Good morning, ladies and gentlemen, and welcome to First National's first quarter 2021 analyst call. It is now my pleasure to turn the call over to Stephen Smith, Chairman and Chief Executive Officer of First National Financial. Please proceed, Mr. Smith. Thank you, operator, and good morning, everyone. Welcome to our call and thank you for participating. Also on the line are Rob Inglis, Chief Financial Officer, who will provide quarterly performance highlights, and Jason Ellis, our President and Chief Operating Officer, who will discuss our outlook. Since the MD&A provides full details, our prepared remarks will be brief. Before we begin, I will remind you that our remarks and answers may contain forward-looking information about future events or the company's future performance. This information is subject to risks and uncertainties and should be considered in conjunction with the risk factors detailed in our MD&A. We are very pleased with First National's first quarter. In fact, growth in our earnings exceeded our expectations. For shareholders, strong profitability provided such good coverage for our common share dividend that the board of directors approved a further increase to our dividend rate starting on June 15th. This CAD 0.25 per share increase brings the dividend rate to CAD 2.35 per share on an annualized basis. This represents the 15th consecutive year since our IPO in 2006 that we increased distributions to our shareholders, and that's possible because of the structural advantages of the First National business model. For the first quarter, the dividend payout ratio was in the low 60s, and together with a positive trend in cash flow, the board felt comfortable with this latest increase. Turning to operations, first quarter performance did not display the typical effects of market seasonality as borrowers continued to finance home purchases at a record pace to take advantage of low interest rates. I think the fact that many Canadians also accumulated savings during the lockdown and deployed it into housing was another factor that played in favor of a very active first quarter market. Looking specifically at production, single-family originations increased 58%. Once again, double-digit growth was generated by every First National office across Canada. Commercial originations were lower than last year by 31%. In context, we are comparing to a very strong quarter to start 2020, which included some fairly large financings that landed in that particular period. Because 2020 was such an unusual year, I think a better basis of comparison for progress is 2019. If you recall, Q1 2019 commercial originations were CAD 1.2 billion, and at the same time, we described that performance as strong, which it was. This year, Q1 generated CAD 1.8 billion of commercial originations. On a normalized basis, we think this is a good start to the year. On a consolidated basis, new mortgage origination was higher by 16% over last year. Our strong market share performance was supported by great service from all our teams. Speaking specifically to our employees, thank you for your dedicated efforts. I know there has been a lot of discussion in the media and on Parliament Hill about measures to cool the housing market. Although OSFI has increased the qualifying rate and the federal government in the recent budget introduced a non-resident foreign buyer tax on vacant housing, I don't believe these measures will have much impact upon demand. We are certainly of the view that lack of supply has and continues to be an ongoing issue, particularly in Vancouver and Toronto. The creation of additional housing stock is the real solution to the supply issue. Since First National finances both single-family and multi-unit apartments, including new construction, we look forward to being part of the solution for the long term. Now over to Rob. Thanks, Stephen, and good morning, everyone. First quarter revenue increased 23%, but was down 1% if we exclude the changes in the fair market value of financial instruments limited to interest rate movements between the quarters. The biggest drivers of revenue growth were a 26% increase in residential volume originated for institutions. The impact on per unit placement fees from a proportionally larger volume of residential business compared to commercial this quarter, and 37% growth in mortgage servicing income, which includes both our third-party underwriting and our administration businesses. The outlier, as in Q4, was mortgage investment income, which was 34% lower, reflecting deferral. Despite adding no new borrowers to the program since September 2020, our investment in deferred payments has not significantly decreased since peak in the third quarter, as borrowers return to making their regular monthly payments. Accordingly, these assets will only be repaid when those borrowers either renew for a new term with First National or pay up. We are encouraged that these investments will gradually be repaid and provide cash flow over the next four years. Expenses in the first quarter were generally higher, but for the right reasons. In Q1, brokerage expenses increased by 8% on a 93% increase in single-family originations made for institutional investors. Per year broker fees were generally consistent between the years, but we did expend some of the costs of broker loyalty left over from 2020. Wage costs increased 24% as a result of growth in our workforce and some 2020 bonus costs, which were expensed in the first quarter. Other operating expenses increased 5%, but most of the increase went to higher hedging costs. Excluding that, other expenses increased modestly due to costs to support the growth of the business, higher MUA, and technology investment. Interest expense, much like investment income, decreased 42% due to the decline in short-term lending rates. Now, over to Jason. Thanks, Rob, and good morning, everyone. The past year has been a busy one for the First National team, with substantial growth in originations leading to record mortgages under administration in every quarter, this one included. Through a large part of last year, we also responded to a record number of requests for service and advice from our borrowers and their mortgage advisors, which is understandable given