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 (June 2020)
34 slides from Bank Of N.t. Butterfield & Son Limited (the) Voting's investor presentation, Jun 4, 2020
Slide 1: Investor Presentation
Investor Presentation The Bank of N.T. Butterfield & Son Limited June 2020
Slide 2: Important Notice
Important Notice 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, i
Slide 3: Today’s Presenters
Today’s Presenters Michael Collins Chairman & Group Chief Executive Officer • Named Group Chief Executive Officer in September of 2015 and named Chairman in July of 2017 • 30+ years of financial services experience • Prior to NTB, held senior positions at Morgan Guaranty Trust Company in New York, B
Slide 4: Company Overview Company Highlights
Company Overview Company Highlights Franchise retail banking presence in Bermuda and Cayman Bermuda Bank of the Year for 7 consecutive years in Bermuda and for the past 5 of 7 years in 1 Leading Bank in Attractive Markets Cayman(1) 30%+ deposit market share in Bermuda and Cayman Islands, respe
Slide 5: NTB’s Credit Ratings Overview
1.1 Leading Bank in Attractive Markets NTB’s Credit Ratings Overview(1) Issuer Type Rating Rating Date Outlook Company Credit Ratings Kroll Deposit A+ 7/16/2019 Stable Senior Unsecured Debt A+ 7/16/2019 Stable Subordinated Debt A 7/16/2019 Stable Short-Term Deposit K1 7/16/2019 Stable Short-Term Deb
Slide 6: Who We Are and What We Do
1.1 Leading Bank in Attractive Markets Who We Are and What We Do Business Line Banking Wealth Management Bermuda Cayman Islands Bermuda Cayman Islands Channel Islands Core Geographies (38% of Group deposits(1), (27% of Group deposits(1), (35% of Group deposits(1), Channel Islands Switzerland 44% of
Slide 7: Bermuda and Cayman Islands
1.1 Leading Bank in Attractive Markets Bermuda and Cayman Islands Bermuda’s Insurance & Reinsurance Market Cayman Islands’ Financial Services Market #2 #1 #1 #1 #2 Global Reinsurance Captive Insurance Insurance Linked Captive Insurance International Fund Domicile Market Domicile Securities Domicile
Slide 8: Channel Islands
1.1 Leading Bank in Attractive Markets Channel Islands A Leading International Financial Center and Banking Market • Recently completed the acquisition of ABN AMRO’s Channel Islands Banking, United Kingdom Investment Management and Custody services London • As British Crown Dependencies, the Channel
Slide 9: COVID-19 Update
1.1 Leading Bank in Attractive Markets COVID-19 Update Initial Assessment/Community Actions Short-term Implications Medium/Long-term Implications • Business continuity/social distancing/remote • Tourism credit and revenue streams being • Sustained, ultra low interest rates would alter working implem
Slide 10: Historical Financial Profile & Profitability
1.1 Leading Bank in Attractive Markets Historical Financial Profile & Profitability Total Assets (US$ Billions) Gross Loans (US$ Billions) $13.9 $13.2 $11.1 $10.8 $10.8 $5.2 $5.0 $3.8 $4.1 $3.6 2016 2017 2018 2019 2020Q1 2016 2017 2018 2019 2020Q1 Core ROAA(1) Core ROATCE(2) (%) 25.6% 22.4% 23.4% 1.
Slide 11: First Quarter 2020 Highlights
1.2 Strong Capital Generation and Return First Quarter 2020 Highlights • Net income of $40.3 million, or $0.77 per share (US$ Millions) vs. 2019Q4 vs. 2019Q1 2020Q1 $ % $ % • Core Net Income(1) of $40.8 million, or $0.78 per share Net Interest Income $ 87.6 $ 1.4 $ (0.4) 14.2% Non-Interest Income 47
Slide 12: History of Excess Capital Generation
1.2 Strong Capital Generation and Return History of Excess Capital Generation Regulatory Capital (Basel III) - Total Capital Ratio(1) TCE / TA (%) 19.8% 16.3% 14.1% Butterfield Current BMA 2020 Required US Peer Median (2) (2) • Conservative capital ratios reflect prudent and balanced capital managem
Slide 13: Solid Capital Base
1.2 Strong Capital Generation and Return Solid Capital Base Common Equity Tier 1 Ratio Tangible Common Equity Ratio 19.6% 7.1% 7.5% 18.2% 17.3% 17.5% 6.8% 5.9% 6.3% 15.3% 7.0% 2016 2017 2018 2019 2020Q1 2016 2017 2018 2019 2020Q1 Common Equity Tier 1 Ratio Basel III minimum • Prudent capital managem
