Gerald Soloway - Chief Executive Officer Martin Reid - President Rob Morton - Chief Financial Officer Brian Mosko - Chief Operations Officer Pino Decina - Executive Vice President, Residential Mortgages

Shubha Khan - National Bank Financial Jeff Fenwick - Cormark Securities Graham Ryding - TD Securities Geoff Kwan - RBC Capital Markets Aren Hoffman - National Bank Financial Don Destino - Harvest Capital Patrick Kuczynski - IA Securities Asim Imran - Macquarie

Thank you. Thank you, operator.

I am joined this morning with – here in the room with Martin Reid, Home’s President; Rob Morton, the Chief Financial Officer; Brian Mosko, the Chief Operations Officer; and Pino Decina, the Executive Vice President of Residential Mortgages. So, good morning shareholders, ladies and gentlemen, I am delighted to report to you on Home Capital’s 2015 first quarter performance.

I am also pleased to report that Home delivered solid performance during the first quarter and I believe is on track to deliver performance in 2015 in line with its mid-term objectives. The net income of $72.3 million increased 3.7% over the first quarter 2014 net income of $69.7 million.

Diluted earnings per share were $1.03 for the quarter, representing a 3% increase over the $1 earned in the comparable period in 2014. Return on average shareholders’ equity was 19.7%, slightly below our objective of 20%, but the company is confident that it will attain a 20% return on average equity for the full year.

If the company is successful in attaining a return on equity of 20% for all of 2015, it would mark the 18th consecutive year where return on equity exceeded 20%. The credit quality of the portfolio remains very strong, with the net non-performing loans as a percentage of gross loans ending the quarter at 0.25% or 0.25% on an $18 billion loan portfolio.

That compares with 0.33% a year ago. The 0.25% non-performing loan ratio is one of the lowest for Home in the past 10 years.

The company is confident that with the improved control functions that have been implemented over the past 18 months and with technology enhancements in our underwriting process, the non-performing ratio – the low non-performing ratio will continue going forward. All of Home Trust capital levels remained strong in Q1 2015, well in excess of all regulatory requirements.

Total assets under administration surpassed $25 billion in the quarter, which are 9.6% greater than last year. Total loans under administration, including off balance sheet mortgages, increased to $22.74 billion, up 11.1% from last year.

Traditional uninsured residential mortgage originations for the first quarter were $960 million compared to $1,000,070,000 last year, or about 11% less than last year. The company remains focused on growing its traditional mortgage lending portfolio and to help increase our volume for the uninsured and the insured mortgages.

At the end of the first quarter, the company hired Joe Rosati as Vice President, National Sales. This is an added resource to our sales – our mortgage sales team.

Joe’s experience includes over 15 years as Director, National Sales for Scotiabank and three and a half years as Executive Director of IMBA, which is the Independent Mortgage Brokers Association of Ontario. We believe that with Joe’s background and contacts in the mortgage broker industry, he can help drive our sales and credit processing strategies.

The first quarter traditionally is the slowest quarter for adding new non-insured mortgages. And that was exasperated in 2015 by extremely harsh winter conditions.

What happens is people do not like to list their homes in the middle of a blizzard or heavy snow conditions and as a result, there are fewer properties for sale and usually fewer sales. But in addition, the company also continued to apply caution to its lending approach.

Given the continued macroeconomics uncertainty, we are talking about a falling dollar, falling oil prices, gloomy economic reports during the first couple of months of the year, all of which caused Home to take a very cautious approach to some loan opportunities that might, I am saying might, might have been approved today as the Canadian economy looks somewhat more positive than it did three months ago. The company also launched the first phase of new originations – of a new originations technology platform, which will allow the company to increase its underwriting capacity, operational efficiency and controls to support future growth in its loan portfolio.

Now after a few growing pains, we are confident in saying it’s now fully integrated into the lending process. Home’s other businesses performed very well, including during the first quarter, the commercial mortgages and other loan advances, which were $139.6 million in the quarter compared to $99.6 million last year are up about 40%.

