Bank Of N.t. Butterfield & Son Limited (the) Voting · NYSE:NTB
Bank Of N.t. Butterfield & Son Limited (the) Voting — Bank of N.T. Butterfield & Son — IPO Roadshow (May 2018)
33 slides from Bank Of N.t. Butterfield & Son Limited (the) Voting's IPO roadshow presentation, May 16, 2018
Slide 1: Investor Presentation May 2018
The Bank of N.T. Butterfield & Son LimitedInvestor PresentationMay 2018
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by us solely for informational purposes. This presentation has been prepared to assist interested parties in making their own evaluation of us and does not purport to contain all of the information that may be relevant. In all cases, interested parties
Slide 3: 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 Ex
Slide 4: Terms of the Proposed Offering
Terms of the Proposed Offering Bank of N.T. Butterfield & Son Ltd. (NYSE / NTB) Issuer Fixed-to-Floating Rate Structure Subordinated Notes Security $75.0 million Amount Basel III regulatory requirements for Tier 2 Capital as applied by the BMA Covenants Repay the outstanding 5.15% Series B subordina
Slide 5: Company Overview Investment Highlights
Company Overview Investment Highlights Leading Bank in Attractive Markets Franchise retail banking presence in Bermuda and CaymanNamed Bermuda Bank of the Year for 5th consecutive year by The Banker$9.8bn deposit balance with 2018 Q1 average cost of 0.12% Strong Capital Generation and Return Core RO
Slide 6: Leading Bank in Attractive Markets: Market Operations
Leading Bank in Attractive Markets Market Operations $11.0 bn 1.8 bn 4.5 bn 4.0 bn 9.8 bn 2018 Q1 2018 Q1 $44.2 mm 24.3% 1.7% Key Balance Sheet Items Key Operating Metrics Total Assets Cash & Cash Equivalents Investments in Securities Net Loans Deposits Net Income Core ROATCE ² Core ROATA ³ Financia
Slide 7: Who We Are and What We Do
Leading Bank in Attractive Markets Who We Are and What We Do Cayman Islands Bahamas Business Line Core Geographies Clients Focus Areas / Key Statistics Banking Wealth Management Bermuda(54% of Group deposits¹,51% of Group loans²) Cayman Islands(31% of Group deposits¹,25% of Group loans²) Bermuda Swi
Slide 8: Bermuda and Cayman Islands
Leading Bank in Attractive Markets Bermuda and Cayman Islands British Overseas Territories, English Common Law, UK Privy Council final court of appealAffluent resident population, no corporate or personal income taxFATCA / CRS tax transparency requires reporting on foreign nationals to 67 tax author
Slide 9: Award-Winning Trust Business
Leading Bank in Attractive Markets Award-Winning Trust Business Very Large Large Boutique Franchise Private Client Trust focusDiversified Fee Players Trustee feesFX feesCustody feesAsset management feesNII Deposits Client’s Assets Assets / Deposits TrustRelationship Legal Ownership Pays Income and /
Slide 10: First Quarter 2018 Highlights
Leading Bank in Attractive Markets First Quarter 2018 Highlights vs. Q4 2017 vs. Q4 2017 vs. Q1 2017 vs. Q1 2017 (in millions of US$) Q1 2018 Q1 2018 $ $ % $ $ % Net Interest Income $ 79.9 $ 3.8 3.9 % $ 12.0 14.2 % Non-Interest Income 39.8 (2.6 ) (1.2 )% 1.2 5.4 % Prov. for Credit Losses 1.9 (3.4 )
Slide 11: Historical Financial Profile
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) Total Customer Deposits ($ Millions) Tangible Common Equity ($ Millions) Not
Slide 12: Strong Profitability
Leading Bank in Attractive Markets Strong Profitability Core ROATA¹ (%) Core ROATCE² (%) Net Interest Margin (%) Core Efficiency Ratio³ (%) Core ROATA is a non-GAAP measure calculated as core net income / average tangible assets. See the Appendix for a reconciliation of the non-GAAP measuresCore ROA
Slide 13: History of Excess Capital Generation
Strong Capital Generation and Return History of Excess Capital Generation Pro forma for $75 million subordinated debt raise, assuming a 0.75% underwriting fee and 20% risk weighting on proceeds; Assumes payoff of $47 million of maturing subordinated debtNote: All information in US$ as of 31-Mar-2018
Slide 14: Low Loans / Deposits and RWA / Assets
Efficient, Conservative Balance Sheet Low Loans / Deposits and RWA / Assets Peer Group includes: FRC, SIVB, EWBC, CFR, ASB, WTFC, CBSH, IBKC, UMBF, FHB, BOH, TRMK, IBOC, CBU, BPFH, FFIN, WABCNote: All information in US$ as of 31-Mar-2018 unless noted otherwise. Conversion rate: 1 BMD$ = 1 US$Source:
Slide 15: Highly Rated, Liquid Portfolio
Efficient, Conservative Balance Sheet Highly Rated, Liquid Portfolio Investment Portfolio Composition Investment Portfolio by Debt Rating Securities Portfolio Duration AFS Securities Total Securities Portfolio HTM Securities Balance Duration $3.1bn 2.8 years $1.5bn 6.1 years $4.6bn Composition of In
Slide 16: Stable Portfolio, Attractive Characteristics
