Laurentian Bank of Canada

Bonjour à tous. Good morning and thank you for joining us.

Today’s opening remarks will be delivered by Rania Llewellyn, President and CEO, and the review of our second quarter of 2021 financial results will be presented by Yvan Deschamps, Executive Vice President and Chief Financial Officer, after which we will invite questions from the phone. Also joining us for the question period are several members of the bank’s executive leadership team: Liam Mason, Chief Risk Officer; Kelsey Gunderson, Head of Capital Markets; Eric Provost, Head of Commercial Banking; and for the first time, Karine Abgrall-Teslyk, Head of Personal Banking.

Thanks Susan. Bonjour à tous.

Good morning and thank you to everyone for joining us today. I would like to begin by expressing my deep sadness about the recent discovery of the remains of 215 children buried on the grounds of a former residential school in Kamloops, BC.

As we pause and honor the lives of these 215 innocent children and the countless others, we must also make a commitment to them and their families that our individual and collective actions as a nation must focus on righting these wrongs. Moving now to our second quarter, on behalf of the entire leadership team I want to thank everyone at Laurentian Bank for their efforts over the last quarter and for their ongoing commitment to our organization and the new leadership team.

You have continued to grapple with the competing priorities of home life and your ongoing commitment to the work of the bank. Your efforts are very much appreciated and directly contribute to our positive results.

As the country continues to work its way through the third wave of the pandemic, our priority remains the health and safety of our employees and in supporting our customers and communities during these challenging times. For our part, we are offering all our employees paid time off to get vaccinated and encourage everyone to do so as soon as possible.

With the number of new COVID-19 cases declining and with increasing vaccination rates across the country, there is reason to feel optimistic. Turning to our results, the momentum we built in the first quarter of 2021 continued into the second quarter, delivering adjusted net income of $56.7 million.

This represents an increase of 19% quarter-over-quarter and is almost four times higher than a year ago, with adjusted earnings per share of $1.23. Our results were driven by strong performance in capital markets, lower provision for credit losses, and our continued focus on cost discipline.

The PCL includes a reserve release on performing loans of $9.9 million, reflecting improvements in economic forecasts. The bank has also maintained its healthy liquidity levels and a strong capital position with a CET-1 ratio of 10.1%.

Merci Rania. Bonjour à tous and good morning everyone.

I would like to begin by turning to Slide 9, which highlights the bank’s financial performance. Total revenue increased by 4% and adjusted non-interest expenses decreased by 3%, driving positive operating leverage from last year.

Adjusted net income reached $56.7 million in the second quarter of 2021 and adjusted pre-tax, pre-provision income totaled $75.1 million, up $14.6 million from last year. A more granular review of the drivers of our performance begins on Slide 10.

Year-over-year, net interest income and net interest margin were relatively unchanged as improved funding costs were largely offset by lower loan volumes. Turning to Slide 11, other income was up 13% from a year ago.

The increase was mainly due to the strong contribution from capital markets and treasury activities, which improved by $4.5 million, as well as from higher lending fees stemming from increased commercial activities and commission from sale of mutual funds, which benefited from the strong performance of financial markets. We continue to have a disciplined focus on costs.

Slide 12 highlights that adjusted non-interest expenses were 3% lower than last year. Salaries and employee benefits increased by 4%, reflecting higher performance-based compensation related to strong capital markets revenues and the overall improvement in profitability.

This was partially offset by lower salaries from a reduction in headcount. Premises and technology costs were 2% lower year-over-year, reflecting good cost control.

Other non-interest expenses declined by 22%, stemming from a general reduction of expenses ensuing from efficiency measures and the current economic conditions.

At this point, I would like to turn the call over to the conference call Operator for the question and answer session. Monesh?

You mentioned that according to the bank’s calculation, you have about $350 million in excess capital. I’m wondering what your capital deployment priorities are and how you think about that $350 million.

Thanks Meny. Yes, we are well capitalized at 10.1% based on a standardized approach, and it is above our risk appetite, which is between 8.1% to 8.5%, which leaves us with approximately $350 million in excess capital.

