Bank Of N.t. Butterfield & Son Limited (the) Voting · NYSE:NTB
Bank Of N.t. Butterfield & Son Limited (the) Voting — The Bank of N.T. Butterfield & Son — Investor Presentation (May 2018)
31 slides from Bank Of N.t. Butterfield & Son Limited (the) Voting's investor presentation, May 16, 2018
Slide 1: Investor Presentation May 2018
The Bank of N.T. Butterfield & Son Limited Investor Presentation May 2018
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements and Non-GAAP Financial Measures Forward-Looking Statements: Certain of the statements made in this presentation are “forward-looking statements” within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities E
Slide 3: Company Overview Investment Highlights
Company Overview Investment Highlights Franchise retail banking presence in Bermuda and Cayman Leading Bank in Attractive 1 Markets Named Bermuda Bank of the Year for 5th consecutive year by The Banker $9.8bn deposit balance with 2018 Q1 average cost of 0.12% 2 Strong Capital Generation and
Slide 4: Leading Bank in Attractive Markets
1 Leading Bank in Attractive Markets Market Operations Geographic Footprint Supports Expanding Trust Business¹ Financial Snapshot Key Balance Sheet Items 2018 Q1 2017Y Total Assets $11.0 bn $10.8 bn Cash & Cash Equivalents 1.8 bn 1.5 bn Investments in Securities 4.5 bn 4.7 bn Net Loans 4.0 bn 3.8 bn
Slide 5: Who We Are and What We Do
1 Leading Bank in Attractive Markets Who We Are and What We Do Business Line Banking Wealth Management Bermuda Cayman Islands Bermuda Cayman Islands Core Geographies (54% of Group deposits¹, (31% of Group deposits¹, Guernsey / Jersey Switzerland 51% of Group loans²) 25% of Group loans²) Singapore Ba
Slide 6: Bermuda and Cayman Islands
1 Leading Bank in Attractive Markets Bermuda and Cayman Islands Bermuda’s Insurance & Reinsurance Market¹ Cayman Islands’ Financial Services Market¹ #2 #1 #1 #1 #2 Global Reinsurance Captive Insurance Insurance Linked Captive Insurance International Fund Domicile Market Domicile Securities Domicile
Slide 7: Award-Winning Trust Business
1 Leading Bank in Attractive Markets Award-Winning Trust Business Private Trust Overview Private Trust Economics Butterfield Value Proposition Client’s Assets Trustee fees Bank-owned trust company with over 70 years of experience FX fees Multi-jurisdictional offering in English Trust Common
Slide 8: First Quarter 2018 Highlights
1 Leading Bank in Attractive Markets First Quarter 2018 Highlights Net income of $44.2 million, or $0.79 per share Core Net Income¹ ($ Millions) Core Net Income¹ of $45.0 million, or $0.81 per share Return on average common equity of 21.8%; core return on average tangible common equity¹ of 24.