Consumer retail advances were $35.5 million, up from $27.2 million last year or 30.5% from a year ago. However, the uninsured single-family originations were down during the quarter due to the same reasons as the uninsured loans.

But we see both the insure and uninsured volumes growing over the rest of the year under our existing sales group and with the addition of Joe Rosati. Over the last two years, we have worked diligently to acquire more of our total deposits through a series of diverse measures, which are Oaken Financial high interest saving accounts, savings accounts and institutional deposits.

The total of the three initiatives at the end of March was $2.83 billion in deposits compared to $1.72 billion at the end of first quarter last year. These new direct deposit initiatives now account for approximately 20% of Home Trust total deposits and we will see those initiatives continue to grow throughout the year.

The company also approved a quarterly dividend of $0.22 per common share compared to the dividend of $0.16 that was declared at the end of the first quarter. And if the earnings expectations continue to grow, we look forward to future dividend increases in the future.

The company’s exposure to the energy producing regions of Canada which include Alberta, Saskatchewan and Newfoundland and Labrador, are only 4.2% of our uninsured loans and have an average loan-to-value of 55.7%. The non-performing number in those provinces is 0.23% compared to a companywide total of 0.25%.

Those provinces’ portfolios are performing very well. And given Home’s limited exposure, we do not expect a significant increase in credit losses from those regions.

In conclusion, the company continues to deliver solid results in terms of growth, returns and dividends. We continue to remain cautiously optimistic that 2015 will be another record year for Home in all aspects of our business.

Thank you. We would be happy to take questions.

Hi, thanks. Good morning.

Hi, Shubha.

So, I had a couple of questions related to the originations in the quarter. And I may have missed it in your prepared remarks, but were there any execution issues related to the rollout of your originations technology platform, I think that’s what you called it...

Yes. No, no, there was few delays, but there was not – we didn’t lose the deals, but some stuff might not have got closed by March 31 on the transfer of the systems.

They were on refinance situations, not on purchases. Of course, on a purchase, it has a higher priority, but there was a little bit of fuzziness around it and – but it’s all working well now.

It’s just in any new business there is always a few hiccups. To say it was perfect and no hiccups and no one had a complaint, that’s not right.

So, it wouldn’t have been a material contributor to the year-over-year decline in traditional mortgage originations then?

No, but it might have accounted for a couple percent.

Okay. And then if I look at the dollar value of existing home sales, which were up 12% year-over-year and then some of your peers posted pretty healthy origination volumes in the quarter as well, do you get the sense that you may have experienced some market share erosion in the quarter, because perhaps you were more conservative in underwriting new business relative to those peers or how...

You know what, that’s possible, but I should tell you that having been in this game a fairly long time, I have been CEO for over 25 years, but when they – when you start seeing flashing orange lights and you are going down the highway of running the company with a long perspective, you learn to respect those flashing cautious lights. And as I said in my prepared remarks, the cold weather was a factor.

There was a lot of macroeconomic things that were a factor, we probably – and I don’t apologize, we took our foot off the gas a little bit. We are a little more cautious.

We are a little more cautious of risk because one of the things that you have to keep focused on in business is you try not to let sort of the ups and downs get in the way of doing what you have to do. And rather than play for the quarter, we play for the whole company and we look for quality and we look for good business.

And if it’s a little slower in the quarter, we don’t see it disastrous. We have shown that we have the ability to generate sales and volume.

And I think you will see it throughout the rest of the year. So, sure, it was off and we are quite open about it, but I don’t see that we can’t go back and increase that and meet the competition.

It’s not like the company has changed.

Okay. But subsequent to your quarter end, it sounds like your – the level of caution has subsided a little bit, because you get the sense that macroeconomic conditions are probably perhaps not as bad as you initially thought, is that right?

Yes. No, no and what was coming out of the Bank of Canada and the dollar is not going to $0.50 and the oil is not going to $32 and there is a lot of things that are happening that in the first months of the year, we just took a little more cautious view.

We don’t apologize for it. That’s just the way.

There is another comment that I would make on this that if one is thinking that the economy is going to tip over, a little extra caution leading into it is not a bad thing and look for quality and look for caution. And you know the old saying, when the tide goes out you quickly know who is swimming nude and in business, we are careful about risk.