Our number one deployment strategy is really we see a lot of opportunities from an organic growth perspective, so to redeploy it and reinvest it in our business, but as we’ve said in the past, if there is an opportunity for any strategic tuck-in acquisitions that are not distracting but, more importantly, are accretive and are on strategy, that is definitely something that we will consider at the appropriate time.

So even though you’re still going through the strategic review, that wouldn’t preclude doing a deal if the right deal came your way, is that correct?

What I would say is that we are open for any strategic transactions that are opportunistic, that are on strategy and that are accretive, but we will continue to be prudent in terms of our capital deployment strategy.

That’s helpful. Then just following up in terms of the organic growth comment that you made, in terms of, call it RWA growth, how do you see that developing over the second half of the year, and then as you look on, when do you expect to really see that start to expand meaningfully?

Yes Meny, I’m going to turn that question over to our CFO, Yvan.

Thank you Meny for your question. As I mentioned in my script, we currently have a very strong pipeline in commercial banking, particularly in real estate, but we do have softness in inventory financing, and the main element there is that, as we’ve mentioned over the last few quarters, the demand is still pretty high for the consumer recreational goods, so that will temper what we see in terms of asset growth for the next few quarters, so my comment would relate to the RWA as well.

That’s helpful. Then a final follow-up on the mortgage side in particular, you mentioned a few changes that you’re making and expanding the review.

When do you expect the changes that you’ve made to bear fruit? What’s a realistic timeline there, and will we see it in terms of volume growth and over what time frame?

Yes, great question. What I would say is that as anybody who’s done end-to-end processing reengineering for the mortgage business in particular, it’s not going to happen overnight, so what we’ve done is we’ve started with our broker origination business, started identifying some quick, early, easy wins which we’ve shared with you today in terms of piloting a few things, segmentation, reducing our overlap, and for example putting in a quarterback who’s responsible for making sure they own the file from start to finish.

We’re starting to see some early positive results coming out of that, and so we’ll continue to expand that and we’re going to be very cautious in terms of our approach, in terms of how we roll things out. The next thing, as everybody knows, retention is a big part of the mortgage business, so that’s why we’re going to be undergoing an end-to-end review on the retention side, and then we’ll also be expanding into our entire branch network in Quebec as well.

All I see is there’s lots of upside, there’s lots of opportunities, we just have to be patient. We’re probably going to start seeing results in the next 12 to 18 months.

Thank you very much.

Hi, good morning. Just to stick with some of the stuff we’ve touched upon already here, but the mortgage distribution channel review, both the branch and the broker, you identify origination processes that are getting fixed but you also talk about renewals.

What’s going on there as far as problems you’re seeing, and then just benchmarking the retention rates that you see, where are they and where do you want them to be?

Gabriel, thanks for the question. We did start in this quarter, this past quarter focused on the origination and we’re now pivoting to retention, so it’s early days in terms of identifying benchmarks and where we’re at, at this point, which is why we’re undergoing it, because you’re absolutely right - retention is key to this.

That’s what we’re going to be doing in this quarter and we will be providing the analysts and the market with an update in the next quarter or two, based on our key findings. But all hands are on deck in terms of making sure that we identify the issues, map it out, figure out what some of the quick wins and early fixes are that we can do to right the ship.

It’s no news, based on our performance, we are underperforming in that business, which is why it’s a high priority for us and it’s a big opportunity for us.

No, I get that. I’m not asking to be--it’s like a glass half full perspective, because a few years ago we were--certainly when B20 was coming into effect and we were asking all the banks about retention rates, I was surprised to hear it was over 90% for pretty much all of them.

Do you know if you’re quite a ways off from that, because that does represent, if you can fix it, a big opportunity, as you say.

Yes, so Gabriel, what I would say is that based on our underperformance, that we are below market on all benchmarks, whether it’s faster time to decision, improving our funding ratio, as well as our retention rates, which is why we see this as a big opportunity for us and we are focused on fixing it.

Okay. Expense optimization, that was something that I hadn’t heard before, and you mentioned reviewing partnerships.

