Summary of VersaBank Conference Call Company Overview - **Company Name**: VersaBank - **Ticker Symbols**: VBNK (Nasdaq and TSX) - **Established**: 30 years in operation, recognized as a fully digital bank in North America [2][3] Core Business Highlights - **Growth Rate**: Achieved a compounded average growth rate of 27% over the past three years, reaching nearly CAD 6 billion in assets [4] - **Profitability**: Generated nearly CAD 36 million in ordinary income in 2025, with expectations for increased efficiency and profitability as operations expand in the U.S. [4] - **Business Model**: Operates a cloud-based, branchless business-to-business model, benefiting from significant operating leverage [3] Digital Asset Strategy - **Digital Asset Leadership**: Positioned as a leader in the digital asset space, with a focus on tokenized deposits and stablecoins [5][6] - **Market Trends**: Approximately 70% of generational wealth is expected to transfer to non-bank entities, creating challenges for traditional banks [6] - **Stablecoin Market**: The total value of the stablecoin market has surpassed $300 billion, reflecting a growth of over one-third in the last year [8] Tokenized Deposits - **Definition**: Tokenized deposits are digital representations of actual bank deposits on the blockchain, eligible for deposit insurance and capable of paying interest [7][8] - **Market Opportunity**: Anticipated to provide low-cost funding for financing and lending activities, with billions in potential deposits from cross-border trade between the U.S. and Canada [12] - **Regulatory Environment**: No new legislation is expected to be required for the launch of tokenized deposits, as they are real bank deposits reflected on a blockchain [19][20] Community Bank Engagement - **Licensing Opportunities**: Plans to license deposit token technology to community banks, allowing them to issue their own tokens [22][23] - **Community Bank Support**: Received positive feedback from community banks eager for regulatory clarity to adopt deposit tokens [22] Cybersecurity Business Update - **Divestiture**: Currently in the process of selling the cybersecurity services business, which is unrelated to the digital asset operations [33][34] - **Bids Received**: Expecting to receive bids for the cybersecurity business within the next month [35] Future Outlook - **Growth in U.S. Market**: Anticipates continued strong growth in the U.S. market, with a focus on enhancing product offerings and leveraging AI for receivable purchases [30][32] - **Deposit Insurance Expectation**: Expects that tokenized deposits will be covered by deposit insurance, crucial for maintaining depositor confidence [36][39] Conclusion - **Investment Proposition**: VersaBank presents a low-risk, high-growth digital banking opportunity with significant upside potential in the digital asset space, particularly through tokenized deposits and stablecoin custody [14][15]