Struggling mortgage lender Home Capital Group Inc. is turning to a 57-year-old veteran of the mortgage industry with an innovative streak to lead it through a challenging turnaround.
The alternative lender's new chief executive officer is Yousry Bissada, plucked from the helm of a small company that sources insurance quotes, Kanetix Ltd. His earlier career was varied, spanning big banks and technology ventures, but always with an eye on the mortgage sector. He takes over at Home Capital on Aug. 3.
Hiring a new CEO is a crucial step in the company's plan to remake its culture and restore its fortunes, and Mr. Bissada has his work cut out for him.
A crisis of confidence sparked a run on Home Capital's deposits, threatening it with collapse earlier this year. Since then, a refreshed board of directors steadied the firm and landed support from revered investor Warren Buffett, through his firm Berkshire Hathaway Inc. With Mr. Buffett's stamp of approval, depositors have begun to return cash to the company's fixed-term products.
But Home Capital still has considerable work to do setting a strategy for growth, while stabilizing its capital structure at a reasonable cost and continuing to originate mortgages at a sustainable rate.
At Home Capital's annual meeting in late June, board member Alan Hibben cautioned investors: "It's too early to declare victory."
The company terminated its previous CEO, Martin Reid, in late March, after it landed in hot water with securities regulators for failing to disclose that some mortgage brokers in its network were submitting fraudulent documentation. Since then, Bonita Then, who sat on the company's board, has served as interim CEO.
Mr. Bissada will spend his early days choosing a chief financial officer and assessing all corners of the business. In the process, he plans to "just to go in and build a great culture, a culture that is a pillar to Home," in which "every employee is an ambassador to customers," he said in an interview.
Industry insiders who know Mr. Bissada describe him as personable and passionate, with a sensible approach to mortgage risk. "He's a master of getting people's confidence," said Brendan Calder, an angel investor and professor at the Rotman School of Management, who has worked closely with Mr. Bissada. "He has the courage to stand up to all."
Yet, some observers point out that after spending most of the past decade and a half at companies specializing in technology underpinning the industry, he is short on recent hands-on experience managing credit or mortgage risk. And he has never run a public company – although he has served on public company boards, including at rival Street Capital Financial Corp.
"The one knock that came up is his lack of experience managing a public company. From our perspective, CEO experience with Filogix and Kanetix mitigates that concern," said National Bank Financial Inc. analyst Jaeme Gloyn, in a research note.
Mr. Bissada's roots extend back to the former FirstLine Trust Co., an innovator in mortgage-backed securities, which he joined in the 1980s. From there, he gained big bank experience with stints in senior roles inside the mortgage arms of Canadian Imperial Bank of Commerce and Toronto-Dominion Bank, before becoming CEO of Filogix Inc., a software provider that connects mortgage lenders and brokers, helping manage underwriting and compliance.
"Over the last 30 years, I have touched the mortgage business in some degree or other. I have never left it," Mr. Bissada said.
The hunt for a new CEO was led by executive search firm Caldwell Partners International Inc., and within the industry there was quiet speculation that some qualified prospects might not want the job. "I was never one of those guys. I was attracted to it from the day I heard it was available," Mr. Bissada said. "The core of this company is really good."
Brenda Eprile, Home Capital's board chair, said Mr. Bissada has "that CEO gene." She praised his "proven track record" as well as "his views on ethics and integrity," but also highlighted his potential to reinvent the company.
"He's an innovator. We do need to take the business to the next level," she said.
Mr. Bissada enjoys the approval of Home Capital's largest and most prominent shareholder, too. "He clearly knows the Canadian mortgage business well, has enormous respect for his regulators and understands that conservative underwriting is the key to long-term success in the lending business," said Ted Weschler, an investment manager at Berkshire Hathaway, who spoke to Mr. Bissada by phone last week.
Rating agency DBRS Ltd. hailed Mr. Bissada's arrival as "a positive step," and Mr. Gloyn at National Bank said the new CEO brings an array of "important qualities and experiences that HCG desperately needed."
"The resume appears strong on paper," he writes. "That said, we expect the market to adopt a wait and see approach to Mr. Bissada's strategy and execution, which we expect to learn before year-end."