Is that more of a supplier focused initiative or--I know the one with Mackenzie on the mutual funds, but is it more the former or the latter?

What I would say, Gabriel, is we actually conducted a complete cost optimization program that we had shared with the market back in Q4, as well as Q1, and so now we’re in the process under our new leadership team in terms of reviewing what are some of the strategic priorities, how does it fit into our overall strategic review while we continue our heightened focus on cost discipline. As I had mentioned, we need to pivot from not just being cost disciplined but identifying cost optimization.

Some of the early findings are, yes, there are a number of key strategic partnerships out there in terms of contracts where there may be opportunities for us to renegotiate the levels of service, making sure that we’re getting our money’s worth. Sometimes you end up paying for things that you don’t even use, so some of these key strategic contracts are currently under review.

Then as part of our ongoing end-to-end process reengineering and review, it’s seeing if there’s other opportunities for us to partner up to create more efficiencies in our business.

Okay, and then lastly on the deposit-slash-funding side, the message I’m getting here is it’s on the tapping into covered bonds, the cheap wholesale funding, maybe de-emphasis of the broker channel for deposits to reduce your funding costs there. Is that a correct interpretation, and would that perspective of de-emphasis of certain deposit products, would that extend to the broker--sorry, the branch channel, the core branch channel, or is that still an area that you’re focused on to grow?

Yes, so Gabriel, deposits are core to the bank and making sure that we get personal deposits as well as commercial deposits is going to be key to our success going forward, so it’s not de-emphasizing it whatsoever - on the contrary. Our digital play is going to play a critical role in terms of building that, so we will be focused on deposit growth.

What we’ve done in the meantime is, as Yvan mentioned, we proactively managed our deposits to really optimize our margins and making sure we’re getting cheaper sources of funding, and to also make sure that we’re managing it against our asset growth. That’s a strategic direction that we’ve focused on, but that’s not to say that deposits are not core to the bank.

Just in terms of our celebrations for our 175 year celebrations, we’ve launched a couple of new products and cash-back offers in the market, again to acquire new customers, new deposits, as well as increased deposits from our existing client base, so will continue to be a focus for the bank.

Perfect. Thank you and enjoy the rest of your day.

Thanks Gabriel.

Thank you, good morning. The quarterly guidance you provided was helpful, but maybe I want to drill down on a few of those items, just to kind of extend the outlook beyond the next quarter, because there are some positive trends here.

Maybe starting with the inventory finance, the customer demand clearly is there, it’s really supply chain issues that have been well documented that seem to be limiting the lending opportunity. When do you think this might turn around and start becoming a source of growth?

Clearly not next quarter, but could it be as early as Q4 or is this more of a 2022 type story?

Thanks Paul for the question. Maybe if I can just paint a picture, in terms of our inventory financing, 85% of our business is in the U.S., 15% is in Canada, and as you know, the reopening plans are different depending on the markets.

The consumer demand has definitely outstripped the supply, so there is a supply chain issue, and as Yvan had mentioned in his opening remarks, our utilization rates pre-pandemic were in the mid-50s, and right now we’re sitting at the mid-30s. Just in terms of simple math, for one extra percentage point of utilization, that translates into $50 million of additional assets, so if we were to return back to our pre-pandemic utilization rates, that would generate an additional billion dollars in assets.

It is a seasonal business, though, so there is a seasonality to it as well, and so from a timing perspective we anticipate that this will be recovering in the next, I would say 12, so it would be a 2022 story and beyond. But in the meantime, we’ve been adding dealers as well to also mitigate some of that risk - we’ve added 20% year-over-year, so we’re quite optimistic once the tide turns and the seasonality issue is out of the equation, as well as the supply chain issue, that this will continue to be a growth engine for us.

That is a very helpful answer. Just one follow-on in that, in terms of the dealers you’ve added, is that also mostly in the U.S.

as well?

It’s a combination, so we’re constantly looking to grow our business in Canada as well as in the U.S.

Got it, okay. Similar question on equipment finance, and maybe that one covers a little bit earlier again, I think, positive demand backdrop but maybe less supply constraints.