Slide 9: Historical Financial Profile
1 Leading Bank in Attractive Markets Historical Financial Profile Historically growing, deposit-driven balance sheet, through organic and acquisition-based market share gains Total Assets ($ Millions) Gross Loans ($ Millions) $11,104 $10,779 $10,988 $4,141 $9,858 $10,276 $4,067 $4,049 $8,871 $3,990
Slide 10: Strong Profitability
1 Leading Bank in Attractive Markets Strong Profitability Core ROATA¹ (%) Core ROATCE² (%) 1.7% 1.5% 24.3% 1.3% 22.4% 1.2% 20.5% 1.1% 17.6% 0.9% 14.4% 9.7% 2013 2014 2015 2016 2017 2018Q1 2013 2014 2015 2016 2017 2018Q1 Net Interest Margin (%) Core Efficiency Ratio³ (%) 3.05% 71.6% 2.64% 2.74% 2.73%
Slide 11: Strong Capital Generation and Return
2 Strong Capital Generation and Return History of Excess Capital Generation Profitability of business continues to strengthen capital ratios Actual (3/31/2018) Pro Forma (3/31/2018)¹ 20.8% 19.2% 17.6% 17.6% 17.6% 17.6% 6.8% 6.8% Leverage Ratio Common Equity Tier 1 Capital Tier 1 Ratio Total Capital
Slide 12: Efficient, Conservative Balance Sheet
3 Efficient, Conservative Balance Sheet Low Loans / Deposits and RWA / Assets Historically highly liquid, conservative and stable balance sheet composition Lower balance sheet leverage as compared to peers with significantly lower Risk-Weighted Asset density Gross Loans / Deposits Risk-Weighted
Slide 13: Highly Rated, Liquid Portfolio
3 Efficient, Conservative Balance Sheet Highly Rated, Liquid Portfolio Investment Portfolio by Debt Rating Investment Portfolio Composition A Commercial Non-US BBB AA 3% 1% ABS / RMBS 3% Government 1% 1% 4% Corporate Debt 4% US Government & AAA Agency 95% 88% Securities Portfolio Duration Compositio
Slide 14: Stable Portfolio, Attractive Characteristics
3 Efficient, Conservative Balance Sheet Stable Portfolio, Attractive Characteristics Loan Portfolio Stability¹ Residential Loan Market Characteristics 2017 average yield of 5.19% on consumer loans, Attractive Yields including residential mortgages $4.0 $4.0 $3.6 $3.8 $4.0 6% 5% 5% 4% 5% 3% 6% 3% 5
Slide 15: Diversified Loan Portfolio
3 Efficient, Conservative Balance Sheet Diversified Loan Portfolio Loan Composition by Type Loan Composition by Geography Consumer Government Guernsey Bahamas & 5% 5% 8% Other Other 4% Commercial 12% UK 16% $4.0bn1 $4.0bn1 Bermuda Commercial RE Residential 55% 15% 64% Cayman 17% Residential Loan Com
Slide 16: Strong Asset Quality
3 Efficient, Conservative Balance Sheet Strong Asset Quality NPAs¹ / Total Assets Non Accrual Loans by Type Commercial 1.40% 18% Cons umer 1.00% 2% 0.70% Commerci al RE $42mm 0.50% 0.50% 0.40% 10% Res idential 70% 2013 2014 2015 2016 2017 2018 Q1 Net Charge-Off Ratio² Reserves / Nonperforming Loans
Slide 17: Low Cost Deposits
3 Efficient, Conservative Balance Sheet Low Cost Deposits Historically Growing Customer Deposit Base Historically Low Cost of Deposits 0.40% $10,010 $9,736 $9,524 $9,168 0.30% $8,632 0.26% 0.26% $7,598 0.21% 0.20% 0.12% 0.12% 0.11% Cost of Deposits 0.10% 0.00% 2013 2014 2015 2016 2017Y 2018 Q1 2013
Slide 18: Visible Fee and Balance Sheet Revenue
4 Visible Earnings Visible Fee and Balance Sheet Revenue Earning Assets & Net Interest Margin Visible & Diversified Sources of Fee Income Custody & Other 9% Asset Banking Management 27% 6.00% 16% 5.31% 5.10% Yield on 4.78% Loans $159mm ¹ 5.00% 4.65% 4.71% 4.63% 4.00% Trust FX 27% 21% 3.05% Net Inter
Slide 19: NIM Increase Driven by Long-term US Treasury Yields
4 Visible Earnings NIM Increase Driven by Long-term US Treasury Yields 2016 to 2017 Highlights NIM increased by 28 basis points to 273 basis points compared to 245 basis points in 2016, and the cost of funding declined by 1 basis point to 11 basis points. The primary driver of the increase in NIM
