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 — Q2 2020 Earnings Presentation
26 slides from Bank Of N.t. Butterfield & Son Limited (the) Voting's earnings presentation, Jul 23, 2020
Slide 1: Second Quarter Earnings Presentation
Second Quarter Earnings Presentation The Bank of N.T. Butterfield & Son Limited July 23, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements: Certain of the statements made in this release are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements through our use of words such as “ma
Slide 3: Agenda and Overview
Agenda and Overview Presenters Agenda Butterfield Overview Michael Collins • Overview • Leading Bank in Attractive Markets Chairman and Chief Executive Officer • Second Quarter 2020 Highlights • Strong Capital Generation and Return Michael Schrum • COVID-19 Update • Efficient, Conservative Balance S
Slide 4: Second Quarter 2020 Highlights
Second Quarter 2020 Highlights • Net income of $34.3 million, or $0.67 per share (In US$ millions) vs. Q1 2020 vs. Q2 2019 • Core Net Income** of $34.4 million, or $0.67 per share Q2 2020 $ % $ % • Return on average common equity of 14.0%; core return on average Net Interest Income $ 79.1 $ (8.5) $
Slide 5: COVID-19 Update
COVID-19 Update* Principal Markets Update** Butterfield Actions • Near term Guernsey & Bermuda Cayman Jersey ◦ Support local economic activity through mortgage deferral program for qualifying residential mortgage Active COVID-19 Cases 7 2 5 holders in Bermuda and Cayman ◦ Working with customers to m
Slide 6: Financials
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Slide 7: Income Statement: Net Interest Income
Income Statement Net Interest Income Net Interest Margin & Yields Net Interest Income before Provision for Credit Losses - Trend (In US$ millions) (In US$ millions) Q2 2020 vs. Q1 2020 $87.6 $85.2 Avg. Balance Yield Avg. Balance Yield $79.1 Cash, S/T Inv. & Repos $ 3,358.4 0.13 % $ (322.8) (0.90)% I
Slide 8: Income Statement: Non-Interest Income
Income Statement Non-Interest Income Non-Interest Income Trend (In US$ millions) (In US$ millions) Q2 2020 vs. Q1 2020 $47.6 $44.2 Asset management $ 7.4 $ (0.4) $41.7 Banking 9.1 (2.1) FX Revenue 8.1 (2.7) Trust 12.3 0.2 Custody and Other 3.3 (0.3) Q2 Q3 Q4 Q1 Q2 Other 1.5 (0.5) Total Non-Interest
Slide 9: Income Statement: Non-Interest Expenses
Income Statement Non-Interest Expenses Core Non-Interest Expense Trend* Core Non-Interest Expenses* vs. Q1 2020 (In US$ millions) (In US$ millions) Q2 2020 $ % $87.6 $79.2 $81.9 Salaries & Benefits** $ 41.4 $ (2.7) (6.1)% Technology & Comm. 16.3 (0.1) (0.6)% Property 7.2 (0.1) (1.4)% 63.8% 66.7% 60.
Slide 10: Capital Requirements and Return
Capital Requirements and Return Regulatory Capital (Basel III) - Total Capital Ratio*** Leverage Capital 9.8% 21.2% 0.8% 8.3% 1.4% 16.3% 9.0% 13.9% 6.9% Butterfield - Current US Peer Median * Butterfield Current BMA 2020 Required US Peer Median * TCE/TA TCE/TA Ex Cash Dividend Payout Ratio** • Capit
Slide 11: Balance Sheet
Balance Sheet Total Assets (In US$ millions) Q2 2020 Q4 2019 (In US$ billions) Cash & Equivalents $ 2,228 $ 2,550 $13.2 $13.2 Reverse Repos & S/T Investments 1,136 1,361 $11.2 Investments 4,354 4,436 Loans (net) 5,018 5,143 Other Assets 415 432 Total Assets $ 13,151 $ 13,922 $4.5 $4.5 $4.4 Int. Bear
Slide 12: Residential & Commercial Loans
Residential & Commercial Loans Residential Mortgage Loans (US$ Billions) Commercial Loans (US$ Billion) $2.3 $2.5 $2.7 $3.2 $3.2 $1.1 $1.1 $1.2 $1.7 $1.6 25% 32% 37% 48% 47% 46.9% 44.6% 45.9% 56.5% 51.7% 23% 22% 21% 8.6% 52% 18% 18% 2.7% 22.0% 22.5% 46% 10.4% 13.6% 42% 2.4% 1.9% 1.7% 35% 2.6% 34% 41
Slide 13: Asset Quality
Asset Quality Non-Accrual Loans Investment Portfolio (In US$ millions) $73.3 Loan Distribution Rating Distribution AA 0.3% $55.9 A 0.5% $53.1 Consumer 4.4% BBB 0.1% Res Mtg 63.1% Comm’l R/E 14.7% Other Comm’l 10.5% Gov’t AAA 99.0% 7.3% $5.0 billion $4.4 billion Q2 Q3 Q4 Q1 Q2 2019 2020 0.10% Net Cha
Slide 14: Interest Rate Sensitivity
Interest Rate Sensitivity Average Balance - Balance Sheet Interest Rate Sensitivity Average Balances (US$Mil) Weighted 20.1% Average Life Q2 2020 vs. Q1 2020 Duration vs. Q1 2020 10.4% 10.2% Cash & Reverse 7.4% Repos & S/T Invest. 3,358.4 (322.8) < 0.2 N/A N/A 4.9% AFS 2,340.9 21.1 2.1 (0.5) 3.6 (3.
