David Taylor: Well, it’s a tiny risk, but it’s not non-existent, because those factors you’ve mentioned are real. The US regulars got their work cut out for them with, with the various challenges that have surfaced. And frankly, we we’re a pretty small transaction. We don’t move the needle for them. Now mind you, after saying that, we’re part of the cleanest bank anybody’s ever seen. It’s not very often, I think you’d come across financial institutions, you can talk about a 30-year history of [nursing] (ph) loan losses and a model that’s been proven out in this — in Canada point-of-sale model, I’m thinking — talking about that isn’t quite a significant demand in in the States. So we got those things going in our favor, but as you say, there is a backdrop of US regulators being, sort of challenged with their existing business.
So I wouldn’t say it’s non-existent. But from what we’re seeing and our interaction with the US regulars, it looks like we’re getting close to the end. There hasn’t been anything new come out for a long time. And I think our value proposition for the US economy is significant. We’re providing alternate source of funding that percolates through to consumers and small businesses which is helpful for any economy. So, not non-existent, but I’d say, we’re in the 90% that we’ll see some movement in the in the fall.
Mike Rizvanovic: Okay. That’s very helpful. Thank you for that color. And then a quick one on POS. I recall a couple quarters ago, I thought you were a little bit less optimistic on volumes, and it — I think it’s fair to say that you’ve been pleasantly surprised on the 9% growth this quarter and 5% sequentially last quarter. It’s been it’s been a really good trajectory here. And I’m wondering, like, what do you think is driving that? I don’t know if this is more industry more broadly, or is it just more of a of a, take market share from VBNK’s perspective?
David Taylor: It’s a combination of both. We are taking market share from the others that are participating in this this area. Our model, our systems, our technology are state-of-the-art, and customers, our partners like it. They like getting fast funding. They like fast turnaround and our buy rates are competitive. And so we are taking market share. The other thing is, it’s just what I was talking about earlier. There’s always a boost in the purchases in the summer. And it was still maybe a little more of a boost than we were originally anticipating, but, it is the summertime spending spree. And it’ll dissipate in the fall, like I was saying, in that, the hire rates — the monthly rate for your motorcycle or your hot tub or your home improvement has gone up fairly significantly.
And, a lot of Canadians now are wondering how they are going to make their mortgage payments with redoing their mortgages at much, much, much higher rates. So, I expect that the actual purchases to decline, going forward. But we aren’t taking more market share too, that, might very well offset that.
Mike Rizvanovic: All right. Thank you so much for the insights. Appreciate it.
David Taylor: Well, thank you, Mike.
Operator: [Operator Instructions] Your next question will be from Stephen Ranzini at University Bank. Please go ahead.
Stephen Ranzini: Hi, great job on a great quarter, David and team, it was great to see you at the [indiscernible] which is a really fun time.
David Taylor: Yeah, Steven.
Stephen Ranzini: So just to follow-up on David Feaster’s question. And by the way, are you going to be at the Raymond James conference in Chicago next month?
David Taylor: I sure am.
Stephen Ranzini: Awesome. Well, hopefully, we’ll see you there. Dave was talking about the model sort of the — last quarter, you also went through this, but I just want to make sure that you still see things the same way. You were saying if we can get to $5 billion in loans at a 3 point margin, that’s a $150 million of net revenue and your expenses are running $12.5 million a quarter. So $50 million a year. So, you can get to 20% ROE and you have the capital to do that. Is that still your thinking?
David Taylor: Yeah. That’s absolutely right, Steve. It’s a fantastic model. It just gets better and better with the volume. I guess it’s inevitable we’ll get to the $5 billion mark. The question is just how long it takes. I was talking about the recessionary forces and offset perhaps by entering the US market in a bigger way and take a little market share in Canada. But, I think we’ll end this year well over $4 billion, and I’m hoping next year is over $5 billion. And that’s when the numbers really start to work well.
Stephen Ranzini: Super. And then the follow-up question I’ve got on a different topic is, during the quarter, you bought back just under 80,000 shares and for the year, a 1.5 million. And you mentioned that, in August, you have to go back to your regulator to sort of get new permission for a buyback program. Just curious about two things. One, why only 80,000 shares in the most recent quarter? Did you did you run out of room or, did the share price run away from your target? And what are you targeting for next year? What do you think would be great to be able to do next year?
David Taylor: Well, we ran out of capacity to buy. We’re only allocated so many shares we can purchase by our regulator each year and we ran out. Yes, we do have the application to buy more shares and it’s in the order of about 1.5 million shares would be our hope. Mind you, we are in a — what do you call them, a more challenging regulatory environment and that regulators [indiscernible] looking for more capital, not less. So I’m not sure how well received $1.5 million — 1.5 million share purchase will be. But we would like to — we would like to have a normal course issuer bid open so we can take advantage of our stock when it’s running less than book value. And it just obviously makes — it turbo charges our earnings. The denominator is reducing. It’s what gave us $0.38 this quarter versus last quarter despite being slightly down in net income.
Stephen Ranzini: Well, yeah. And, I, and enthusiastic about your approach to buying back the stock at underbook value. And my last question relates to the mortgage business and the potential you discussed last quarter about getting deeper into the CMHC business and launching some new channels there. Have you made any progress towards that in the most recent quarter?
David Taylor: On the retail side, we’re working, with some partners, with a view that in the first part of 2024, we’ll be able to launch the retail type mortgage product and make good progress there. We’ve hired person who’s an expert in that area, and we’ve got some good partnerships that are developing. On the commercial side, the interim construction of residential projects, you’ll see us pivot into CMHC insured construction projects. There’s quite a demand in Canada for a new residential unit. We’ve had a lot of new Canadians come in looking for homes. And, we banks, seem, ourselves included, seem to be quite reluctant to finance these construction projects without the comfort of CMHC insurance. So we’ve got few opportunities to do that, and we expect in the 2024, it’ll be, I would say, a good portion of our construction book will be CMHC insured.