the unusual economic and market circumstances. Our scalable model has been critical to our success during this time. Operating leverage is not a concept often associated with mortgage lenders, but technology, including automation, has definitely provided that kind of leverage by allowing us to be productive as well as efficient as we've put more business on the books. Stated simply, our origination platform has a fixed cost component, so additional origination volume has a positive impact on the marginal costs of underwriting. At the same time, we still needed to add to our workforce. Over the past year, we've added 276 people, a 26% year-over-year increase. Investing in our workforce is a key strategic priority, and growing it is a sign of confidence in First National's future. Additional staff have been deployed in all areas, including third-party underwriting, where our customers are also experiencing strong growth. We've put a great deal of effort into the successful recruiting, onboarding, and training of new hires using virtual means. What's more difficult is to instill our culture in our new employees while we continue to work from home. Our collaborative and entrepreneurial spirit sets First National apart, and it's crucial to maintain these values throughout the organization. We are very pleased with the extraordinary efforts of our employees, who are to be credited for much of our success this quarter and over the long term. Thank you to everyone. Turning to our short-term outlook, it hasn't changed since our last call. We remain very positive. Since the first quarter of 2020, the housing market has been extraordinarily strong. We expect this trend to continue in support of our optimism for increased residential origination in 2021. We also expect success in growing commercial mortgage originations. As you heard from Stephen, commercial originations were down in the first quarter relative to an exceptional Q1 last year, but demand signals in the market remain positive. On the funding side, demand remains strong from institutional investors who have a substantial amount of liquidity available to deploy and know they can do so and earn an attractive risk-managed return in mortgages originated by First National. Securitization markets also continue to operate well after a brief period of disruption at the beginning of the pandemic. For the short and long term, we believe our strong relationships with mortgage brokers and our diverse funding sources will keep First National in a leadership position in the market. Of course, we take comfort from the fact that the company will continue to generate income and cash flow from our servicing portfolio and our mortgages pledged under securitization, which together amount to approximately CAD 117 billion. Of course, we expect to continue to capture the value inherent in our single-family renewal book. This concludes our prepared remarks. We'll be pleased to take your questions now. Operator, please open the line for questions. As a reminder, to ask a question, you need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile a Q&A roster. Your first question comes from the line of Étienne Ricard with BMO Capital Markets. Thanks, and good morning. Hey, good morning. First question on mortgage servicing income. From your third-party underwriting arrangement continues to be strong. Could you help us understand how meaningful those partnerships could become over time from a top-line perspective? Hi, it's Jason. Yeah, the servicing line is a combination of third-party underwriting as well as our traditional mortgage administration activities. I would say that proportionally, the third-party underwriting fees have been growing, and we expect them to continue to form a meaningful part of that line of income going forward. Okay. I mean, the vast majority still remains servicing income on your book. Got you. The vast majority of that line is related to the servicing revenue on the, I don't know, Rob, what is it, approximately CAD 50 billion of mortgages that are serviced for our third parties? I think it's like CAD 83 or something. $83. Yeah. Like CAD 35 is on our balance sheet kind of thing, and the CAD 83 is with institutions. Okay, great. Switching towards Excalibur, could you provide an update on how the rollout is progressing in British Columbia, and what impact on securitization margins should we expect as Excalibur continues to grow? Well, we continue to roll the product out in British Columbia. I would say that we're not probably at full steam yet. We're pleased with how that's going. As far as impact to the net interest margins on the securitized portion of the book, I think it'll be quite a small impact even as that program continues to grow given the relatively large denominator of prime mortgages through both NHA MBS and ABCP securitization programs. Okay. Makes sense. It's great to see this additional dividend increase, even after the increase, it seems as we may still be at the low or slightly below your 60%-70% target range. Looking ahead, how should we think about First National favoring regular dividend increases relative to special dividends? That's a great question, Étienne, because I think we have that internal debate ourselves. We are torn between being prudent and cautious, between following market practice. Even with that CAD 0.25 increase, the payout ratio is still quite low. There's internal debates whether we should increase dividends further because we think there's room. I think the fact that we've had four years in a row of specials, there's the argument inside, "Well, we've had four years of special. Maybe we can afford to increase the dividend, particularly with the big jump in income last year and continuing. I would say that we certainly would have a policy that we want to increase dividends each year. One could make an argument that maybe our target of 60% to 70%, which we have tended to avoid, is perhaps too conservative, that we could go for a higher payout ratio. In the end, we're probably focused here to maintain the appropriate amount of capital, yet still pay out a good dividend. How should you think about? Well, I think to the extent that we can, we'll continue to pay out dividends. We'll continue to try to grow that