Slide 15: Appendix
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Slide 16: Current Expected Credit Losses (CECL)
Appendix Current Expected Credit Losses (CECL) ACL / Total Loans ACL by Loan Type 0.60% 0.51% 0.46% 0.72% 0.79% (In US$ millions) Q2 2020 Q1 2020 Q4 2019 $40.2 Loans $36.2 Commercial $ 14.9 $ 15.5 $ 7.3 Commercial Real Estate 2.2 2.6 1.5 $24.0 $23.9 $23.6 Consumer 5.5 4.6 1.5 Residential Mortgage 17
Slide 17: Customer Deposits
Appendix Customer Deposits Average Deposit Volume and Cost of Deposits Deposit Composition By Currency (In US$ millions) 3,500 6.4% 8.8% 7.7% 14.1% 21.4% 20.7% 3,000 79.5% 69.8% 71.6% 2,500 1.52% 2,000 Q2 Q3 Q4 Q1 Q2 Desposits 1.21% 2019 2020 USD / USD Pegged GBP Other 0.97% 1,500 0.42% 0.42% By Typ
Slide 18: Balance Sheet Trends
Appendix Balance Sheet Trends (in millions of US Dollars, unless otherwise indicated) 2020 2019 2018 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Assets Cash & Equivalents $ 2,228 $ 1,978 $ 2,550 $ 3,605 $ 2,011 $ 2,601 $ 2,054 $ 1,259 $ 1,756 Reverse Repos & S/T Investments 1,136 1,240 1,361 855 330 288 80 148 167 I
Slide 19: Average Balance Sheet Trends
Appendix Average Balance Sheet Trends (in millions of US Dollars, unless otherwise indicated) Q2 2020 Q1 2020 Q2 2019 Average Interest Average rate Average Interest Average rate Average Interest Average rate Assets balance ($) ($) (%) balance ($) ($) (%) balance ($) ($) (%) Cash due from banks, reve
Slide 20: Income Statement Trends
Appendix Income Statement Trends (in millions of US Dollars, unless otherwise indicated) 2020 2019 2018 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Net Interest Income $ 79.1 $ 87.6 $ 86.2 $ 86.3 $ 85.2 $ 88.0 $ 87.4 $ 88.3 $ 87.4 Non-Interest Income 41.7 47.6 49.7 46.6 44.2 43.4 45.7 41.3 41.9 Prov. for Credit Reco
Slide 21: Non-Interest Income & Expense Trends
Appendix Non-Interest Income & Expense Trends (in millions of US Dollars, unless otherwise indicated) 2020 2019 2018 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Non-Interest Income Trust $ 12.3 $ 12.2 $ 13.0 $ 12.7 $ 13.0 $ 12.6 $ 13.8 $ 13.1 $ 13.2 Asset Management 7.4 7.8 7.8 7.4 6.9 6.7 6.5 6.5 6.2 Banking 9.1 11
Slide 22: Core Non-Interest Expense Trends
Appendix Core Non-Interest Expense* Trends (in millions of US Dollars, unless otherwise indicated) 2020 2019 2018 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Salaries & Benefits** $ 41.4 $ 44.1 $ 46.6 $ 42.8 $ 41.1 $ 42.8 $ 43.7 $ 43.8 $ 40.9 Technology & Comm. 16.3 16.4 16.5 16.3 15.2 14.6 14.8 15.4 14.9 Property 7
Slide 23: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation (in millions of US Dollars, unless otherwise indicated) 2020 2019 Q2 Q1 Q4 Q3 Q2 Net income A $ 34.3 $ 40.3 $ 43.9 $ 42.4 $ 38.6 Non-core (gains), losses and expenses Non-core expenses Early retirement program, redundancies and other non-core compensation costs 0.1 0
Slide 24: Non-GAAP Reconciliation (cont'd)
Appendix Non-GAAP Reconciliation (cont'd) (in millions of US Dollars, unless otherwise indicated) 2020 2019 Q2 Q1 Q4 Q3 Q2 Tangible equity to tangible assets Shareholders' equity K $ 990.3 $ 980.5 $ 963.7 $ 964.6 $ 928.7 Less: goodwill and intangible assets (89.7) (91.2) (96.5) (93.4) (72.2) Tangibl
Slide 25: Commentary on Factors Influencing COVID-19 Implications
Appendix Commentary on Factors Influencing COVID-19 Implications The short- and medium/long-term implications of the pandemic on our business, financial condition, liquidity and results of operations will depend on factors such as, but not limited to the following: • The duration and scope of the pa
Slide 26: Peer Group
Appendix Peer Group Our peer group includes the following banks, noted by their ticker symbols: • First Republic Bank (FRC) • First Hawaiian, Inc. (FHB) • SVB Financial Group (SIVB) • Bank of Hawaii Corporation (BOH) • East West Bancorp, Inc. (EWBC) • Trustmark Corporation (TRMK) • Cullen/Frost Bank
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