VersaBank (VB) Planet MicroCap Showcase: TORONTO 2025 summary

Business model and growth strategy

• Operates as a branchless digital bank using a partner-based model, earning a 2.5% spread, significantly higher than industry averages in Canada.

• Avoids bad loans by requiring partners to repurchase loans in arrears, minimizing credit risk and eliminating the need for collection departments.

• Expanded into the U.S. market after securing a rare national bank license, leveraging its point-of-sale lending model and launching a securitization product to match U.S. funding practices.

• Growth driven by home improvement loans and diversification into areas like medical equipment, with year-over-year asset growth of about 15%.

• U.S. operations are structured under a Nasdaq-listed holding company, making it easier to attract investors and potentially sell business units.

Technology and operational efficiency

• Utilizes proprietary software for deposit and asset management, integrating AI to automate loan adjudication and portfolio monitoring.

• AI reviews 90% of cash flows and ensures partners stay within credit parameters, enabling rapid scaling and improved accuracy.

• Human auditors supplement AI, but the bank aims to further automate processes for greater efficiency and growth.

• Cooling systems repurpose heat from AI operations to warm tech facilities in Canada.

Digital assets and regulatory engagement

• Developed tokenized deposit receipts (deposit tokens) on blockchains like Algorand, Stellar, and Ethereum, offering insured, interest-bearing digital assets.

• Piloted digital deposit tokens in Canada and is now refreshing and piloting them in the U.S., with both USD and CAD versions available.

• Positioned as a safe, regulated alternative to stablecoins, with strong interest from regulators in both Canada and the U.S.

• Business case for deposit tokens includes attracting funds from existing stablecoin holders by offering interest and FDIC insurance.