Efficient, Conservative Balance Sheet Stable Portfolio, Attractive Characteristics Loan Portfolio Stability¹ Residential Loan Market Characteristics Commercial Loan Market Total based on net loans, breakout based on gross loansNote: All information in US$billions as of 31-Mar-2018 unless noted other
Slide 17: Diversified Loan Portfolio
Efficient, Conservative Balance Sheet Diversified Loan Portfolio $4.0bn1 $2.5bn $4.0bn1 Loan Composition by Type Loan Composition by Geography Residential Loan Composition by LTV Band² Total based on net loans, breakout based on gross loansLTV data as of 31-Dec-2017Note: All information in US$ as of
Slide 18: Strong Asset Quality
Efficient, Conservative Balance Sheet Strong Asset Quality $42mm NPAs¹ / Total Assets Non Accrual Loans by Type Net Charge-Off Ratio² Reserves / Nonperforming Loans Nonperforming assets defined as gross non-accrual loans - specific allowance for credit losses on non-accrual loans + accruing loans pa
Slide 19: Low Cost Deposits
Efficient, Conservative Balance Sheet Low Cost Deposits Historically Growing Customer Deposit Base Historically Low Cost of Deposits Note: All information in US$ as of 31-Mar-2018 unless noted otherwise. Conversion rate: 1 BMD$ = 1 US$Source: S&P Global Market Intelligence Cost of Deposits 3
Slide 20: Visible Fee and Balance Sheet Revenue
Visible Earnings Visible Fee and Balance Sheet Revenue $159mm¹ Fee Income ($mm) Visible & Diversified Sources of Fee Income 2018 Q1 fee income annualizedNote: All information in US$ as of 31-Mar-2018 unless noted otherwise. Conversion rate: 1 BMD$ = 1 US$ 4 Earning Assets & Net Interest Margin Yield
Slide 21: NIM Increase Driven by Long-term US Treasury Yields
Visible Earnings NIM Increase Driven by Long-term US Treasury Yields 2016 to 2017 Highlights Net Interest Margin 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
Slide 22: Interest Coverage Ratio
Visible Earnings Interest Coverage Ratio Assumes a $75 million subordinated debt raise and a 4.750% coupon rate3 Month LIBOR as of 15-May-2018 for the floating rate of 2.000% + 3 Month LIBOR on the $47 million of subordinated debt which will mature on May 27, 2018Note: All information in US$ as of 3
Slide 23: Leadership Team
Experienced Team with Deep Market Knowledge Leadership Team Michael CollinsChairman &Chief Executive Officer 55 Michael SchrumChief Financial Officer Daniel FrumkinChief Operating Officer 49 53 Age Background 30+ 20+ 30+ Experience Joined Butterfield in 2009Formerly COO at HSBC Bermuda Joined Butter
Slide 24: Potential Growth Opportunities
Company Overview Potential Growth Opportunities Organic Macro Strategic Acquisitions Completed to Date Net Interest IncomeBML loan growthDeployment of depositsFee IncomeFee pricing reviewsExpense ReductionStrengthen compliance and regulatory modelExpand Halifax centerInvest in IT infrastructure and
Slide 25: Recap and Q&A
Company Overview Recap Leading Bank in Attractive Markets Strong Capital Generation and Return Efficient, Conservative Balance Sheet Visible Earnings Experienced Team with Deep Market Knowledge 1 2 3 4 5 Thank You – Q&A
Slide 26: Appendix
Appendix
Slide 27: Risk Management
Appendix Risk Management Source: Company data Board of Directors Executive Management Audit Committee Reviews the overall adequacy and effectiveness of the Group's system of internal controls and the control environment. Group Asset and Liability Committee ("GALCO") Chaired by the Chief Financial Of
Slide 28: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation ($ Millions) (in millions of US Dollars, unless otherwise indicated) 2018 2018 2017 2017 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 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
Slide 29: Non-GAAP Reconciliation (cont'd)
Appendix Non-GAAP Reconciliation ($ Millions) (cont’d) (in millions of US Dollars, unless otherwise indicated) 2018 2018 2017 2017 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 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
Slide 30: Balance Sheet Trends
Appendix Balance Sheet Trends ($ Millions) 2018 2018 2017 2017 2016 2016 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 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 29
Slide 31: Income Statement Trends
Appendix Income Statement Trends ($ Millions) 2018 2018 2017 2017 2016 2016 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 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 Recov
Slide 32: Non-Interest Income & Expense Trends
Appendix Non-Interest Income & Expense Trends 2018 2018 2017 2017 2016 2016 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 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
Slide 33: Core Non-Interest Expense Trends
Appendix Core Non-Interest Expense Trends 2018 2018 2017 2017 2016 2016 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 Q1 Q4 Q4 Q3 Q3 Q2 Q2 Q1 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
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