David Taylor: U.S. expansion. Basically, Stephanie, the approval to get the U.S. Bank is a little slower than we’d expected. We’re working well with our U.S. regulators and the Canadian regulators. And, we expected halfway through this calendar year. But in the meantime, there was so much interest for our product amongst U.S. point of sale companies that we thought well, we should just roll it out anyways. Directly from Canada and satisfy the demand. Just get it going. We hate to see really ideal partners wanting to deal with us and us not doing it not we made a strategic decision to slow it down. But no, we said you know what, we’ll hit our program up to some of our U.S. partners and let it get going.
Operator: Your next question will come from Trevor Reynolds at Acumen Capital.
Trevor Reynolds: Just a couple quick ones. I think most of them been touched on but in terms of the asset classes that you’re seeing demand for in the U.S., would they be similar to what you’re seeing in Canada or just maybe a little bit of insight on that?
David Taylor: No real theme to it. U.S. coasts a huge market. And we are interested in all asset classes. It’s just what we see in Canada too. We’ve got a trucking firm. Now on board. We’ve got another one coming up as medical equipment. We’re looking at recreational products. For us, we’re sort of agnostic to asset classes. We look very carefully at the skill of our partners with respect to lending. So basically, if they’re good lenders, they asked they’ll have to somebody or irrelevant. If they’re ever they’re not good lenders, it doesn’t matter what asset class and we don’t have to do with them. There’s no saving them, if they haven’t got their credit adjudication sorted out.
Trevor Reynolds: And then just on the instant mortgage app like is it you mentioned that it’s close to being ready, what’s the timelines on that being rolled out? And what sort of growth are you expecting on that?
David Taylor: The app itself is developed many, many months ago, and the systems are on place, people are ready to go. But there’s been a few regulatory issues that we’ve been working through with the regulators, and we hope to have those resolved in about a month. And we have partnered lined up to the mortgage administration for is a wonderful, wonderful partner that’s worked with us in other areas. So everybody’s all set to go. And there’s a fair amount of demand. It’s in the order of hundreds and millions of dollars. So, consumer just starting up, I mean, I’d look for as long as we can get it going in about a month, I’d look for at least a couple of 100 million in the year.
Trevor Reynolds: And just remind me who would be the primary people looking at this, the instant mortgage?
David Taylor: Usually new homebuyers. This is the apps designed to be resident in the sales office of the developer selling the units. So it’s designed as a sales tool. It’s an adjunct to our point of sale program, we just thought real estate home purchases, was the largest point of sale market, in Canada, in the States. So we would develop this app to aid in that not programmed to aid in the sales process. So when somebody wants to buy a house, and they haven’t negotiated a mortgage with one of their traditional banks, we say not to worry, punch the numbers in here. And before you know it, you’ll be approved for one of those types of mortgages. So it’s designed to help our customers that we already deal with, for the most part by doing their financing for the construction of the residential units, is designed to help them in their sales process by taking that hurdle to closing a deal, i.e., I haven’t got financing yet.
And we say okay, here we are. Here’s your thing. There was nothing like that in North America when we came up with it. It’s still nothing like Canada, but there’s something like a United States that works really well. And just disappointing to me that it took so long to get all the regulator’s on side to let Canadians enjoy this sort of convenience and again, the mortgage committed a bit earlier at the point of sale.
Trevor Reynolds: Great. And then just last one, just on the digital currency, maybe just some insight on where that sits, whether it’s on the back shelf for now or what the plan is with that moving forward?
David Taylor: It’s on the back shelf, the digital deposit receipt that we developed in as is fully developed. We think eventually, banks will use blockchain as a new channel for deposits. I think it’s inevitable. But given the regulatory environment, north and south of the border, and given all the busy, good work we have on our point-of-sale business, it really, really pays. We decided leave this one on the shelf, and we don’t have any particular time to take it off the shelf. It’d be sometime maybe in the future, when regulators say, hey, maybe that was pretty good idea. You guys want to bring out to market. I always regulators asked me to do it. Rather than because, obviously, we love diversifying our deposit base, and we embrace technology.
But we’ve got a lot to do with our core business, our spread business that’s grown by leaps and bounds. We’re actually using artificial intelligence where to enhance the efficiency in our bank. For me, that is the layup. There’s serious in our bank that artificial intelligence seems ideally suited. So we’re working with our artificial intelligence people to improve our banks overall efficiency so we can scale even faster and at torque I was talking about. I think we’ll be putting numbers out maybe in a year that banks thought were impossible.
Operator: Your next question comes from Brad Ness at Choral Capital.
Brad Ness: Hey guys, how you doing?
David Taylor: Very good Brad. Although I’m in the frozen north right now but I got my really socks off.
Brad Ness: Sounds good. Well, I’m going to jump into things. You had quarterly expenses, noninterest expenses at 12.3 million in the quarter. Is there any one time kind of transitory expenses in there?
David Taylor: There’s a little bit left from the previous year but not a whole lot anymore. That to 12.3 probably run rate for us now. It’s like I said a little bit of hangover from the past, but there’s pluses and minus going forward.
Brad Ness: And what type of growth should we see in that number kind of excluding a U.S. acquisition?
David Taylor: Well, we’re not looking for any growth in the upcoming year.
Brad Ness: Do you think hold flat in the whole year?
David Taylor: Yeah. We’ve already absorbed the additional salary increases that came about by hiring some new employees and Kia is of course, also just the general wage increases that I guess post-pandemic gave us gave us all inflationary increases. So that’s already in the numbers. And yes, I mean, there’s potential for a little bit of a decline in that 12.3. But I wouldn’t think about it that way. Because there’s kind of a lot of moving parts involved.
Brad Ness: And in light of continued upward pressure on interest rates. Do you think you can continue to maintain that interest margin on loans about 3%?
David Taylor: So saying this, there’s a few factors, generally speaking, yes. You note that our cost of funds is about 1.5% less than the same term government, Canada. We have a really nice efficient gathering networking. And we’ve got, sooner or later, we know that those buckets I was talking about those insolvency accounts that we’ve opened are going to fill up with cheap deposits. So that helps. The thing that could depress NIM a little, which is kind of good, really good, actually, is the answer mortgage CMHC isn’t conventionals. Because they have left, NIM, they’re approximately 2%, all in after administration costs. So that that would depress NIM on a weighted average basis, but because very little capital they have, so it really boosts ROE.
So henceforth, you’re going to start seeing me talk more and more about ROE. I mean, obviously, we all know, that know about banks, that are we is highly correlated to this two percentage, a book value, market value presented percent of book and highly coordinated last analysis we did was 0.8, 0.6 was they are. So my mission is to move ROE up as fast as it can. So that stock starts trading where it should. In fact, I like to she is an outlier on the positive side, like because of the trajectory. So NIM covering around three could go up a little bit, down a little bit. But are we should really, really start moving.
