Laurentian Bank of Canada at RBC Capital Markets 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 : And I think I want to start our discussion here a little bit differently and talk a bit about your focus and your efficiency ratio, which seems to be the big focus. So you guided to a relatively stable efficiency ratio in 2025, more or less 75%, let's say at Q4. And your longer-term goal is significantly lower than that. So when I think of that big improvement or eventual improvement, efficiency is a function of two things: revenue and expenses. And so I think of the revenue side as being the interesting one to start thinking about and start talking about. So maybe we can discuss your shorter-term revenue growth and your longer-term aspirations of revenue growth to help bring down that efficiency ratio. So that's my start and we'll start from there and I'm sure there's going to be lots to discuss there.

Question: Darko Mihelic - RBC Capital Markets - Analyst : So maybe just to follow up on that, the first follow-up is you're expecting utilization rates to improve for the fall. That's typically when they're restocking. But between now and then, the $9.5 billion of lines could actually still grow as you add more dealers. And are you targeting 6% to 8% growth in that arena or is that still --?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And can you talk a little bit about that process in terms of growing the dealer base? Do you have to hire people? Because here, we are talking about your efficiency ratio. But at the same time, we're talking about potentially growing the number of dealers. How do you see that evolve?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And by the way, I could talk about this -- I'm always fascinated by Northpoint, by the way -- just curious, just as a follow-up on that, I mean, the one thing that dealers in Minnesota versus Utah versus you name it; how is the vetting process done there in terms of dealers that are --?

Question: Darko Mihelic - RBC Capital Markets - Analyst : But on balance then, just to bring this all home to revenue growth and talk about this from a total holistic point of view, it is a smaller portfolio than commercial. But do you see or do you sense that there's a greater opportunity in the Northpoint portfolio or do you see the better opportunity

Question: Darko Mihelic - RBC Capital Markets - Analyst : So we can see that progression, we can think about that longer term and it's efficient.

Question: Darko Mihelic - RBC Capital Markets - Analyst : So then the question now turning to the expense side. So what can we actually -- how do you get -- what can be done on the expense side to help you get to your longer-term target? Should we think about that in terms of chunks? Big chunk this year or less?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And this is taking into account the new -- the accounting change and so on. That's the way to think of this. So when I think to 2026, I mean, you don't have a significant change in your expense growth rate in 2026. And so that's something that we should be thinking about, but you touched on something which isn't -- not wanting to be all things to all people, but you alluded to deposits in your Investor Day. And so maybe you can talk a little bit about your deposit strategy and what we can think about going forward from there?

Question: Darko Mihelic - RBC Capital Markets - Analyst : So where are you on that journey for the deposit product and the digital offering?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. Didn't touch on this in your discussion on Northpoint so I think I have to go back to this now because I look at my questions and say, oh, I forgot to ask about. The uncertainty in the US and the tariffs. How does it affect -- does it affect your business? What are the dealers telling you? And I think about that because you deal directly with the OEMs, too. So maybe you can touch a little bit of on the uncertainty that's out there today and the tariff threat?

Question: Darko Mihelic - RBC Capital Markets - Analyst : So I've spoken with some investors about your company and many of them have come back with an understanding or -- maybe this is a better word, is an appreciation of the value of Northpoint, and that the value of Northpoint may not actually be in your stock price at the current moment. And so the question that's sometimes thrown out and I'm just going to ask it bluntly here, I mean, would you consider ever selling Northpoint booking a large game and repatriating the capital and putting that to work on your Canadian strategy? Is that something you've considered? Is that something that we should completely blow off here? What should investors think about when thinking about that?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And maybe just to further nail down this point. I mean, a dealer in Minnesota selling a boat is oblivious to Laurentian Bank being part of Northpoint. Is that -- how I should think about this? So from a prospecting point of view, from a client-relationship point of view, Northpoint really doesn't -- whether it's Laurentian owning it or whatever --

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, great. Thank you. So Northpoint, lots of commitment there. You did mention earlier, you divested of the retail full-service investment brokerage division. Are there other things that -- other opportunities for investment? Are there other things to think about or --? 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 07, 2025 / 7:35PM, LB.TO - Laurentian Bank of Canada at RBC Capital Markets Canadian Bank CEO Conference

Question: Darko Mihelic - RBC Capital Markets - Analyst : So you ended the year at a common equity Tier 1 ratio, 10.9%, significant cushion there. I think I model that your ratio will grow, that you're going to generate some capital this year. So maybe you can speak a little bit about your capital plans and how you want to manage that and where -- roughly where you want to manage your ratio to be?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And where do you think -- like at what point would you consider buybacks? What ratio or an aggressive buyback program? Is that something that -- it's clearly not been -- but is it something we can think about?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, I'm going to turn some questions from the audience. Okay. So this question I've already asked. Your dividend payout ratio increased throughout most of 2023. Should we expect this to continue or is there room to pull back on dividends for a capital buffer?

Question: Darko Mihelic - RBC Capital Markets - Analyst : And the next question is, can you please discuss which type of partners you are looking for to grow your US platform, Northpoint?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Real quick. Canadian Western Bank being inquired by National Bank, I don't know how aggressive can you be in Western Canada as an opportunity for you?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay. We're at this point now where I'm going to ask you for some key messages that you'd like to leave for investors for 2025.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, great. With that, we'll end the session and the conference. Thank you very much.