Laurentian Bank of Canada

Welcome to the Laurentian Bank Financial Results Conference call. Please note that this call is being recorded. I would now like to turn the meeting over to Raphael Ambo, Vice President, Finance and Investor Relations. Please go ahead, Raphael.

Bonjour à tous. Good morning and thank you for joining us. Today's opening remarks will be delivered by Éric Provost, President and CEO, and the review of the fourth quarter and annual 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 for the question period is Christian Debroux, Executive Vice President and CRO. All documents pertaining to the quarter can be found on our website in the Investor Relations section. 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 2 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. Thanks for being with us today. Our roadmap for 2025 was ambitious. We are proud to report that we delivered against our plan, achieving several transformational milestones. Notably, the deployment of cloud-based systems has significantly improved our operational efficiency resilience, and customer experience. These investments are foundational to building a bank that is agile, secure, and well positioned for the future. Operational resiliency and redundancy were also meaningfully enhanced, enabling the bank to respond swiftly to change, maintain stability, and ensure consistent service delivery to our clients. Elevated interest rates and moderated economic activity influence other income streams, notably lending fees. Despite these headwinds, net interest income increased year over year, reflecting a more favorable business mix and an improved net interest margin. Credit performance remained stable at 17 bps, with slightly lower allowances for credit losses compared to 2024, supported by resilient asset quality and disciplined risk management. In line with the spending levels outlined in our strategic plan, we continue to make targeted investments in IT infrastructure during the fourth quarter. These planned and essential initiatives are designed to simplify operations, strengthen resiliency, and deliver long-term efficiency gains for both our clients and shareholders. As a result, we closed the year with an adjusted efficiency ratio of 75.2%, aligned with our guidance. The bank divestitures of assets under administration from the full service and discount brokerage division earlier in the fiscal year contributed to lower non-interest expenses through reduced ad count and broker commissions. while also driving higher other income from the associated gain on the sale of the division on a reported basis. Our capital and liquidity positions remain consistently strong throughout the year, reinforcing the bank's financial resilience and ability to navigate the current microeconomic environment. This solid foundation provides the stability and flexibility required to support growth while staying firmly focused on executing our strategic priorities. Throughout the year, we have achieved steady progress in strengthening our portfolio by increasing the proportion of commercial loans from 47% to 50%. Notably, commercial loan balances grew by 2% on a quarter-over-quarter basis and by 8% year-over-year. This strategic shift in our business mix contributed to an improvement in our net interest margin, which rose from 1.79% in the prior year to 1.83% in 2025. Turning to the composition of our commercial growth, our key specialization delivered strong results. Inventory financing closed at $4.2 billion, making an impressive 12% year-over-year increase. This performance was supported by an expansion of our dealer base of more than 3% and continued diversification into new segments, areas where we see meaningful opportunities for further growth. In commercial real estate, activities started the year slowly, but interest rate reductions later in the year resulted in a notable improvement, particularly in rental construction. This momentum allowed us to expand our unfunded pipeline by 13% and grow our loan book by 11% year-over-year. On the personal banking front, our continued engagement with customers allowed us to maintain a relatively stable deposit base within the retail segment while simultaneously building positive momentum in broker-sourced deposits. The agreements we announced earlier this week are aligned with the acceleration of our commercial specialization and the partnership strategy we had announced as part of our strategic plan. In recent years, we have assessed multiple approaches for our retail and SME banking services. However, the substantial investments needed to sustain a competitive position in the Canadian banking landscape coupled with the evolving regulatory requirements and rising customer expectations, have made it increasingly difficult to compete effectively. Joining forces with Fairstone Bank will allow us to grow our specialized commercial business even further while maintaining our brand identity and head office in Montreal, where we were founded over 175 years ago. Partnering with National Bank, a leading Quebec-based institution, will provide our customers with access to a broader suite of services and enhance modern technology. The press release regarding this announcement is available in the news release section of our website and includes detailed information. As the special shareholder meeting to vote on these agreements is scheduled for the first quarter of 2026, the proxy circular will be published in early January. With that, I'll turn it over to Yvan.