And we know when the economy turns we want to be fully covered.

Okay.

I gave you – is that not a good line?

That’s a great line. One final question on this topic before I re-queue and that’s surrounding the language in the MD&A in your 2015 outlook section regarding loan growth and that’s related to both traditional and accelerated mortgages, it looks like it’s changed a little from the 2014 annual report.

And I hate to sound pedantic, but the reference to growth being consistent with 2014 is no longer there. So, I am just wondering whether your outlook has changed since you released the annual report or are you still looking for a fairly consistent growth relative to 2014?

We are looking for consistent growth, but we are trying to reflect the reality that the first quarter was down a little bit. And we just wanted – we would rather over – under promise and over deliver, that’s always been our style.

So, it’s a cautious statement so that – we try to reflect what the realities are in the marketplace.

Okay, perfect. Thank you.

You’re very welcome.

Hi, good morning Gerry.

Good morning, Jeff.

I wanted to talk a little bit about the expense side of things. There was a pretty notable jump there in salaries and benefits, I think in the first quarter.

I know there is always an incremental expense to start the year, but what was the play there? Did you have some incremental hires coming on or what other factors were going on in the quarter?

Yes. I am going to turn this over to our Chief Financial Officer, Rob Morton and he will have some comments to say on that.

That’s a good question. Thanks for asking it.

Here is a couple of things. We didn’t really grow headcount too significantly, 3 or 4 people.

There is overweighting of expenses on seller expenses in the first quarter when we catch up. The other thing I would point out is in the fourth quarter – and we disclosed this – we had changed our depreciation on our SAP system.

We had changed it from 10 years to 15 years and that was all taken in the fourth quarter and so was a 1 year item and that was close to almost $4 million. So, it’s actually not a significant jump on an adjusted basis when we look at the fourth quarter.

So, we look at expenses and we are careful. We are not like the Senate of Canada, where we give out a lot of free expenses.

We monitor them every month and not wait for 5 years to go back and try to reclaim them.

That’s good to hear. So, Gerry, I just wanted to talk about your ROE target areas.

You say you ticked under a little in the quarter, still optimistic on the year. I guess, I kind of look at it in the context of how much capital Home Capital has and your Tier 1 ratio being as high as it is and relative to the amount of growth that you are generating currently, I mean, it seems like maybe you have got a little too much capital, frankly.

I know most lenders wouldn’t want to say that, but I know you have increased the dividend payout ratio. What other things are you looking at here?

Could we be looking at some share buybacks or are you may be looking at some M&A opportunities here like things that you could utilize that capital towards?

Yes, we have – and these are all – none of these are at a stage that are ready for – they have not gelled, they are all in preliminary stages, but we have been looking very carefully at a modest M&A – a number of M&A situations, where we might be able to find a bolt-on to the company, but none have advanced to the agreement stage. If anything happens, we will be glad to deal with it.

But that’s one of the thing that’s on the table. A share buyback is not on the table at this point.

I am not saying it’s never on the table, but I think we would be looking more to grow the assets and grow the income than buy the stock back. We have also some internally generated, some very good opportunities whereby when they gel and they are finalized, you will see we will take up capital going forward.

And so it’s always nice to have it a little ahead of time. Also, if you chat with any of your other regulated institutions and this is not unique to Home.

I think as a general policy, you don’t see the big banks in Canada or the major financial institutions, I don’t think that there is a great excitement of using capital by buying back shares on the regulatory regime. Now we don’t disagree with that.

It’s not that we want to do it and we can’t. But I know generally that there is a – the regulatory regime would prefer to see the capital in the company.

So you maybe a little ahead, grow into it or – over a period of time. So we are aware of that and we are aware that probably we are earning a lot more than 19.9% or 19.7% on the capital we really need.

But over the years, we have learned, I would rather have a few bucks in my pocket and rather than be exposed so that you can’t take an opportunity when it does arrive. And as I say, we have both M&A and internal business opportunities that, if they did gel and if they did come to fruition, would require substantial capital and it’s nice to be there ahead of the time, not after the fact.