Maybe you can help us with an outlook there in terms of when that can get back to growth trajectory again.

Eric Provost, who is the head of our commercial bank, is on the call, so I’ll turn that question over to him, Paul.

Yes, thank you Rania. In terms of equipment finance, we’re well positioned as well to benefit from the recovery.

Most of our positioning is in transportation construction as well as technology and equipment finance equipment, so we will ramp up following reopening, again depending on the geography, but most of the portfolio out there is actually in Canada, so a driver for us in the next few quarters depending on the pandemic situation.

Got it, okay. Then final question, noticed on the fee base income that service charges were up 10% quarter-over-quarter.

Just wondering, is that all volume-based or are there some price increases included there?

Yes, I would say in the fee income, there’s lending fees that are up, so lending fees are up 15% year-over-year and 6% quarter-over-quarter, and that’s really just a reflection of the increased commercial lending activities, particularly in our real estate lending portfolio. But the other thing too that we introduced is fees relating to paper statements, and that was really to incentivize our customers to access digital statements, which is obviously more environmentally friendly.

As part of our ongoing review, we’ll be continuously looking at all of our product offerings and our services and benchmarking it from a fee and pricing perspective.

Got it, okay. That’s all from me, thank you.

Hi, good morning. Just two quick ones on the credit side.

When I looked at the release, it seems like there could be--and correct me if I’m wrong, there might be a bit of negative migration in the resil book, and I’m just curious what that might relate to. I guess I’m curious if I’m right, and what that might relate to.

Then just the net write-offs increased quarter over quarter, more on the personal side, and just hoping to get a little bit of color on that as well.

Thanks Doug, I’ll turn that question over to Liam.

Yes, good morning Doug. What I would say is there is a slight bit of migration solely in the mortgage book.

It relates to a few of the mortgages linked to rentals, and it’s not material. We don’t expect it to persist, but it was not unexpected given the COVID situation.

Then on the personal write-offs?

On the personal side, actually there’s not a lot of migration at all. As we’ve explained in the past, we were prudent in terms of our reserving around anything that had a deferral program.

We’ve seen things behave very well on that, and as a result we’re not seeing anything adverse in that space.

Okay, so write-offs--

Doug, maybe I can--go ahead?

No, I was just going to say, it looked like the personal write-offs were up so I just wanted to know if there was anything unusual, but it doesn’t sound like there is. Is that a fair way to--

Yes, it’s normal variation, Doug. It’s normal variation.

Okay.

Yes, I wanted to just reconfirm that we have no concerns with any of our underlying assets at this point. We feel that we’re adequately reserved.

Just a reminder that we have a minimal exposure to pandemic-impacted industries, that represent less than 2% of our overall portfolio.

Okay, perfect. Then just on the capital side, and maybe this is for Liam, March 11 OSFI came out with the proposed 2023 Basel III related changes for small and medium sized banks.

There are some interesting changes that are in there that potentially could benefit yourselves, and I understand that the AIRB conversion is under review and seems to be delayed. I’m just curious, and not that capital is an issue for you, but would these revisions help you, which I think they would, and can you maybe talk a bit about how they would help you, if at all?

Yes, thanks Doug. There are a lot of gives and takes in the Basel III revised.

We’re in the process of working through the QIFs in terms of the impacts, and what we’re seeing generally is gives and takes - in some areas, it’s going to be positive and in other areas it might have a slight impact on our business. Yvan and I are working through it and we’ll provide further guidance in the future as we work through those numbers.

Maybe what I would add is that we are taking those changes into consideration as we continue to do our deep dive in terms of our strategic review, because obviously, as Liam said, it will depend on what industries or what sectors that we look to grow in, so that’s definitely going to be taken into account as part of our overall strategic review.

Okay, so more to come on that. Then just lastly on the NIC side, you’ve done a good job on non-interest expense.

One of the things that caught my eye was it was down partially due to lower regulatory costs, and every bank I talk to talks about regulatory cost inflation, so I’m just curious what would that relate to in terms of lower regulatory costs?

I’ll refer that to Yvan.

