Laurentian Bank of Canada Foundation at Royal Bank of Canada Canadian Bank CEO Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. And that's a great question. I think given Peter's comments at lunch time as well, it didn't seem that you guys were on the radar screen for a much more intense capital regime. And I think generally speaking, when I think of Laurentian Bank, I don't want to dive too much into the vulnerability of the mortgage market with you. Rather, I want to spend a little more time sort of diving into your three-year kind of plan. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 09, 2023 / 6:55PM, LB.TO - Laurentian Bank of Canada Foundation at Royal Bank of Canada Canadian Bank CEO Conference But before we dive in, maybe you can just review the first year, which was last year, where you met and exceeded all of your financial targets, but maybe you could talk a little bit more about the groundwork that you laid, and then we can talk a bit more about what we expect for 2023 in the year of execution, I believe you call it, part of the plan.

Question: Darko Mihelic - RBC Capital Markets - Analyst : That's a great overview. Thank you for that. So let's talk about 2023 and some of the significant initiatives that you've got coming up. Maybe you can touch on the three most significant initiatives for your bank. And I'm sure it's going to list some follow-up questions for me, but I'll try and hold them back. I don't want to ask them as you're going through them so I'll wait. But please go ahead.

Question: Darko Mihelic - RBC Capital Markets - Analyst : So I wanted to dive in a little bit into number two there, deposit growth, because it was the one sort of KPI that you did in this last year, which is new account openings. So maybe we can talk a little bit about the new digital offering that you're going to be providing to customers. I mean, when I think of that, I think of, okay, a big promotional rate, creating a high-cost, fast-money deposit base. Correct my thinking on that. What exactly are we talking about here with respect to your deposit offering?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so to dissect that a little bit, though, what are you anticipating in terms of when you get the ability to onboard digitally very quickly? For sure if the 460,000 customer basis, if they want to tap. But outside of Quebec, how do you go about getting that deposit? I mean, I don't know that the Laurentian Bank brand is very strong outside of Ontario. So what's the hook?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Sorry, when you speak of the immigrant opportunity, are you talking specifically about Quebec or are you talking (multiple speakers)?

Question: Darko Mihelic - RBC Capital Markets - Analyst : The other area that you've talked about is the NPS and sort of bringing that to everybody's scorecard and sort of working that through. And I don't know that we really appreciate how important that is for the organization. This is a very cultural -- a big cultural change. Are there any -- can you remind us of the target there and sort of what we should be thinking about with respect to the NPS scores and sort of how it's going to drive the sales culture at Laurentian Bank? And can I dovetail this into a second part of it, which is, does that necessitate any kind of change at the branch level? So I'm thinking about people that work in the branch, they have a scorecard and they're out to drive business. Can you talk to that at all? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 09, 2023 / 6:55PM, LB.TO - Laurentian Bank of Canada Foundation at Royal Bank of Canada Canadian Bank CEO Conference

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. The efficiency discussion and simplification and cost reduction. You mentioned a couple of things there, but it's difficult for us, from the outside looking in, to say, okay, yes, you brought in the robotics and you had some -- how much more is there? The opportunity's a little bit opaque to us on the outside. And can you eventually get your efficiency and push your efficiency down below what you're currently targeting and getting all the way down to what some other banks are able to achieve?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. Thank you for that. I think I want to -- I don't want to touch too much on it. I think on the fourth quarter conference call, it was a good discussion around net interest margin. I think Yvan walked us through the lag effect, but it elicited a question to me in hearing the explanation of the lag effect that you've got some loans that are going to be repricing here at significantly higher rates. And so the question that dawned on me after I hung up the phone for your conference call was, what do those customers do when the prime rates gone up 400 basis points? Do they behave differently? Do you think that going forward there will be lower loan growth? Are they going to be more committed to maybe shopping around, to go talk to a big six and say, look, Laurentian wants to crank up my rate here by 400 basis points. What can you do? Is there any -- am I reading into that too much? I mean, maybe even defaults, I don't know. But am I reading into the lag effect and potentially slowing growth in a minimum as a threat?

Question: Darko Mihelic - RBC Capital Markets - Analyst : One of the growth engines has been Northpoint, and I wanted to talk a little bit about it because it is unique. And I guess maybe you can speak to the strength of the growth in Northpoint. But more, I think we worry about the economy changing here and I don't know how this business responds to -- I don't know how it works at this end of the cycle. So maybe you can give us a bit of a thought process here on, A, the growth; and B, how might that business work in a recession. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 09, 2023 / 6:55PM, LB.TO - Laurentian Bank of Canada Foundation at Royal Bank of Canada Canadian Bank CEO Conference

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, great. That's a great run-through. I really appreciate that.

Question: Darko Mihelic - RBC Capital Markets - Analyst : For sure. So let's take a look at the questions from the audience here. Few of them have come in here. ARB still seems so far in the future. We're concerned that when LB get serious about it, it will be more expensive and difficult to achieve. How do you respond to that?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. We've reached the moment in time where I hand it over to you for any final remarks that you want to -- and key takeaways for shareholders and investors.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. With that, we will end our session here. Rania, thank you very much for participating.