Okay. And maybe just one last question, if I could circle back on the originations and talk a little bit about the prime single-family accelerator product, I mean that seems to be an area where you have had maybe a more lumpy performance in terms of originations, and it’s hard to read how much of that is you being opportunistic based on competition and spreads versus just the challenge of competing in that space and how should we be thinking about that business and the potential for it to continue to grow volume over the next year or so?

Well, I think if you look forward, one of the mandates from our – the higher we had will be to try to take some of the lumpiness out of that business. That’s one of the things that Joe – one of Joe Rosati’s mandate.

He did work for Bank of Nova Scotia. They have a big national program.

He is used to running a big program. We need to develop with broker rewards.

We need to develop the kind of broker rewards and incentives that some of the other major contenders have. So it’s not – and we build and bake it right into our business as an ongoing part.

We have been, in the past a little bit opportunistic where we are more excited when the margins are good. We are not as excited when the margins kind of disappear.

But I think to build it on an ongoing basis, strategically we are going to put all the pieces. We will have the proper rewards incentive.

We will have the proper sales force. Well, you will see it will develop into a less lumpy business going forward.

Okay, great. Thanks for your answers.

Thank you. Thanks.

Hi Gerald.

Good morning Graham.

If you could provide some color, you have got some investments and partnerships in the payment space, just wondering if you can elaborate on I guess why you are investing in this market and how you see it complementing your existing lending businesses?

I am going to turn this over to Martin Reid, our President. And he is close to that business and he will answer your question, Graham.

Hi Graham, it’s really related to PSiGate, which is a sub of Home Capital, which is in the payments business. Some of those partnerships are where people have got sort of global payments happening and they may have their coverage for Canada currently, maybe with the U.S.

provider. And to reduce costs, they are looking for a local Canadian provider and so we are filling that void for them.

That’s what a lot of those partnerships are. And also probably you saw earlier some press releases related to prepaid cards as well where we have increased activity and that’s all related to PSiGate.

Okay. So I guess my follow-on there would be, how does PSiGate – how do you see that complementing your lending business?

Yes. So it does a lot of e-commerce payment processing and with a focus on sort of the small and mid-sized entities, so everything from a small mom and pop shop business that’s online to some of the sort of mid-sized companies.

So there is a bit of a void there where the likes of Chase Paymentech or Moneris wouldn’t necessarily provide the kind of service that those clients are looking for. On the mortgage side of the business, we have a lot of self-employed people.

Some of those would be have their businesses online. So there is a little bit of tie-out to that.

It was a company that we bought back in 2006.

Yes. Okay, got it, that makes sense.

The other question I had was just on the Greater Toronto housing market, April starts suggest the market’s actually been quite active from a sales and price growth perspective. Is that a reflection in your view of limited supply of houses for sale and maybe you could provide some context on whether you think this level of activity is sustainable?

Well, I don’t want – I first of all think it is due to a shortage and there is a great demand we find with everybody who is within Downtown or within Toronto or within commuting distance of Downtown Toronto that Toronto is a huge magnet and the same in Vancouver for jobs. The way the economic shifts are, the – it might be a lovely town to live in, but places like Ingersoll and Woodstock and London although they are – they may be growing, do not have the magnet of jobs and business centers that a Toronto or a Vancouver, the main cities have.

And as a result, when there is greater demand, prices go up, people are ready to pay, especially with a low interest rate. But we try to lend very cautiously because what happens if rates are up 100 basis points over the next couple of years.

And so we can’t tell you whether it’s sustainable, not sustainable, but we got to make sure our borrowers are sustainable. They have good employment.

They have got the ability to absorb a rate increase when the mortgage comes up for renewal. And there could be adjustments.

But there could also not be adjustments in the price. It could be that the magnet of the big cities, those who are on the sidelines waiting for a price decrease may not happen for many moons in the future.

The people who are buying are of good credit quality. They have big down payments.

They are – all the fundamentals are very strong. You saw by our non-performing ratio.