as much as is prudently possible. Thank you for your comments. Your next question comes from the line of Graham Ryding with TD Securities. Hi. Good morning. Hi, Graham. Stephen, the 60%-70% payout ratio target, is that just on your regular dividend or does that include your specials? No, that doesn't include the specials. That would be the regular payout. I think of the way we've been running this, Graham, is we on a run rate basis, it's the CAD 0.60-CAD 0.70. We've had that target for a few years. When we get to the end of the year, we look at it as what capital do we need going forward, and then we do the special based on that. Last year, for example, it was a great year. We did a CAD 0.50. I remember when we put together the number and one of the reasons so much room is, I think we wanted to see visibility into 2021. We had more room back last year because we announced it. It would've been beginning of November. Actually, when we put it together and the numbers, we basically did it on, I think, if I go back on end of August numbers. We ended up having a very strong four months at the end of the year. Numbers came in a lot stronger. At the beginning of last 2020, if you recall that there were substantial mark-to-market losses in the quarter. That tended to erode income too. That would be a factor. To your point, when we think of payout ratio of 60%-70%, that's on the run rate, and then the payout just adjusts us to where we think we should be appropriately on a capital basis. Okay. Understood. I appreciate your comments on the regulatory policy, and you feel like this is more of a supply issue that's not necessarily a short-term solution. Well- How are you feeling just about? I'd have to say this market, this can't keep up. This reminds me, I will be dating myself here. It reminds me of 1988, 1989, I do remember the market in June 1989, it stopped, like in a week, all of a sudden gone. We were into a lot of monetary tightening. Rates were double digits back then, we went into a period of monetary tightening for a number of years in the early 90s. Very, very tough. We would see here, this is a lot different market. It will change. At some point, we're going to have the bid will come off. Things will slow down. If I have a view of how I think things will go, I think it will be a case of things will slow down quite a bit. I don't necessarily see prices dropping. They'll just probably go sideways for quite a while as income catches up. Certainly the lack of supply is a big issue. It's a big issue in Toronto in particular, where provincial and municipal regulations conspire together to restrict supply and make it expensive. We have a policy in Metro Toronto of intensification. Everyone supports intensification, as long as it's not within a kilometer of their house. We can see that along the Bloor subway, where that's been there for 60, almost 70 years now, and yet it's one and two-story buildings all the way along. Because generally local people have opposed intensification. That's certainly an overriding issue. So until we solve the supply issue, we're going to have demand. The other change that I would say the big change in the last decade, and it would start after the crisis of 2007, 2008, would be the introduction of B-20. OSFI, particularly based on the experience in the U.S., was very concerned about a real estate bubble. A mortgage loan is really a loan to an individual secured by real estate, and very easy, at a certain point, to just make that real estate. OSFI through B-20 has put more and more focus, and lenders, and supported by insurers, have made that mortgage as much more covenant loans. You're being lent to on the basis of your ability to repay through your income with collateral in the house. The number that I quote all the time would be in 2007, 2008, First National, we did 21, 22% of our loans at FICO was under 680. Now it's maybe 3%, and certainly no insured loans under 680 any longer. You've seen the insurers tighten up, all the D-SIBs tighten up, the markets tightened up. The quality of book is very high. Another stat is average FICO in 2007, 2008 is 705. Now it's 775. A very high-quality book. If I had a concern is at some point this market's going to slow down, and we will not be looking at these same originations. When that is, I don't know. It's like any market. It's like predicting a turn in the equity markets. There'll be some event where something will happen. Don't know what that is. Certainly, with all the stimulus the government's providing and all the savings on the sideline, you could see this running for a while. Anyway, those are my comments generally on the housing market and our book and the resiliency of it. I feel a lot more comfortable about the book, and this gets back to Alt-A business. We had an Alt-A program, and I think it goes to the Alt-A lenders, where back in the day, prior to B-20, I think Alt-A was much more just real estate loans. In fact, even a number of the D-SIBs have had programs that will lend you 75% if your FICO was 720, no questions asked, and that's just all gone. The support underlying the mortgage book in general is as strong as it's ever been. Perfect. Appreciate the color. That's it for me. Thank you. Your next question comes from the line of Geoff Kwan with RBC Capital Markets. You mentioned in the MD&A just the origination comparable to 2000. Just wanted to get clarification. Did you mean that kind of more for Q2, or I suspect you might have meant more for the 2021 on a full year basis? Sorry, Geoff, can you just repeat that one more time? I think it was the outlook. I think what we said was. Yeah. You had the outlook that you're kind of talking about residential originations to be comparable to 2020. I was just asking whether or not that was in reference to Q2 or just still sticking to the kind of the full 2021 year. [crosstalk] In fact. There's a couple of different factors there. I would say we had a strong 2020, and we'd see 2021 being as strong. One factor that's sort of a tailwinds on that is certainly we would see prices in the first Q1 up by about 30%. Given those tailwinds, that would point to some fairly strong numbers. It gets into an issue of to what extent one thinks how strong the market's going to be for the rest of the