Home Capital Group Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Home Capital Group second quarter financial results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jill McCray, Head of Investor Relations. Thank you. You may begin.

Jill McCray Thank you, April. Good morning, everyone, and thank you for joining us today. Our agenda for today's investor presentation is as follows. We'll begin the call with remarks from Yusri Basada, Homes President and CEO. Our CFO, Brad Kodesh, will then review our financial performance, which will be followed by a question and answer period for participants. We have members of our senior management team with us on the call to help answer your question. On behalf of those speaking today, I note that this call may contain forward-looking statements and that actual results could differ materially from forecasts, projections, or conclusions in these statements. Please refer to our advisory on forward-looking statements would also remind listeners that HOME uses non-GAAP financial measures to arrive at adjusted results and that management will be referring to both reported and adjusted results in their remarks. And now I'd like to turn the call over to Yusri Basad.

Good morning and thank you for joining us for our second quarter conference call. Turning to our Q2 results, today HOME is reporting net income of $72.8 million or $1.42 per share, an increase of 118% over Q2 of 2020. We're very pleased with these results and the factors that contributed to this achievement include a robust housing market leading to healthy top line growth, disciplined expense management, and a release of credit provisions this year compared to the increase in credit provisions one year ago. Brad will have more detail on the financial results in this presentation. Today, I'd like to talk to updating you on the lending restrictions we put in place at the start of the pandemic last year, review some of our activities during the quarter, and give you a sense of our expectations for the balance of the year. We spoke last quarter about our lending restrictions and the adjustments to our risk appetite we put in place at the time of the initial lockdown. Throughout the second quarter, as the economic data became more positive, we gradually returned to our pre-pandemic risk appetite. By the end of July, all the restrictions were removed from both residential and commercial underwriting. This means that all our businesses will have returned to normal risk appetites for most of Q3. We believe there's lots of opportunity in the market with our current guidelines. Following a successful Q1, we saw continued strong growth in single-family originations this past quarter, both in Alt-A and A mortgages. Originations in our single-family residential portfolio totaled $1.84 billion, an increase of 63% over 2020. We're proud of the incredible effort of our sales, underwriting, and funding teams to bring in this volume. They showed their commitment to support our broker partners in providing mortgage solutions for our borrowers in market conditions that are constantly changing. One of our home values is know your business. And I believe this quarter, we demonstrated how this value drives our success. We grew our volumes by delivering responsive service and industry expertise to evolving market conditions and risk parameters. This quarter also saw steady growth in deposits for our open channel, which now make up nearly 31% of our total deposits. Our open store in Toronto reopened in mid-June, and we are now back to welcoming customers into all our stores. I'm pleased to report that the traffic in our stores has bounced back quickly since reopening, demonstrating the value of the in-person option for many of our customers. Our treasury group has also been busy this past quarter. In June, we closed a second successful cross-border RMBS offering. Compared to our inaugural issue in the fall of 2019, we saw increased investor interest and increased participation from U.S. investors. Based on the investment demand for our last offering, we expect to be back in the market later this year, subject to market conditions. We continue to believe that RNBS offers a valuable strategic option for diversifying our funding options and growing our institutional source funds. We have also expanded our whole loan sales program, adding to the counterparties who are interested in purchasing loans originated by HomeTrust. This quarter, sales under this program were $431 million, up from $37 million in Q1. Whole loan sales enhance homes' capacity to offer insured mortgage products to our broker channel. Whole loan sales take these mortgages off balance sheet, recognizing a gain on sale while collecting servicing income over the life of the loans. We expect to make regular sales of our mortgages under this program. Within the company, our execution of the Ignite program continues to transform the way we work. I credit the effort of all our teams to implement the transformation of our core banking system with minimal disruption to operations, all while navigating the demands of an active housing market and remote working conditions. Initiatives in our technology transformation include our roll-up of robotic process automation has allowed us to be more efficient by automating routine repetitive tasks, Our new CRM has improved productive engagement with our broker partners with new features in reporting to a broker, a variety of productivity KPIs with home. We have refreshed our Loft platform to quickly and effectively update brokers with information on our mortgage promotions and other important communications. Loft is the system we and the brokers use to collect documents for mortgage applications, request additional information, and post updates on the status of an application. This increased functionality built into the Loft platform has been very well received by our brokers. We are progressing towards the launch of an enhanced digital experience for our open customers with the expected release of our mobile typing app later this year. All these are examples of the improvements in efficiency and customer experience made possible by our Ignite program. As we look ahead to the second half of 2021, we see good visibility for further mortgage growth and continued opportunity to deliver on our strategic objectives. First, we plan for a return to more normal working conditions. We know that a healthy economy requires a healthy population. We're delighted to see high vaccination rates in Canada, and we hope to trend towards a reduction in COVID cases continues. It has now been over 500 days that most of the team has been working from home. We continue to prioritize the health and safety of our employees, customers, and partners as we make plans for a gradual return to the workplace. At this point, we, like most downtown employers, are planning for a hybrid model of home and in-person work. It may take some time and adjustments before we land on our final version, but we are committed to following public health advice and to be transparent, two-way communication with our employees throughout the return of the office process. Looking at the economy, the latest GDP and employment data have been positive, and this constructive outlook is expected to persist into 2022. The Bank of Canada is reducing its quantitative easing measures, and OSPI has announced plans to increase the domestic stability buffer effective November 1, 2021. signal of their confidence and the resilience of the financial system. The latest housing data shows steady upward price movement in our major markets and an increase in sales over 2020. We consider the recent pullback in sales volumes for June and July to be a healthy moderation from the peak volumes in February and March. We believe that current conditions, namely low interest rates, high consumer savings, and changing housing needs in line with evolving working conditions, all support a robust housing market. We see improvements in employment and immigration providing additional support to the medium and contributing to demand for mortgages in both prime and alternative space. Our residential team is reporting that the market conditions we saw in May and June have helped to start the third quarter. Our commercial team is seeing more opportunities in both the large and small commercial markets as they return to pre-pandemic underwriting parameters. We will continue to pursue attractive options to diversify our funding by investing in our open platform and expanding our RMBS and whole loan sales program. Another of our priorities is optimizing our capital base. We ended this quarter with a common tier equity one capital ratio of over 22%. We reiterate our commitment to manage towards the target CET1 range of 14 to 15% as the regulatory restriction is lifted. I would now like to turn the call over to Brad for a view of our financial results.