First National at 30: Moray Tawse Shares His Thoughts On Three Decades of Performance

  • First National Financial LP

On March 31st, 2018, First National began a year of celebrations to mark its 30th anniversary. To commemorate this important milestone, we asked key leaders to share their personal perspectives on the company’s long history of service, innovation and performance. In this interview, Moray Tawse, Executive Vice President and co-founder of First National offers his thoughts.

It’s been 30 years since you and Stephen Smith created First National. What’s the most important lesson you’ve learned from building a successful business?

To be honest, every day teaches us important lessons but overall, I would say the most critical ingredient is people. We're a small company that's grown into a big company and the only way that happens is through people.

How would you rate the people of First National?

I would argue that the team we have here today is the best team in financial services across the country. The reality is we've built a company that has stood the test of time because we've had great people since day one and have added to the nucleus over time. By and large, our employees stay with the company, they grow with the company, they take on new challenges and it's been like that for three decades. So if there is a lesson from that, it's to surround yourself with talented, like-minded people who want to grow and succeed.

Some people would liken business success of the magnitude achieved at First National as catching lightening in a bottle.

That's one way to say it and we are quick to credit being in the right place at the right time. But it's taken a lot of hard work too.

How did you and Stephen go about growing the team in the beginning?

We worked with most of our founding employees at other companies, so we knew them, we knew how capable they were, and they knew us. It created instant cohesion and a solid launching pad for the business. And let's face it, when you hire your first employees, they have to be right because they are going to hire your next set of employees and so on.

What was it like to work at First National in the beginning?

It was a family. For the first 10 or 15 years, we all knew each other, and the organization was very flat. There weren't bosses and workers. Everyone was on the same level and we all had the same goals. We had the freedom to expand the business, expand our business relationships and we shared in each other's successes. Lots of lunches, lots of after-hours business functions and looking back, these provided some of the most enjoyable memories of the past 30 years.

Can you perpetuate that for the next 30 years?

It's tough to be a family of 930 people but I would say it's up to the new generation of managers to make sure they have the same kind of relationships with their employees. Their job is to keep making this a great place to work.

How has your workforce changed over 30 years?

The millennial attitude has changed us. It's a different attitude and as the old generation, we have to learn to adapt to their way of thinking, and not try to get them to adapt to our way of thinking. We have to learn from them because they are the future. 

How would you describe the team today?

Smart and a lot more educated, which is a reflection of improvements in the educational system. Our employees also want to see change happen quickly because they see change happening quickly in the world at large and so it's an expectation. Fulfilling that expectation in a big organization means we have to constantly find new opportunities and challenges to keep people engaged.

How would you describe the culture today versus in the past?

We've always tried to build a culture based on teamwork and on doing a good job and being acknowledged for exceptional performance. I don't think the philosophy has changed. People here work together, they are expected to do a good job, which they do, and when they rise above, they are recognized.

What is your guiding philosophy as an employer?

I want employees who really stand out to know there is a future here for them. I'm not one of those people who gives a pat on the back for showing up on time or a trophy for participation. When I acknowledge performance, it is deserved. It means the recognition given is genuine.

And your philosophy as a business leader?

Reputation is everything. Don’t do anything that will risk the firm's reputation, which has taken 30 years to earn.

What would you like employees to know about First National’s future?

We're at an inflection point as a business because it's harder to grow something that has $100 billion under management versus something that has $5 billion or $25 billion. And so we need to come up with new ideas to grow the business. To me, that's exciting. It means opportunity and challenge and that we're open to fresh thinking and perspectives.

First National seems to have been good at coming up with new ideas over the years.

Thanks and yes, we've had success. We started by entering the residential mortgage market and became the best non-bank. We entered the commercial space and became Canada's largest commercial lender. We entered the CMHC apartment lending space and became the leader there. We started a third-party underwriting business and partnered with a Canadian bank leader. The question now is, what's next? What's the next leap we can make? As I said, it's a challenge but it's also stimulating, and we think about it all the time.

Would you be willing to enter new businesses?

We're a lender. That's our core competency, so we're not suddenly going to become a software company. But we have a huge client base as a lender and so our thinking turns on the question; 'what more can we do for our clients?'

What’s your proudest First National moment of the past 30 years?

Our public listing on the TSX in 2006. That event said to our customers and partners that First National had arrived; we were real. The whole perception of the company changed.

