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 observations on the company’s long history of service, innovation and performance. In this interview, Doug Farmer, Director, Residential Mortgages, Prairie Region, offers his thoughts on the key drivers of success.
Doug, how long have you worked in the mortgage industry and for First National?
About 30 years in total including the past 18 at First National.
What's that been like?
Fantastic. I've seen the population of our major cities expand, and the broker channel emerge and grow. I've also experienced a shift in consumer attitudes toward mortgage brokers as borrowers have become more and more reliant on the channel for advice. The value brokers bring today to the home buying experience is immeasurable. I'm constantly amazed by how much information brokers absorb for clients. Every year, we see the broker's value proposition increasing.
What's it been like working at First National?
We've come a long way. I was asked by Scott McKenzie to open the branch and started here exactly one day after I left my previous employer. It was a greenfield start-up and so there were challenges including the fact that First National was not particularly well known in the market. At the time, we were number 10 in market share in the broker channel. Now we're in the top three with over $100 billion of mortgages under administration. It's been an incredible journey. For those of us serving in Western Canada, what's exciting is that we are like our own little company.
I have a tremendous amount of respect for Scott. He gave my family an opportunity and we have never looked back. He has been a great mentor and I can attribute a lot of our success to his leadership and direction.
What's the reason for the company's growth?
Our alignment with the broker channel first off. Secondly, I would say the introduction of Merlin, our real-time deal tracking system for brokers, catapulted the company in the broker channel. It puts us at the competitive edge and kick started our growth. Merlin epitomizes First National's focus on service. If you ask any mortgage broker today about First National, they will rave about our service levels. They may not always like our risk policy, but service has been the point of difference that has allowed us to move forward not only here in the West but across Canada. I would also say that the collective experience resident in our teams and in our managers really across the country has helped First National as well. Getting the right mortgage solution and underwriting that solution is not child's play; it takes experience at all levels to make it happen and make it happen quickly. Because of our pure focus on mortgage lending, we have a unique perspective.
Has Merlin changed during your time with First National?
In the early days, Merlin was a DOS-based program, then it migrated to Windows® and has just continued to evolve and advance since. Last year, we came out with a smartphone version called Merlin Mobile, which enables brokers to check their deals from the road. For a broker who is constantly visiting clients, being untethered from a desktop computer is a huge advantage.
In general, how has technology changed the mortgage industry?
I would say it's collapsed the time it takes to make informed decisions. Every part of the value chain, from brokers at the top to lenders, is just way more proficient. It's not unusual for my team to do 100 deals a day. Two decades ago, there is no way we could have handled that pace.
During your years with First National, what’s the most important lesson you’ve learned from helping to build a successful business?
There have been many. Number one is provide the best service you can to all stakeholders: borrowers, brokers, mortgage insurers and investor partners. Number two: remember that there is a family at the other end of every mortgage transaction waiting to move into a home (unless a refinance of course). Number three is culture. Treat your colleagues fairly and with respect. Our company is family-oriented, and we care about each other.
Can you elaborate on number two?
Sure, we keep in mind that a mortgage is not just a piece of paper. It represents something much larger than that. For a family, a mortgage is a ticket to realizing the dream of home ownership. When you think about it this way, and we do, the act of lending and adjudicating a credit file becomes much more personal. We recognize that there is a consequence to the decisions we make, so those decisions must be accurate, timely and solutions based. Our team understands the personal nature of what's at stake.
How many people serve in your region?
We have a team of 50 and we look after the residential markets in Alberta, Saskatchewan and Manitoba. In total, we account for about 25% of all residential customer accounts that First National has in Canada. Our territories are large and diverse. Take Medicine Hat, for example. Oil and gas are important industries to their economy, but agriculture is also a driver and we've seen growth in solar and wind energy projects. On the surface, Medicine Hat may seem similar to other Prairie towns, but you have to be present to recognize the differences.
So being present in a community is important?
As a mortgage lender, you can't come and go or work at a distance. First National knew that before I started. In the beginning, the company originated local mortgages here in our region from Vancouver and that was just a temporary measure. The plan all along was to invest here and to have a local workforce and those decisions allowed us to develop the deep relationships that are critical to growth, service and risk management.
You mentioned working in the branch is like having your own little company. How so?
We're aligned with the policies and procedures of head office, but we take the company's goals and plans and really make them our own and we're not only allowed to do that, we're encouraged to do so. I think the delegation of responsibility says a lot about the confidence head office has in the regional teams, ours included. This allows us to put our own stamp on the relationships we have in the market.
How would you describe the state of your mortgage and mortgage broker market today?
We've been through a difficult three years as a result of the downturn in the oil sector and while the price of oil has definitely rebounded in the past few months, housing and mortgage market volumes are not reflecting economic improvement yet, partly because of the impact of new B-20 residential underwriting rules and the prospect of higher interest rates. Of course, changing regulations provide another good reason for home buyers to consult a broker.
So too soon to declare the beginning of a recovery has arrived?
Perhaps, and oil companies remain cautious in hiring, but the fact is, the conversation is around hiring as opposed to layoffs, which is a good thing. I subscribe to a variety of economic updates and what I would say is that the economy is beginning to reflect a few positives.
In your experience, was this past downturn as bad or worse than others that preceded it?
I would say commentators who lived through past downturns probably assumed that lenders would experience high delinquencies this time around because the price of oil was so low for so long. It didn't turn out quite that way, at least for us, because many companies in the oil patch made a serious attempt to find alternatives to straight out layoffs. I also think severance packages have been more generous and our economy is perhaps a bit more diversified than in past. Don't get me wrong, this has not been an easy time but on a relative basis, it could have been worse. Many families have suffered real hardship during this recession and I our hearts go out to them. I am very relieved to see the economy rebounding, for many reasons.
Did you have to downsize your operation?
No, we didn't have a single lay off and I will say that immediately before the recession, we had geared up for continued growth and instead what we got was a downturn.
How did brokers react to the downturn?
A smaller market and more regulation makes life more competitive for them and for us, but I would also say that we have a very tight-knit broker community and some strong voices present through broker associations that are keeping the channel front and centre in the eyes of consumers. Social media has also played a role in helping the channel sustain market share. From my interactions on Twitter and LinkedIn, the attitude in the community is much more upbeat than it has been.
What’s your proudest First National moment?
Getting the chance to start the branch, the opportunity to hire great people and the privilege of watching them grow.
You also won a CMA Lifetime Achievement Award in 2013.
Yes, that was a major highlight in my career but one that's shared. No one wins a lifetime achievement award alone.
What aspect of doing business has changed the most in your time here?
Technology and the sophistication of brokers and borrowers. Everyone is more knowledgeable and more informed, which is great for us.
What’s the one thing that hasn’t changed since you started?
The need to keep the goals of brokers and borrowers top of mind. This is a people business and it always will be.
What would you like your local partners to know about First National’s future?
We're not a company that rests on its laurels, so while 30 years in business provides us with a reason to celebrate, we're not thinking about the past, we're trying to constantly better ourselves because that's what will take First National to the next level – not only in Western Canada, but nationally. We plan to be here for decades to come and we intend to work hard every day to build on the legacy of the past 30 years.