Thank you Doug for your question. I would start by answering generally.

We really had a focus on costs over last year. We reduced the costs materially, as you can see from the improvement at the efficiency ratio, so it really impacted the whole lines of expenses and not only regulatory costs but overall costs.

Regulatory programs could have been business continuity, initiatives - it was a whole slot of things where we did invest some money for some programs, and most of them are now in place, so that’s how we see the benefit of the expense reduction going forward.

Okay, great. Thank you.

Thanks. Perhaps more of a big picture question for Rania.

As the economic recovery gains momentum here and we see the benefits of strong volume growth, whether it be on the personal or commercial side, how does Laurentian position itself to benefit from that recovery? I guess it’s kind of an unfair question given the magnitude of the strategic review you’re undergoing right now, but I just want to hear your philosophy on how you balance the need to participate in the economic recovery, which seems like it’s going to be over the next couple of quarters, versus positioning the bank for success over the longer term.

Thank Lemar, and I think that’s a great question in terms of the balancing act quarter to quarter versus longer term. I would say, as I had mentioned, our commercial book of business is well positioned to benefit from that upside, and even though our utilization rates are down, what we’re seeing is the real estate business has been picking up, we’re looking at we’ve been growing in the multi-residential area.

We’re expanding in terms of adjacent sectors, in terms of our equipment financing as well as our dealers, looking at new product offerings. I would say commercial is definitely well positioned to ride that wave when it comes, and we’re already starting to see the fruits of our labor there.

In general, based on the specializations we’re in, it’s an attractive margin business, we have deep expertise, excellent customer experience, and really a specialized workforce there. I’m quite optimistic that we will ride that wave on that front.

I think in terms of our capital markets, we had a record quarter and our strength continues in the fixed income platform. What we’re seeing is that government issuances will continue, so that will continue to drive some of that business for us as well.

But the key thing that we’ve done differently in the capital market space that, I think, is going to really position us well is that we have better alignment now between our capital markets coverage model as well as our commercial clients, so as those two businesses work hand-in-hand, that will also generate some additional growth opportunities for us as well, and we’ve already started seeing that in Q2 and moving forward. In the personal banking space, listen - everybody knows it’s challenged.

We need to unlock the potential. It’s going to take time, but we also identify that there’s a lot of low hanging fruit versus some of the longer term fixes, so it’s trying to balance out what can we do in the short term while we’re trying to fix things for the longer term.

I feel optimistic that things are going to start turning around under Karine’s leadership. We had too many brands, we need to simplify it, we need to rationalize our product offering.

We need to streamline our processes, and digital is definitely going to help us unlock some of that potential, so while doing all of that, we’re going to continue our heightened focus on costs and--because I always say, there’s two levers, it’s revenue and cost, but you can’t do one without focusing on the other. You need both, and so pivoting to cost optimization will also allow us to reinvest in our businesses where we need to, to ensure that we can maybe potentially move faster where we can.

Hopefully that answers your question, Lemar.

That’s very helpful. Thanks for the additional detail there.

Then I just want to flip over to non-interest expenses, and I’m referring to Slide 12 here and the comment that other expenses decreased $7.6 million from lower regulatory costs, advertising, business development, travel. How much of that would you suggest is going to come back when the economies reopen?

Maybe I’ll start and then I’ll turn it over to Yvan. I think every institution out there has benefited from some of the reductions in the pandemic cost, but the pandemic has also generated some additional costs, whether it’s maintenance, cleaning, equipment.

Our branches have been open and so we’ve got staff going into the branches, so some of that will level out. As we know when the economy opens up, there will be a return, and we’ve already started seeing it in our operations in the U.S.

- business development costs will start going up. We will continue to focus on those that are within our control and we’ll be very disciplined and prudent, and making sure that where we invest, if it’s business development, that is going to generate revenue.

Every leader is responsible and accountable for that, which is why we need to pivot very quickly to cost optimization, so that we don’t waste our efforts, so we are starting to pivot very quickly on that. I don’t know if Yvan, my CFO has a few words to add?