These are people that are paying. And the irony is that probably the – if I looked over the non-performing in urban areas over the non-performing in rural areas or where rural areas being communities or areas where the town is say under 10,000 people, almost all of our arrears are in smaller communities.

They are not in any of the urban centers. They are not in the Vancouver’s or Toronto’s or Calgary’s across the country or Montreal.

They are usually in outlying areas, so -- and the demand is in those areas. So I have tried to give you an answer, but I don’t know if there is anybody that has a perfect crystal ball on it.

All we can do is follow fundamentals, lend carefully, lend cautiously and make sure the borrowers have capacity to absorb a rate increase. I don’t know, if that answer it for you Graham?

That’s perfect. I appreciate it.

Thank you.

Okay.

Hi good morning.

Good morning Geoff.

The first question I have is, just going back to the originations I totally get how, given what was going on with macro, why you guys would be more kind of cautious on originations in the traditional business. I am just trying to understand I guess from the prime insured side, are you guys saying that you were also kind of a bit careful there too, I am just being an insured product?

Is that part of the reason why the originations kind of were where they were?

Yes.

And – sorry, you…

Morton will give you more color, okay.

Yes. And Geoff, as Gerry pointed out earlier, just with the technology change, there were some bumps there.

Just given the smaller size of the accelerator product, it was probably a little bit more noticeable there.

Okay. So, it was – okay, so it was a little bit of teething pains, but were you guys being a little more cautious on underwriting?

I am just trying to get a sense of has it been because maybe brokers have been losing some market share, whether or not it’s been some more competition within the broker channel or…

None of that’s changed. I think it’s very similar to what it was last year.

There isn’t a dramatic one quarter change. There has been no new competitor.

There has been no new change of brokers. Brokers are exactly the same in my estimate.

The banks have been taking a bigger share. None of the figures have shown that.

And banks are also into the broker network. I think you will see all of those return to a more normal level, but I don’t apologize for being a little more cautious during that – the first few months of the year.

We have seen enough ups and downs, and if the numbers are down one quarter, it’s not the end of the world. We are here playing for the long-term.

And so we do what we have to do to make sure that the company is strong and safe and sustainable. And if we are a little more cautious at some point, we are a little more cautious.

Okay. And in terms of on accelerator program last year, you did about $1.8 – I think it was about $1.8 billion on the origination side.

Do you kind of have a kind of a range or ballpark that you think you would be like to be able to get this year?

I don’t know whether we – I will have Pino Decina. He is going to come around and sort of answer your question.

Hi, Geoff.

Hi.

Yes. So, with the prime lending, there was this obviously some talk now about the April market.

That’s a good sign. We really start seeing the purchase business coming back.

When we talk about our conservative lending the first three months that’s typically because of the nature of the deals, there is really no surprise that in the past couple of years, the amount of tightening that’s happened on refinance transactions in the A space across the board has been really attacking that type of transaction. And when you look at January, February, March purchase transactions down, we really look closely at the percentage between purchase and refinance.

In winter months, we expect that refinances probably be about 60% of the applications come in. When you are cautious about the market and all of a sudden, refinances start to increase over 60%.

We take an even more cautious approach to that underwriting, right? You see numbers that come in, in April as far as the Toronto real estate market, the average sale price going up, the days on the market going down 10%, which is great.

Active listings now in April have gone up. So, buyers have more choice as to what’s out there and we are already seeing it in our pipeline.

So, we fully expect this to normalize within the next 30 to 45 days. Keep in mind, the pipelines need about that long for the deals to close, but all the signs are happening right now and we like what we see.

Okay. So, do you feel at the end of the day, you might be able to do better than what you did, kind of the $1.8 billion last year or...

We always want to do better, but I don’t want to get pinned down. I think you have asked the question three times, I have danced three times, do you want to dance some more?

I will dance some more with you.

Okay. Maybe I will – the other question...

Okay, on to the next one. We don’t want to get pinned down to a number.

Last question I had was just on the NIMs on the securitized book that was down kind of quarter-over-quarter. I know it can be lumpy for a bunch of different reasons, but given where it was in Q1, is that kind of where you think it might be going forward or is there different levers that might bring it on a normalized basis, upper or down, from where it is?