How so?

It gave us legitimacy. Before going public, the perception was, 'oh this is just Stephen and Moray's company, are they really going to be able to show up with a $30 million cheque for my loan?' Once we went public and opened the books, borrowers and investors recognized that there was real substance here; we weren't just two guys.

Being a public company has its pressures as well.

Sure it does and I'm happy that we've been able to perform consistently. We've never let our shareholders down. I'm proud of the fact that shareholders who got in on the ground floor have made lots of money with First National and I'm grateful for the investment dealers who brought us to market.

What aspect of doing business has changed the most in three decades?

The volume of business and the technology that enables it. Both are night and day different and without technology and systems there is no way we could handle the volume we do now.

What’s the one thing that hasn’t changed since you started?

At its heart, a mortgage then and a mortgage now hasn't really changed. To me, the importance of having trusting business relationships also hasn't changed. 

Relationships with whom?

With mortgage brokers, with residential and commercial borrowers and with investors. First National is built on those relationships and we can't function without them any more now than we could when we started. We would never take a risk with any of our relationships that would impair our reputation.

Thinking about commercial mortgage lending, why and when did you choose to enter that business?

We've been a commercial lender pretty well from day one. It's a competitive market but with size and scale. When we started, I was running the residential side and Stephen was doing commercial. Scott McKenzie joined us and then he took residential and I moved to commercial.

How has commercial mortgage lending and First National’s approach to it changed over the decades?

We've always tried to excel on the basis of providing better service than our competitors. So that principle hasn't changed, but under Jeremy's leadership, we've taken the service ethos to a whole new level. We decided that unlike a typical lender, we were going to give advice and referral information that would help our clients build their businesses. We weren't just going to sit there and wait for borrowers to come to us, we were going to go to them with ideas and ways to increase their knowledge and success. That started about five years ago and it's been very well received.

It sounds as if your value proposition has evolved over the years?

We've always tried to be on the leading edge of market knowledge but how we use that knowledge to benefit clients has changed. In context, the commercial market hasn't really grown in three years. So the great growth First National has achieved is because we've taken share away from our competitors. The way we've done that is by improving our value, by being best in practice.

Why should commercial borrowers choose to do business with First National today?

Our focus on their needs, our knowledge of the industry and our ability to offer a broad array of products. We don't just do CMHC. If you need conventional, we'll do that. If you need a second mortgage, we'll do that. If you need mezzanine financing, we'll do that. We look at each client's situation and come up with a value strategy that works for them.

What would you like commercial borrowers to know about First National’s future?

People are always surprised when they find out that First National is the largest commercial mortgage lender in Canada. And if they deal with other institutions, they are always surprised by how much easier it is to work with us. Once we get the chance to do a first deal, borrowers always come back to do their future deals with us because the process is quick, smooth and satisfying.

No discussion about the past 30 years would be complete without touching on relationships with funding partners. How have those relationships changed?

When we first started the business, we had a broker mandate with institutions. We showed them deals and they decided whether they liked them or not. Now, we've gone to a more comprehensive underwriting process where we do substantial research and present complete, customized financing packages to each institution based on a deep understanding of the market and their particular credit model. So the infrastructure we've put in place to manage their risk and achieve the quality they want has changed the dynamic and along with it, the nature of our relationships. We have a core group of investors who really rely on our expertise and our servicing, which I think is second to none. 

Why do you choose to partner on deals rather than lending only from your own balance sheet?

The philosophy of the company was always to do large volumes and take nickels and dimes from transactions without taking credit risk. It's served us well from a risk-return perspective and it serves our funding partners well too.

You mentioned the word philosophy. What's First National’s guiding philosophy in its relationships with funding partners?

Make their jobs easier. They have specific needs for regulatory compliance, for investment and for administration and we understand that we need to continuously raise our standards to make it easier and more rewarding for them to work with First National.

Overall, what does the 30th anniversary mean to you?

Not to be cavalier, but it means nothing. We're a company that keeps growing, keeps having milestones and frankly what I think about isn't the past, it's the future. How do we get to $200 billion in mortgages under administration is what's exciting, not the fact that we passed through $100 billion in 2017.

What keeps you motivated?

The hunt for new business. I like doing deals and finding opportunities. Most of my time today is on the commercial side of our operations where First National works with really big, interesting and sophisticated developers, builders and REITs. It's intellectually stimulating.