I think it’s a good answer, Lemar. As we look at it, there is probably--if you look at the cost base currently versus what was pre-COVID, there is probably $2 million that you can identify as what I call traveling business development.

But if you offset that with the additional cleaning and some of the stuff, it’s probably a million dollars difference per quarter. The only other element I would add is that the environment post-COVID is not going to be the same as prior to COVID, so definitely there’s going to be a different way of working, maybe not the same level of traveling and all that, so that will offset some of it.

Maybe the last comment is what we expect is as we restart doing business development, we would expect additional revenues coming from that as well, so we’re not too concerned with the evolution. I mentioned currently the lockdowns are opening up in Quebec, Ontario, and some other places, so we are forecasting the efficiency ratio below 70% for the whole year 2021.

Great, thanks. That’s it from me.

Okay, thank you very much. Hopefully a couple of quick ones.

A lot of the questions have been asked and answered. Liam, just first for you, I’m looking on your Slide 18 where you show your PCL trends relative to the big six.

I think the bank has taken great pride in saying that it’s always been consistently below the big six. As you think over the next four quarters, do you see the risk that you may actually fall above the big six?

Thanks Sohrab, and good morning. You know, it’s difficult to assess right now as the economy improves how things will play out and how things stabilize.

The trends do look appropriate. What I would say is that we have a very disciplined and prudent approach to our underwriting, the sectors we’re in, the specialized experts on that, and I would expect our credit discipline to continue and our results to be similar, subject to business mix and how things evolve.

But it’s difficult to predict how things will evolve as the end of the pandemic plays out.

Maybe if I can just add to that, Sohrab, if I can just talk about maybe fiscal ’22 and beyond, because I think in terms of this year, as we have said, provided things continue we will be looking at releases in the next two quarters. But as we continue to finalize our strategic review, that could potentially change our business mix, and making sure that we have a risk-adjusted return model that we’re comfortable with, that the board is comfortable with, that our investors are comfortable with, so the risk appetite will determine that based on the strategic direction that we take going forward.

But we will continue to be disciplined and we do take great pride in terms of making sure that our quality of credit is strong and that we are well reserved.

So maybe Rania, maybe it’s for you, maybe it’s for Liam, but I think you gave a very full answer as to where the utilization rates, for example in inventory finance are and what a 1% utilization increase means in terms of dollars of loans. Can you also say what a dollar of incremental loan will mean in terms of additional reserve requirements?

I guess what I’m trying to figure out here is how volatile can this line end up getting? Are you trying to grow into your reserves or are these reserves coming out and once there is an economic rebound, then you have to kind of build it back up?

No Sohrab, we’re very happy with where our provisions are today, and as Rania has articulated as well as Yvan, right now based on what we’re seeing in the third quarter so far and given the recent reopening by the provinces, we would anticipate further releases, but we’re going to remain disciplined, we’re going to respond to the economic conditions, and that will really drive how our reserves play out. But at this juncture, we would anticipate further releases based on the reopening and what we’re seeing so far in the third quarter.

And Sohrab, I think you can kind of probably go back and look at our pre-pandemic rates. Our business mix hasn’t really changed much, right, so our commercial business has always been our growth engine, so I think it’s fair to say all things being equal, it would look more or less like our pre-pandemic PCL rates, which have historically been lower than the other banks, but the strategic review will come into play as things unfold at the end of the year.

Okay. You made mention of the decertification of the union.

I think Yvan mentioned that on a full year basis, the expense to revenue ratio should be sub-70%. Are you in a position to quantify what are the financial benefits of the decertification of the union?

Yes, so what I would say--listen, the union was an employee-led process. As far as I’m concerned, it’s business as usual.

We’re focused on renewing and growing Laurentian Bank and charting the path forward, and we will continue to focus on our employees, making sure they’re empowered, they’re engaged, and they’re operating as one team.

I mean, how should I think about this from an expense to revenue ratio or expense growth prospects, or the mix of expenses? No change?

Yes, I think no change is the best answer, Sohrab. The conditions of the people will pretty much remain the same, may improve for some of them, but overall it’s not material.