We are sort of looking at that. It’s not something that we really had thought a lot about, but we are just looking at the numbers here, just a sec.

I think you had it. It was 60 basis points down to 46 in Q1 on a quarter-over-quarter basis.

In Q4, there was a little bit of season stuff in there that would have boosted the December 31 number.

Okay.

So, I think that’s the one that’s a little bit distorted.

Okay, so the 46...

Because I would say you normalize probably somewhere between the Q1 2015 and the Q1 2014.

Okay, so kind of between 46 and 54 basis points, I think if I have the numbers right.

Yes.

Okay, perfect. Thank you.

Thank you. Thanks, Geoff.

Good morning, Gerald.

Good morning, Aren.

I know you have had lots of questions on mortgage originations. I just wanted to – you have stated that a large part of it is due to Home Capital’s more conservative lending in light of the – in light of your forecast of stable or slightly lower home prices.

I just want to know if do you think some of the decrease is due to fierce competition among the lenders in the space you lend in, is that part of the reason?

No.

Not at all? Okay.

No. I have answered it five times and I don’t know and I have spelled it out and it’s really – I will sort of go over the comments again.

I think it was due to three or four reasons, it’s not just one. I think one of the big reasons with starting it off was weather.

Second of all, a macro, we definitely – and I made it very clear and I stick by it, we had concerns about the economy and there were some situations both on the insured and the uninsured, we were probably more cautious than we are now about some situations. And as Pino spelled out, when you start seeing a whole kind of refinances on CMHC and you start worrying about, are these people fully qualified to support it, why do they want to suck every last dollar of equity out of their homes, whether it be on regular lending or insured lending, the cautious lights go up.

It’s a yellow sign. It’s a yellow light.

It’s not a red stop. But as I said earlier, what we have learned over the years is don’t ignore yellow lights when you see them up there.

It was a bit of a yellow light. So, we just were a bit more cautious.

And then, I said there is a little bit of lumpiness out of the new platform and there could well be – I don’t see it as new competitor, but a reality – a broker sees that the company is a little more cautious. If they think they have got a marginal deal, they might try another company that’s not being cautious, right.

If I was a broker, that’s perfectly logical. So, you put it altogether and the numbers come in a little bit, but sometimes, the numbers have come in substantially over the year-over-year.

So, it’s not because of the competitors are any better or smarter or more of them. To the best of my knowledge, there is no new banks that got licensed in the first quarter.

There is no institutions that went not around December 31 that suddenly popped up during the first quarter. Things happen, life goes on.

Some things, they turn out a little better, they turn out a little worse. We concentrate on credit quality.

So, we do a few less loans. That’s okay.

We step on the gas for the rest of the year. But the credit quality for us as I mentioned and I was a bit – and I know I was making just talking about when the tide goes out, you know who has been swimming nude.

And I guess the same with companies, if you get into a bit of recession you quickly know who has been putting on a bad book of business. The decline with a bad book of business can go down much faster than when – so I say to the shareholders and the analysts, we are fine, company is good, non-performing is very low, lowest in 10 years.

We have a good solid year. The fact we are a little more cautious, nothing wrong with that.

I guess what I am getting at is...

No, you always have a lot of worries, so that’s okay, that’s your job.

Exactly. Well, I guess, what I am getting at is your earnings growth was 3% year-over-year, you have a target of 8% to 13% for the medium-term in earnings growth, should not that target be revised down, given your cautious stance on lending on the entire Canadian real estate market, shouldn’t you revise those targets down?

No. I think we can still reach them.

They might be up about it when we talk again in three months, but I think – at this point, we are still pretty optimistic for the year.

Okay. The final question I have is, if you are looking at Page 41 of the quarterly report, I noticed there is a spike in past due loans, unimpaired loans that are 61 days to 90 days.

So that category increased from $4.8 million to $17.7 million, which is an increase of 270% just in one quarter, quarter-over-quarter, can you shed any light on that large increase in that one category?

