VersaBank Receives Investment Grade Credit Ratings: "A" Overall and "A-" Sub-Debt Ratings Transform Low-Cost Deposit Opportunities

LONDON, ON, April 7, 2021 /PRNewswire/ - VersaBank ("VersaBank" or the "Bank") (TSX: VB), a leader in digital banking and cyber security solutions, today announced that it has received the following investment-grade credit ratings from Egan-Jones Ratings Company, a US Nationally Recognized Statistical Rating Organization (NRSRO) and US National Association of Insurance Commissioners (NAIC)-recognized Credit Rating Provider:

• "A" rating for the Bank overall; and,
• "A-" rating for the current subordinated debt issue up to US$100 million.

VersaBank's overall "A" credit rating is comparable to that of several of the "Big Six" Canadian Schedule I Banks.

"This is a truly transformational event for VersaBank that will significantly expand our universe of depositors and open up a new, low-risk lending channel, providing the opportunity to further accelerate our growth by means that were not previously available to us," said David Taylor, President and Chief Executive Officer, VersaBank.  "Moreover, the Bank's investment-grade ratings are an external affirmation of our low-risk digital banking model, which is a fundamental component of our ability to drive earnings growth and shareholder value."

"Importantly, the "A-" investment-grade rating for VersaBank's subordinated debt provides the Bank with a new option for significantly lower-cost, non-dilutive, tax efficient capital that was previously not available to us to fuel our growth – especially beneficial during this current period of record loan growth.  These new ratings are especially valuable as we explore the potential to launch our innovative digital banking services in new geographic markets beyond Canada, where we see significant unmet needs similar to those that have driven the Bank's strong, steady growth."

VersaBank's Overall "A" Rating Enables New Low-Cost Deposit Channel, Significantly Expanding Universe of Depositors in Canada and the U.S.

The overall "A" rating for VersaBank by a National Association of Insurance Commissioners (NAIC)-recognized ratings agency significantly expands VersaBank's universe of potential depositors, allowing the Bank to offer a very attractive deposit alternative to institutions such as insurance companies and named municipalities, among others, in Canada and internationally, who typically hold deposits for longer terms and are restricted to holding deposits with investment-grade rated financial institutions.

"The foundation of VersaBank's low-risk, superior profitability proposition is our ability to source low-cost deposits, enabling us to achieve industry leading net interest margins," said Mr. Taylor. "We recently achieved a new record low for its cost of funds at 1.34% and the Bank's new investment-grade credit rating now enables large, long-term depositors, providing a significant additional source of low-cost funds."

ABOUT VERSABANK

VersaBank is a Canadian Schedule I chartered bank with a difference. VersaBank became the world's first fully digital financial institution when it adopted its highly efficient business-to-business model using its proprietary state-of-the art financial technology to profitably address underserved segments of the Canadian banking market in the pursuit of superior net interest margins while mitigating risk. VersaBank obtains all of its deposits and provides the majority of its loans and leases electronically, with innovative deposit and lending solutions for financial intermediaries that allow them to excel in their core businesses. In addition, leveraging its internally developed IT security software and capabilities, VersaBank established wholly owned, Washington, DC-based subsidiary, DRT Cyber Inc. to pursue significant large-market opportunities in cyber security and develop innovative solutions to address the rapidly growing volume of cyber threats challenging financial institutions, multi-national corporations and government entities on a daily basis.

VersaBank's Common Shares trade on the Toronto Stock Exchange under the symbol VB and its Series 1 Preferred Shares and Series 3 Preferred Shares trade under the symbols VB.PR.A and VB.PR.B respectively.

Visit our website at: www.versabank.com

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SOURCE VersaBank

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