year on a unit basis. Okay. Those numbers apply to the full year or our forecast. Just what you're seeing right now, obviously the year-over-year comp should be easier for Q2 relative to last year. Just, I guess maybe relative to recent quarters and obviously adjusting for seasonality, how are you thinking or what's the visibility around Q2 right now, but also too, do you think that you're starting to see or are you seeing evidence of maybe people trying to get ahead of the OSFI likely increase in the stress test rate? We haven't seen any evidence of people trying to get ahead of the stress test. That's a 5% increase on the mortgage, less when you look at the mortgage, including taxes and heating and so on. We haven't seen any indication. I imagine at the margin there'll be some, but that would only apply in certain markets. At this point it doesn't affect insured business. Although I think we were surprised that the stress test wasn't increased in the budget. As it stands now, it only affects conventional non-insured markets. Right. Just in general, Q2, how it's kind of shaping up, say, relative to, say, Q1 and Q4? I think in general, the market tends to be strong. I would say the best indication to get a feeling how a particular quarter is just take the CREA numbers when they come out. We obviously don't have April CREA numbers, they will come out and they'll tell you. Certainly there's house sales certainly for March were global records, and that starts to tend to be approved in February. Sales in February, March tend to close in April, May, June. They tend to be strong. Q2 tends to look strong with respect to originations. Okay. Just my last question was on the multi-unit residential commercial side of your business. You mentioned the mortgage market being a little bit more competitive there in Q1. Just curious, I'm guessing it's probably the banks, any sort of insight as to what had changed? Was it certain parts of that market that were more competitive than others, or were there other factors at play? Hey, Geoff, it's Jason. I would say that we've definitely noticed other participants re-entering that space a little bit more aggressively. You're right, it would be the banks, and it would be life insurance companies. What we've often observed is some of those participants, those big balance sheet participants who aren't necessarily leveraging securitization in that market the way we do, tend to come out at the beginning of the year with large budgets to originate, and they tend to fill those very quickly. Our hope would be that if history is any indicator, some of those competitive pressures might fill their piece for the year and step aside. Structurally, we're still seeing a very active multi-family market. We do have confidence going forward in our ability to continue to grow that book. Okay, perfect. Thank you. Again, if you'd like to ask a question, you may do so by pressing star one on your telephone keypad. Your next question comes from the line of Jaeme Gloyn with National Bank Financial. Yeah, thanks. Good morning. Good morning, Jaeme. Just want to dig in on the expense side a little bit. In terms of the brokerage fee expenses in this quarter kind of ticked up from last quarter, and they seem to be higher than recent years. Can you give us a little color as to what's driving that, and are these higher brokerage fees as a percentage of the mortgages originated and sold to institutional investors? Is this something that's sustainable at these levels, or sure to come back down to what we saw in 2019, 2018 levels? Jaeme, Rob. I think per unit it's basically the same. In 2020, we had a gangbuster year, and at the end of the year we had a lot of brokerage setups that we accrued for various people. As always, there's more money that we have to award that we can't really figure out by the end of December or January 15th. A little bit of 2021, and that's pretty well all done. I think it should be same old, same old. It's not like it's going up a lot, but definitely when you do record volume in 2020, there's more loyalty incentives that click in, and we have to sort of paper that. Okay. There's been no change in the compensation programs to our brokers. Okay. That was going to be my follow-up there. Elsewhere in the expenses, the increase in the headcount, pretty substantial. Is that a permanent increase, you think, or is that something that's a bit more temporary, just given the huge uptick in volumes here? Yeah. At this point, there's no reason to think of it as anything but permanent. We've hired across the organization, underwriting, residential administration, commercial. We've just seen incredible growth in origination volumes in all aspects of the business. At this stage, those are permanent increases, and we continue to hire. Feel free to send your resume in. Okay, thanks. Thanks very much. I don't know that they qualify. Jaeme, a couple things have happened is, big hires there is that our third-party underwriting has been a big success. If you recall, we put that contract out. Our first one was with the TD, and that was launched in 2015. That had a five-year term, and that was renewed last year. They have had substantial growth. They've had substantial growth and along with an increase in the market, there's been an awful lot of hiring there. Of course, we brought on another regulated FI, I think a year and a half ago. We've been hiring for them, too. They've been growing as well. That employment hire comes from, I'd say, three different areas. One, our own growth, our growth, and also our growth for our third-party underwriters. Combined now, if you looked at what we, in the broker channel, we would underwrite around a third of all the mortgages underwritten in the channel. It tends to be a lot of people. Thank you. Mr. Smith, there are no further questions. Back to you for closing remarks. Okay. Thank you, everybody. As there are no further questions, we look forward to holding our virtual annual meeting of our shareholders on May the 6th, which I guess is next week, and full details are available in our management information circular. Look forward to seeing everyone there, and thanks for taking part in the call today. This concludes today's conference call. You may now disconnect.