Slide 20: Interest Coverage Ratio
4 Visible Earnings Interest Coverage Ratio For the For the Year Ended, Quarter Ended ($ in thousands) 2015Y 2016Y 2017Y 2018Q1 Earnings to Fixed Charges Total Deposit Interest $18,446 $11,831 $10,931 $2,942 Other Borrowed Interest $4,869 $4,618 $4,954 $1,354 Total Interest Expense $23,315 $16,449 $1
Slide 21: Leadership Team
5 Experienced Team with Deep Market Knowledge Leadership Team Age Experience Background Michael Collins Joined Butterfield in 2009 Chairman & 55 30+ Formerly COO at HSBC Bermuda Chief Executive Officer Joined Butterfield in 2015 Michael Schrum 49 20+ Formerly CFO at HSBC Bermuda Chief Financ
Slide 22: Potential Growth Opportunities
Company Overview Potential Growth Opportunities Organic Macro Strategic Organic Initiatives Underway Net Interest Income Sensitivity Acquisition Criteria Net Interest Income BML loan growth Geography 11.7 % Deployment of deposits Fee Income 6.0 % Size Fee pricing reviews 3.1 % Expense Reductio
Slide 23: Thank You – Q&A
Company Overview Recap 1 Leading Bank in Attractive Markets 2 Strong Capital Generation and Return 3 Efficient, Conservative Balance Sheet Thank You – Q&A 4 Visible Earnings Experienced Team with Deep Market 5 Knowledge 23
Slide 24: Appendix
Appendix
Slide 25: Risk Management
Appendix Risk Management Organizational structure supports comprehensive management of Financial services risks Reviews the overall adequacy and effectiveness of the Group's system of internal Audit Committee controls and the control environment. Board of Directors Risk Policy and Oversees the G
Slide 26: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation ($ Millions) (in millions of US Dollars, unless otherwise indicated) 2018 2017 Q1 Q4 Q3 Q2 Q1 Net income A $ 44.2 $ 40.3 $ 41.1 $ 36.1 $ 35.9 Dividends and guarantee fee of preference shares — — — — — Premium paid on repurchase of preference shares B — — — — — Net in
Slide 27: Non-GAAP Reconciliation (cont'd)
Appendix Non-GAAP Reconciliation ($ Millions) (cont’d) (in millions of US Dollars, unless otherwise indicated) 2018 2017 Q1 Q4 Q3 Q2 Q1 Core return on average tangible assets Total average assets L $ 10,970.9 $ 10,851.0 $ 10,744.8 $ 10,981.8 $ 10,982.6 Less: average goodwill and intangible assets (6
Slide 28: Balance Sheet Trends
Appendix Balance Sheet Trends ($ Millions) 2018 2017 2016 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Assets Cash & Equivalents $ 1,846 $ 1,535 $ 1,546 $ 1,720 $ 1,867 $ 2,102 $ 1,485 $ 2,655 $ 1,774 Reverse Repos 198 179 210 184 63 149 186 — — S/T Investments 100 250 208 294 542 520 995 436 425 Investments 4,512 4,
Slide 29: Income Statement Trends
Appendix Income Statement Trends ($ Millions) 2018 2017 2016 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net Interest Income $ 79.9 $ 76.1 $ 74.3 $ 71.5 $ 67.9 $ 66.8 $ 65.0 $ 64.3 $ 62.3 Non-Interest Income 39.8 42.4 38.2 38.7 38.5 38.8 36.3 37.9 34.5 Prov. for Credit Recovery (Losses) 1.9 5.4 0.7 (0.5) 0.3 0.9 (0.
Slide 30: Non-Interest Income & Expense Trends
Appendix Non-Interest Income & Expense Trends 2018 2017 2016 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Non-Interest Income Trust $ 10.9 $ 11.3 $ 10.9 $ 11.3 $ 11.4 $ 11.5 $ 11.6 $ 10.8 $ 10.1 Asset Management 6.4 6.6 6.3 5.9 5.8 6.0 5.6 5.3 4.2 Banking 10.9 12.0 10.8 10.9 10.0 11.0 9.7 10.0 8.7 FX Revenue 8.2 8.8
Slide 31: Core Non-Interest Expense Trends
Appendix Core Non-Interest Expense Trends 2018 2017 2016 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Salaries & Benefits¹ $ 37.0 $ 42.2 $ 37.2 $ 37.1 $ 35.9 $ 34.0 $ 33.6 $ 31.5 $ 29.6 Technology & Comm. 14.6 14.3 13.1 13.3 12.8 14.4 14.2 13.8 13.9 Property 5.1 4.5 5.1 5.3 4.9 5.5 5.3 5.0 5.0 Professional & O/S Serv
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