In 1988, two young Canadian entrepreneurs (Stephen Smith and Moray Tawse) founded First National Financial Corporation. Today, Stephen and Moray remain deeply engaged in the day-to-day business operations as committed officers, directors and shareholders of a firm that now has over $100 billion of mortgages under management. In this interview, we asked Stephen to talk about his career, First National’s early years and the future of the Company he co-founded.
What’s a typical work day for Stephen Smith?
There really is no typical day, although it usually starts the same way. I begin each morning by updating myself on macro-level developments. Being aware and informed of what’s going on in the world and in Canada and thinking about how the news may affect our markets is very important. From there, my day sometimes consists of a series of meetings including over lunch. If I’m not in meetings, I’m checking in with my six direct reports and focused on business challenges and how our team might deal with those challenges through our strategies.
How would you describe the team surrounding you?
Let me answer that question by telling you what it was like when Moray and I founded the business almost 30 years ago. We had, near the beginning, 11 employees and along with the other things one would normally associate with co-managing a business start-up, I was responsible for IT. Part of my day was spent fixing printers, installing new computers and programming them. There wasn’t much time to think about strategy. Now, our business runs with a leadership team comprised of nine individuals who have tremendous knowledge and experience in specialized areas. Each of these leaders makes a substantial contribution to business development, which is why I said strategy is a team effort. It’s also why I don’t act as the IT help desk anymore.
What part of your job do you enjoy most?
I like it best when we have record results to report. Meeting people outside the organization and building or re-affirming those relationships would be another great part of the job.
How do you foster an entrepreneurial mindset now as a large business?
It’s about striking the right balance between structure and entrepreneurialism. It’s not possible or wise to run a business with 950 employees and over $100 billion in mortgages under administration effectively without structure.
Doesn’t structure come at the expense of being nimble and responsive?
The two don’t have to be mutually exclusive. We’ve demonstrated this over time, including at times when challenges beset us such as the 2008 financial crisis. Back then, we were not a CMBS issuer; we were just generally selling our product to third parties. Right away, we saw the market change so we responded by becoming an issuer. To a degree, this marked a pivot in the way the organization ran from being entirely third party to creating our own very significant balance sheet. The decision put us in good stead with recent rule changes where we really need that balance sheet to be able to securitize loans. We couldn’t have made the pivot without a great team, a sound structure and an entrepreneurial mindset.
How would you describe First National’s workforce today?
One of First National’s most significant accomplishments is the growth and development of its employees, now numbering about 950. I firmly believe that we have the industry’s best workforce and that’s shown in the contributions our associates make every hour of the day in serving our markets and responding positively to our customers.
As CEO, there must be a lot of pressure on you to make the right decisions at the right time. Isn’t that a big burden?
Let me put it this way. Once you do it for a while, you get used to it. I think it’s why CEOs get a reputation for being a bit impersonal because they have to tune out the external noise and make decisions with the facts at hand and without emotion.
Looking forward, what will First National focus on?
Good service. We have an advantage over other institutions because all we do is provide mortgages. It’s bred in our bones. Because of our specialization, we can be faster problem-solvers for our customers and reach faster credit decisions. In this current environment, really in any market, better customer service wins the day and that’s what we aim to do. Giving our employees the tools, training and encouragement to serve our customers well is obviously the underlying priority.
What do you see ahead for your own involvement with First National?
I still have a lot of runway left. I’m looking forward to being here for the foreseeable future.
As we look ahead, I have no doubt that First National will remain Canada’s largest non-bank originator and underwriter of mortgages. While we pursue our objectives for customers, for shareholders and our employees, we know that with over $100 billion of mortgages under administration, we can count on a strong foundation for ongoing income and cash flow.