Yes, it’s February. There is – the days get lumped together.

Brian will explain. Brian Mosko, just come on over, Brian.

But you hit 60 a lot sooner when you have a short month as opposed to when you have 30 days or 31 days, then it may – so two periods get lumped together. Go ahead.

Yes. Gerry just explained it.

It happens cyclically. If you look at prior year’s months, the quarter, year-over-year quarter, did we show that, no we didn’t, I am sure it was exactly the same.

If you give me a shout after the conference call, I will give you that number. We have no issues whatsoever and no trends that are worrisome.

So it’s nothing to do with people are overexerting the stuff during the Christmas season and not...?

Yes. Because we have seen our April numbers as well and delinquency is equal or better than it was at the end of the quarter.

Okay. Thanks for your answer.

Thanks.

Hi guys. Thanks.

Good morning Don.

A couple of questions, just a mechanical question, I noticed the accelerator product had about $180 million of originations, but the balances went up by $300 million, but just I think maybe I don’t understand the model, but how does that happen, how does that work?

Well, our CFO is tracking down, I mean it was that on a certain page, I don’t know.

I can try to find the pages in real time. I don’t want to have everyone wait on the call.

But if you have [indiscernible] accelerator originations, it’s about $180 million and you have a schedule with accelerator balances and it’s up about $300 million?

Well, the only thing that comes to mind is the approval came off, securitization came back on our books and didn’t get – came on our books and before it’s renewed and put into another pool, it can be there. But I will tell you what if you want to get back to Bob – Rob Morton, our CFO and afterwards.

Then he will be glad to take the time to answer it. There is nothing wrong there.

He will go through – he will walk you through it.

Yes. It’s Tables 8 and 9, so we can maybe walk through that later.

And then just generally, I have heard you and appreciate the caution around the economy, I mean how much subjectivity is there in your reserve – you are bringing down the reserve ratio, which seems contrary to some of the commentary about the Canadian economy and about the housing market, would it make sense to at least hold the line if not increase reserves a little bit given that commentary?

Well, we are just looking at that. I should tell you the reserve gets carefully reviewed both by the audit committee of the Board, by our outside auditors, Ernst & Young, by the regulator and the risk committee.

So Rob is looking for that right now. But that’s a number that gets very carefully scrubbed.

It’s not really a management number. It’s a managed – it’s a number that everybody has had to say in.

And again, Rob will be able to address that with you when you phone about the other matter as well.

Okay. I will look forward to that follow-up.

Thank you.

I am just trying to reconcile net income and comprehensive income, usually it tracks pretty closely, but this time around there was a big unrealized loss, so I was just wondering what that pertains to?

Yes. Hi, Patrick, it’s Martin.

That’s on investments that are held to maturity.

In terms of fixed income?

Yes. It’s basically preferred shares, the preferred shares that – with callable dates that behave like fixed income instruments.

Okay. Thanks for the color.

Hi, how are you. Just a question on margin following your comments on – your understandable conservatism in the current macro environment, could you also talk about how you look at pricing and spreads in this more conservative trend that you are taking?

Well, the pricing and trends have been the same. It’s just a matter of whether you decline in some situations.

I don’t think there has been much change in spreads or the pricing has been pretty much the same, maybe a touch softer on the pricing. But also deposits have been – the costs have come down a bit.

So the overall spread, it always varies from quarter-to-quarter. But I don’t think there is a lot of difference in how we are pricing our loans or – I don’t know, Pino do you see any big difference in the quarter?

No, I think you just have to be careful, especially in the first quarter, again when purchase business is limited. Those are the transactions that typically you want to be doing.

So maybe you are going to be a little bit sharper on those. And then obviously on the refinance business, we continue with our model on those.

Yes. And let me tell you, when people are – it’s just a very simple thing.

If you get something that you are all very excited about in the sense that someone is buying a $2 million house in a metropolitan area and he is putting down $1 million. But he doesn’t qualify at the bank and he has got a strong Beacon score, but something about his proof of income would not qualify him at the bank.