You shouldn’t expect any change from that.

Okay, thank you. One last question, maybe not so quick, but I think on a number of comments that you mentioned, I think you’ve talked about more fundamental reviews but also finding low hanging fruit or some quick fixes, I think in the context of the mortgage review process, for example.

You said the channel, the broker channel, you’ve got some quick fixes and some more fundamental ones coming through. Can you give us some specific examples of some of those quick fixes, just so we have a sense of where the starting point is, if you will, as far as the process, just to be able to get a feel for what the size of the prize is.

Yes, so Sohrab, what I would say is I think in terms of--let’s just stick to mortgages because that’s one that we’ve started working on. It’s as simple as having a dedicated end-to-end file owner.

That’s an easy low hanging fruit, having one person responsible for making sure that the file is going from front to end in a timely fashion, moving from one department to another, and it’s fully accountable. It sounds simple, sounds basic, and it is, and those are the little fixes that will change.

It is incentive accountability, ownership, and ensure that we’re tracking it against key KPIs, so introducing new funding after time, end to end process turnaround time, improving our funding ratio, improving our retention rates while maintaining our disciplined underwriting standards. I would say that’s an easy one there that we can kind of point to, because that’s something that we’ve delivered on and we’ve started seeing how that helps.

I’m a big believer in agile, stand-up huddles, people talking to each other - where is the file, is this a priority file, is it complex, so streamlining--you know, different streams for different transactions, depending on complexity, and depending on what the expectations of the customers are. To be honest, there’s a lot of these that are not rocket science.

It’s a mind shift, it’s a change in culture. I believe we’ve brought in the right team and we’re ready to execute, and so stay tuned.

Like I said, there’s lots of opportunities, but it’s going to take time.

And maybe Rania, just one last question and maybe if it’s too long of an answer, we can table this for another time; but you said you’re still in the market for, I think, a Chief Digital Officer or a Technology Officer - I may get the characterization wrong, but what is--what would be the--what is the goal for that individual? What are you looking for that individual to deliver to the bank and over what sort of time frame?

Sohrab, I’m not sure if you’re applying for the job, but I’m happy to share with you what I’m looking for in a Chief Technology Officer - I’m just being a little facetious here. Listen - technology is a foundational component to any institution, particularly financial institutions given the changing consumer behaviors, the acceleration of digital adoption, and so I’m looking for somebody who will help us in terms of making sure we’re building on a strong foundation.

I do have an interim CIO, we have an entire team, so I’m looking for someone who will bring leadership skills, someone who will help us architect the future technology road map for Laurentian to support the strategy that we will be launching at the end of this year. That’s what I’m looking for.

But does that indicate, Rania, that you expect personal banking will be a growing piece of the overall pie when you think about the business mix in the future at Laurentian Bank?

Yes. We’ve got three businesses, and I expect all businesses to contribute to our growth - commercial banking, capital market, and personal banking, and it’s going to be underpinned by digital as well as our technology platforms.

Yes.

Okay, thank you.

In closing, I’d like to leave you with a few key takeaways. The momentum we built at the beginning of the year has continued into the second quarter.

The bank’s capital and liquidity positions are strong and its credit quality is sound. This quarter also included some significant achievements, including the credit outlook upgrades, the launch of our inaugural covered bond program, and the issuance of limited recourse capital notes.

At the same time, we continue to maintain a focus on cost discipline as we pivot towards identifying more structural cost optimization opportunities. Over the next few quarters, I plan to provide additional updates on the review of our mortgage process as we aim to further improve the customer experience and renew growth.

As the digital channel is integral to our plan, we are initiating a review of our digital strategy and will also share these insights. Finally, across the board the leadership team is hard at work to identify key areas of strategic focus and priorities to chart a new path forward.

Thank you for joining the call today. Have a happy and safe summer, and I look forward to speaking with you again in September.

Thank you for joining us today. Should you have any further questions, our contact information is included at the end of the investor presentation.

Our third quarter of 2021 earnings call will be held on September 1, and we do look forward to speaking with you then. Have a pleasant day.