Laurentian Bank of Canada

Welcome to the Laurentian Bank Quarterly Financial Results Call. Please note that this call is being recorded. I would now like to turn the meeting over to Andrew Chenenki, Vice President, Investor Relations. Please go ahead, Andrew.

Bonjour à tous. Good morning and thank you for joining us. Today's opening remarks will be delivered by Eric Prevost, President and CEO, and the review of the first quarter financial results will be presented by Yvon Deschamps, Executive Vice President and Chief Financial Officer, after which we'll invite questions from the phone. Also joining us for the question period are Liam Mason, Chief Risk Officer, and Kelsey Gunderson, Head of Capital Markets. All documents pertaining to the quarter can be found on our website in the Investor Center. I'd like to remind you that during this conference call, forward-looking statements may be made, and it is possible that actual results may differ materially from those projected in such statements. With a complete cautionary note regarding forward-looking statements, please refer to our press release or to slide two of the presentation. I would also like to remind listeners that the Bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Eric and Yvonne will be referring to adjusted results in their remarks unless otherwise noted as reported. I'll now turn the call over to Eric.

Thank you, Andrew. Hello and welcome to our call for the results of the first quarter. Good morning. and thank you for joining us today. Over the past few months, I have had the opportunity to meet with many Laurentian Bank team members, and I consistently hear the same things. They are committed to this institution, they are driven to improving our operations and simplifying our structure, and they are dedicated to serving our customers. Throughout the quarter, we have remained focused on three priorities, customer focus, simplification, and strategic investments to improve our technology infrastructure. I would like to thank every Laurentian Bank employee for their efforts, while also supporting the organization in our strategic planning exercise. While Yvan will provide further details during his remarks, I wanted to offer some high-level thoughts on our overall performance. I am pleased to report that the bank strengthened its capital position in a time of continued macroeconomic uncertainty. We have managed our funding to our book of business and given the reduction in loans due to the current environment we executed on our planned deposit reduction activities while maintaining a strong level of liquidity materially above the industry average. We are comfortable with our commercial portfolio and are well positioned for a rebound later this year as business conditions improve. This quarter, revenues were slightly down compared to last year and grew by 4% on a sequential basis. Net income and EPS were both down year over year and quarter over quarter as expenses remained high. This increase included costs related to the mainframe outage last year, which impacted EPS by 4 cents this quarter. We know there is more work to do to reduce our expenses, and that is why simplification is a key part of our plan going forward. While overall loan growth was negatively impacted by macroeconomic conditions, including business and consumer sentiment our NIM was up 4 bps to 1.8%. This quarter also saw a small rebound in capital markets-related businesses with stronger trading results in fixed income. The businesses' results also benefited from recent right-sizing actions. Our credit performance remained strong, with a small increase in PCLs compared to Q1 last year and stable versus last quarter. We remain confident in the portfolio and are adequately provisioned. Dealers and manufacturers in our inventory financing business remain cautious. Inventory levels are not rising to the levels seen in previous years, and as a result, utilization was at 50%. This is lower than the mid-50s utilization rate we would typically see at this time of year. Given macroeconomic conditions, Dealers and manufacturers are working together on floor planning programs. This shows strong partnership and provides us with significant confidence as we look forward to the remainder of the year. We expect an increase in utilization starting in the fall if interest rates adjust according to projections. Turning now to commercial real estate activities. We have seen a slowdown in construction start which remains in line with our expectations as developers continue to adjust to the current cost environment. We have seen no cancellation of projects and our portfolio is in line with our credit appetite. The majority of our portfolio is in multi-residential housing, which continues to show resiliency as demand remains stronger than supply. As a reminder, We deal with Tier 1 and Tier 2 developers with significant experience through the cycles. We're pleased with how both commercial portfolios are performing. Our specialized approach gives us confidence as we continue to face uncertainty in the macroeconomic environment. As I mentioned earlier, this quarter also saw a planned year-over-year and sequential decline in deposits And there are a few points I'd like to make. First, we manage deposit and loan activity on a relative basis. That's why we have executed unplanned deposit reduction activities. This includes actions such as more conservative pricing in our broker deposit channel to maintain our focus on profitability contributing to our NIM expansion. Second, Strategic partnership deposits function like conventional demand deposit products. Recent quarters have witnessed these deposits behaving like typical demand deposits with funds being redirected towards market activities and other term deposits products consistent with our expectations. Third, Personal deposits source through our retail channel are stable quarter over quarter, and personal deposits overall represent 86% of our total deposits, contributing to the bank's sound liquidity position. In fact, this quarter, we enhance our Action GIC, an equity-linked product, with a competitive minimum rate guarantee, which are good pickup. We also held a very successful Black Friday campaign where total GIC sales exceeded last year's performance in the same period, further solidifying our funding sources. Operationally, we have a number of developments to share from this quarter, beginning with our people. I'm pleased to announce three new appointments to my executive team. First, we have promoted Mashapo to the position of Chief Human Resources Officer. Masha succeeded Sébastien Bédard, who held this position for the past three years, allowing him to better focus on his role running retail and corporate operations. Masha joined the bank in 2022 and has more than 25 years of experience in the financial services sectors and distribution, information technology, and human resources. I'm pleased to announce that Benoit Bertrand has joined the Bank as our new Chief Information Officer this month. Benoit is an accomplished technology and digital transformation leader with almost 30 years of experience. He has a history of managing large and complex IT programs as well as architecting and delivering innovative solutions. His mandate will be to align the bank's IT strategy with our overall business strategy, ensuring that our technology initiatives directly support our organizational objectives. Third, it is the creation of our strategy and transformation office, which will be led by Marie-Christine Cousteau, who has almost 20 years of experience in financial services, including sales effectiveness, change management, and business process optimization. This new office will oversee the development, implementation, and evolution of the strategic plan, identify organizational priorities, and ensure a steady pace of decisions that enable us to deliver value for our customers quickly. The office will work closely with finance to monitor the budget and maximize transformation goals. The bank also announced three new appointments to our board of directors, Dr. Johanne Brunet, Mr. Jamie Hobbs, and Mr. Paul Stinnis. These appointments are part of the board's commitment to ongoing renewal to enhance overall effectiveness and ensures an appropriate balance between skills and experience and a diversity of perspectives. Their backgrounds are varied and include marketing, risk management, capital markets, and business development. Looking forward, we are fully engaged on the revamp of our strategic plan. This plan will refine our focus on the areas where we can win to increase our competitiveness while always maintaining our objective of improving the customer experience. As part of this refresh, We have launched an end-to-end review of all our products, projects, and processes to help inform our decision-making as we look to simplify our operating model. This work is ongoing, and we will make appropriate decisions about products and projects as we progress through this exercise. I would now like to turn the call over to Yvan to review our financial performance.