Laurentian Bank of Canada

We hope that this call is being recorded. I would now like to turn the meeting over to Raphael Ambeau, Head, Investor Relations. Please go ahead, Raphael.

Raphael Ambeau, Head, Investor Relations. Good morning, and thank you for joining us for the Lawrence & Bank 2024 Second Quarter Result Presentation. My name is Raphael Ambeau, and I'm Head, Investor Relations. Today's opening remarks will be delivered by Eric Coveau, President and CEO and the review of the second quarter financial results will be presented by Yvan Deschamps, Executive Vice President and CFO, after which we'll invite questions from the phone. Also joining us from the question period is Liam Mason, Executive Vice President and CRO. 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. For the 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 Yvan will be referring to adjusted results in their remarks, unless otherwise noted, as reported.

I will now turn the call over to Eric. Good morning and thank you for joining us. Later today, we'll be unveiling our revamped strategic plan where we will outline our path forward. But first, I want to start by thanking our employees for their ongoing resilience and commitment to serving our customers and shaping the future of the bank. Today's plan will provide a strong direction forward with a focus on all of us relentlessly executing against the new plan. In our new strategy, commercial banking will remain our growth engine, we will reduce complexity in personal banking, and capital markets will support our customers across the bank. I would also like to thank our customers. we are taking steps to build an even stronger bank with a greater focus on the customer experience. Before discussing the second quarter results, I'd like to address two recent announcements. In April, Kelsey Gundersen made the decision to leave the bank to focus on personal interests prior to establishing the next phase in his professional journey. I would like to sincerely thank Kelsey for his contributions to the bank over the last five years including navigating our capital market business through multiple periods of market volatility. This month, we've announced the forthcoming retirement of Liam Mason, Executive Vice President and Chief Risk Officer. Liam has been an invaluable asset to the bank since 2018, significantly shaping our risk-aware culture and driving sustained business success. Under Liam's guidance, the team excelled in credit origination, displaying strong education practices, prudent loss-reserving, and effective credit portfolio management. Liam will remain with us until the end of the fiscal year to ensure a seamless transition with his identified successor. I personally extend my heartfelt thanks to Liam for his numerous contributions and unwavering dedication. I wish him all the best as he pursues his personal interests in the future. As for our second quarter results, they were aligned with previous quarter on an adjusted basis. Loan volume continued to be impacted by macroeconomic conditions, and as a result, we managed deposits accordingly. Commercial loans have decreased slightly, mostly from our commercial real estate portfolio. We remain disciplined but still enjoy a strong pipeline which will support the expected rebound in growth once rate reductions occur as for inventory financing dealers and manufacturers continue to exercise caution given the current macroeconomic environment this quarter utilization was 49 below historical average going forward we expect the utilization to follow standard seasonality and reduce during q3 before rebounding in the final quarter of the year however we do expect it to remain below historical levels. Expenses remain elevated as we continue to enhance our technology and digital capabilities along with other strategic initiatives. Coupled with lower revenue, our adjusted efficiency ratio was 73.8% this quarter. Our revamped strategic plan will address the actions we plan to take and will outline the medium-term targets. NIM remained stable at 1.8% sequentially, and our CT1 capital ratio was up 20 bps to 10.4%, mostly due to the reduction in loan volumes. Finally, we maintain a prudent and disciplined approach to credit with PCLs materially lower than the big six banks. This quarter, we focused on simplification and I would like to share some details regarding our adjusting items. After careful consideration, we decided to suspend the AIRB project to prioritize investing in strategic initiatives. This project was not due to be delivered before a few years, but we need to focus and prioritize to deliver on our strategic plan objectives to be outlined later today. The unused assets in development stood at $23 million and were written off. This decision and other factors triggered an impairment test and resulted in an impairment charge of $156 million on the personal and commercial banking segment, including mostly goodwill elimination and intangible reductions. Furthermore, we have decided to right-size our footprint at the 199 Bay Street corporate office. This decision was driven by our hybrid work model and low occupancy rate at less than 20% on average. Our corporate employees in Ontario have the ability to work from home or our Toronto and Burlington offices. Since last October, we have had to make difficult decisions regarding workforce reductions. Considering the actions taken, we have now decreased our workforce by close at 4%. We have also continued to streamline and simplify our capital market business, including the upcoming sale of assets under administration of our full-service brokerage business to Industrial Alliance Private Wealth. This transaction supports our strategic focus on simplification and concentrating on areas of business where we can win and be more competitive. In line with this approach, we also announced that we have discontinued our institutional equity research. Altogether, including the Q3 items, these initiatives amount to charges of $161 million after taxes with an impact on regulatory capital of 10 basis points and are aligned with our goals and strategic roadmap. The estimated annual savings are expected to be about 20 million, a portion of which will be reinvested to improve our profitability on a sustainable basis in the medium term. We will provide more color as part of the unveiling of our plan this afternoon. These actions demonstrate our conviction and ability to execute on our strategic plan. We will concentrate on core strengths, execute with precision, foster accountability, and seek partnerships to expedite our progress. We will provide more comprehensive details later today, and we hope you will all be able to join us. Before I conclude my opening remarks, I would like to congratulate Raphael on his new appointment and tech Andrew Chernenky, who is leaving the bank to continue his professional career in the financial service sector. Over the last few years, Andrew has played a key advisory role in all external actions that the bank has taken and ensured a smooth transition. We wish him all the best in his future endeavors. I would now like to turn the call over to Yvan to review our financial performance.