You are going to be pretty competitive on that and that would probably – that’s what Pino is referring to. So – but there has really been no big pricing difference, I would say over the quarter.

Okay, great. Thank you.

Okay. You’re welcome.

I just had one last follow-up. The comment you guys are making in terms of seeing some increase in the refinance applications, is there any kind of color you can provide around that, has it been a geographic type of thing, has it been a vintage or other type of characteristics?

No. I think it’s just – one of the things that we – you see a little more of during the first quarter when brokers are not as busy with purchases, as you said they have got time to work on refinances.

Maybe – we just were looking at those refinances a little more cautiously, but it came from across – it’s basically from C2C. They came in and so it wasn’t any geographic area and it wasn’t anything unusual.

But for a lot of people, if you can get a CMHC insured loan and compare – and the rates that come with CMHC, if you can pay off any other debts, it looks pretty attractive. And I don’t knock the individual for trying to do so.

If he has got any other consumer debt or he got a car loan or he has got anything else and he can get 5-year money under – well under 3%. It’s got to be pretty attractive.

And so there is a consumer – the fact the consumer looks to refinance and to get the cheaper debt, I applaud the consumer for sort of looking to better themselves. And it doesn’t mean we don’t do them, we do a lot of that, but sometimes, we might limit how much we do and sort of pick and choose among those that really we feel very comfortable that they will be able to handle the matter.

Even if it is an insured loan, we don’t want the hassle with individuals that are destined to not succeed.

Okay, I am sorry. And the refinance, are they coming out of the accelerator or from the traditional program?

And also too is with the refinance maximum being 80% loan-to-value, I mean, these people would still have a decent amount of equity. Are you able to kind of say roughly what the typical post-refinancing loan-to-values look like?

Well, most of them, as for the 80%, here I have got Pino back who will be more accurate.

Yes, I think Gerry was touching on – basically, if you look at the first quarter, obviously, it’s always traditionally a little slower for the mortgage brokers. If you think of our model, where we service clients that are not approved that the major banks – but the point being in the insured space, the programs are just part of the programs.

And I think what you have seen over the past couple of years is, sure, there might be the odd lender that might do something that another wouldn’t, but typically, we are all pretty much in line, so that if a borrower can’t get an insured deal through a bank, because they don’t get approved through one of the three insurers, sending it to Home Trust, it really won’t matter. As you said, the refinances have really tightened as far as the amount of equity individuals need in the property.

I think that was a good move. It has made it a little more difficult for those borrowers to get approved.

And the point being, if they are turned down by CBC or Genworth or Canada Guaranty, Home Trust is limited as well. So, that’s typically what we are seeing, turndowns that were coming.

As Gerry said, deals were being recycled just because generally it was slower in the marketplace.

I am sorry. And are you doing refis on the traditional business or is it just in the accelerator?

No, we are doing it on both sides of the business. But again, we want to make sure we have the right borrower that they are refinancing for the right reasons.

As Gerry mentioned, you want to be very, very careful when individuals are taking equity out of their properties and you don’t see a valid reason for it. There is no benefit for it, be very cautious when individuals are doing that.

In a short timeframe from when they originally purchased the home. So, in other words, they are trying to get out their initial deposit over a short period of time.

Those are all the things that we watch for we always have and always will continue to do so.

And sorry when you are saying kind of tracking, making sure it’s for the right reasons, sorry – this is my last question, is it like are you asking them why they need the money for the refinancing and/or some way to kind of track where it might be going or?

Yes, you want to always trace the money, right? So generally, follow the equity that’s coming out, if it’s for an investment, if you can have a lawyer direct the funds that would be great, again, interview the clients, understand the reasoning behind it, and then direct the funds accordingly and that makes good sense.

At the end of the day, you have improved the situation for a borrower. We are always happy to help them.

Okay, great. Thank you.

Thanks, Geoff.

Okay, thank you very much. Thanks everybody for joining.

As I said earlier, I think we are going to deliver good results over the rest of the year. I think the initiatives we have are solid and sound.

Our book of business is good. And I look forward to reporting to you after the second quarter.

Thanks very much for joining us today. Goodbye.