.74% Average NIM 44 1.50% approx. 1.76% 20 39 34 15 1.00% 26 28 10 0.50% 5 12.4 0 0.00% 2013 2014 2015 2016 2017 2018-Q1

Key Performance Trends 26 VersaBank Provision for Credit losses (PCL) Trend PCL % of Avg loan

0.25%

Major Canadian 0.20% banks average PCL 0.23 %

0.15% 0.12% 0.10% 0.08% 0.06% 0.05% 0.04% 0.020% (0.01%) 0.00% 2013 2014 2015 2016 2017 2018 - Q1

-0.05%

Credit Quality

27 Core Cash Earnings* Trend $30M

$25M CCE - 5 yr CAGR 46 % $20M

$15M $24M $10M $18M $13M $5M $9M $5M $4M $M 2013 2014 2015 2016 2017 2018*

Core Cash Earnings* = pre-tax earnings adjusted for non-core operating income/expenses * Annualized 2018 Core Cash Earnings

28 COMMON EQUITY TIER 1

14.80%

11.20% 11.20% 11.10% 11.00% 10.80% 10.68% 10.60% 9.40% 8.60%

Comparative Capital Ratios

29 10.34%

5.30% 4.60% 4.30% 4.00% 4.00% 4.00% 3.90% 3.50% 3.30%

Conservative Leverage

30 2.5

2.3 RBC

2.1 TD Bank National Bank 1.9 CIBC Bank of Nova Scotia 1.7

Canadian Western 1.5 P/B

1.3

1.1 Laurentian Bank

0.9 Versabank

0.7

0.5 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% CCROCE Q1 F18 - Annualized

CAD Banks CCROCE vs. P/BV

31 Source: RBCCM CAD Financials Weekly Common Shares: Preferred Shares: Preferred Shares: VB:TSX $7.00 VB.PR.A:TSX VB.PR.B:TSX

Issued Shares: 21,123,559 $10.05 (yield 7.0%) $10.10 (yield 7.0%)

Based on Recent Share Price of Non-cumulative 5-year rate Non-cumulative 6-year rate $7.00, Market Capitalization was preferred shares, series 1. reset preferred shares, series 3. $147,864,913. Issued Shares 1,461,460 Issued Shares 1,681,320 YTD Average trading volume/day 58,900 shares. Based on recent share price of Based on recent share price of $10.05 Market Capitalization was $10.10 Market Capitalization was Analyst coverage : $14,687,673. $16,981,332.

GMP Securities Reset date – Oct 31, 2019 Stephen Boland, CFA Reset date – April 30, 2021 [email protected] Reset rate – 543 Basis Points Reset rate – 569 Basis Points IA Securities Dylan Steuart, CFA [email protected]

Financial Overview

32 Introducing VersaVault. The world’s first BlockChain safety deposit box.

The impenetrable security and absolute privacy of blockchain encryption managed by a chartered bank in one of the world’s most trusted financial markets.

33 VersaVault digital box vs Traditional physical box

VersaVault Traditional physical box

• Quickly & easily expandable • Difficult to expand, large capex

• • Global market Local market

• Can be opened by drill if required • Can only be opened by customer with their own personal ‘key’

• Vulnerable to 3rd party demands

34 • Leverage digital technology to serve niche markets; • Common share dividend paid in Q1 F18; • High net interest margin, low loan losses; • Highly scalable model; • High growth potential; • Core Cash Earnings 4yr CAGR of 46% (Oct 31st-2017); • Exciting new initiatives;

• VersaVault, the world’s first blockchain safety deposit box;

Summary

35 Canada’s Fintech Warehouse

36