Slide 14: Capital Composition
1.2 Strong Capital Generation and Return Capital Composition Composition of Capital (US$ Millions) $968 $952 $947 $846 $122 $103 $110 $770 $74 $103 $849 $849 $837 $772 $667 2016 2017 2018 2019 2020Q1 CET1 / Tier 1 Tier 2 Current Outstanding Subordinated Debt Interest Rate From Principal Earliest Dat
Slide 15: Overall Asset Mix
1.3 Efficient, Conservative Balance Sheet Overall Asset Mix Average Asset Composition Investment Portfolio Investment Portfolio (US$ Billions) Composition(1) Rating Distribution(1) MBS Other A $13.7 2.6% 1.0% AA 0.3% BBB 2.9% 0.5% 0.1% $12.4 3.0% $10.9 $11.0 $10.9 3.2% 3.2% 3.2% 37.5% $4.5 bn U.S. G
Slide 16: Low Loans / Deposits and RWA / Assets
1.3 Efficient, Conservative Balance Sheet Low Loans / Deposits and RWA / Assets Gross Loans / Deposits Risk-Weighted Assets / Total Assets 72% 71% 71% 73% 73% 75% 78% 76% 74% 69% 43% 43% 39% 39% 40% 40% 42% 35% 36% 36% 2016 2017 2018 2019 2020Q1 2016 2017 2018 2019 2020Q1 (1) Peer Median NTB Peer Me
Slide 17: Stable Portfolio, Attractive Characteristics
1.3 Efficient, Conservative Balance Sheet Stable Portfolio, Attractive Characteristics Loan Portfolio by Type(1) Residential Loan Market Characteristics 120% (US$ Billions) • 2019 average yield of 5.18% on consumer loans, 14.00% Attractive Yields including residential mortgages $3.6 $3.8 $4.0 $5.1 $
Slide 18: Residential & Commercial Loans
1.3 Efficient, Conservative Balance Sheet Residential & Commercial Loans Residential Mortgage Loans Commercial Loans (US$ Billions) (US$ Billions) $3.2 $3.2 $2.7 $2.5 $1.7 $1.6 $2.3 48.0% 47.1% 37.0% 25.3% 32.2% $1.2 44.6% 45.9% $1.1 $1.1 23.1% 21.5% 20.9% 17.7% 18.3% 46.9% 51.7% 56.5% 22.0% 22.5% 8
Slide 19: Deposit Composition
1.3 Efficient, Conservative Balance Sheet Deposit Composition Deposit Composition by Type Deposit Composition by Geography (%) (US$ Billions) 0.7% $13,500 1.00% 9.7% 14.0% 17.0% $12.4 36.7% 35.0% $11.8 30.2% 30.8% $11,500 35.4% 24.5% 0.80% 27.8% 27.6% $10.0 24.3% $9.5 $9.5 $9,500 59.4% 55.2% 47.6% 1
Slide 20: Strong Asset Quality
1.3 Efficient, Conservative Balance Sheet Strong Asset Quality Residential Loan Composition by LTV Band(1) NPA / Assets (%) >90% 5.4% 70% - 90% <50% 20.5% 27.0% 0.5% 0.5% 0.4% 0.4% 0.4% $3.2 bn 50% -70% 47.2% 2016 2017 2018 2019 2020Q1 Net Charge-Off Ratio • Historically stable asset quality backed
Slide 21: Current Expected Credit Losses (CECL)
1.3 Efficient, Conservative Balance Sheet Current Expected Credit Losses (CECL) ACL / Total Loans ACL by Loan Type (US$ Millions) 0.80% 0.72% $50.0 0.70% 0.62% 0.62% 0.60% 12/31/2019 1/1/2020 3/31/2020 0.60% $40.0 0.51% $36.2 0.46% Loans 0.50% $31.4 0.40% $25.0 $24.1 $30.0 Commercial $7.3 $11.4 $15.
Slide 22: Strong Asset Quality
1.3 Efficient, Conservative Balance Sheet Strong Asset Quality Non Accrual Loans Group TDRs (US$ Millions) (US$ Millions) $60.0 $53.1 2.8% $120.0 5.0% $48.7 $50.4 $2.2 $48.5 $2.3 $100.0 $50.0 $2.4 $3.6 2.3% 4.0% $43.9 $1.7 $80.1 $80.1 $79.7 $7.5 $5.4 $47.3 $76.1 $4.9 $46.4 $80.0 $40.0 1.8% 3.0% $40.
Slide 23: Net Interest Margin
1.4 Visible Earnings Net Interest Margin Net Interest Margin (%) 6.00% • Loan yield impacted by 5.47% 5.36% partially passing on lower 5.10% market rates 5.00% 4.78% 4.80% • Securities yield reflective of historic deployment to protect margin in lower rate 4.00% environment 3.25% 2.89% 2.78% 3.00% 2
Slide 24: Interest Rate Sensitivity
1.4 Visible Earnings Interest Rate Sensitivity Average Balance - Balance Sheet Interest Rate Sensitivity - % change in Net Interest Income Average Balances (US$ Millions) Weighted Average 2020Q1 vs. 2019Q4 Duration vs. 2019Q4 Life Cash & Reverse Repos 2,529.6 (243.9) N/A N/A N/A S/T Invest. 1,151.5
Slide 25: Diverse Fee Revenues
1.4 Visible Earnings Diverse Fee Revenues 2020Q1 Non-Interest Income Mix Non-Interest Income Trend (US$ Millions) (US$ Millions) (In US$ millions) $49.7 2020Q1 vs. 2019Q4 $46.6 $47.6 $43.4 $44.2 Asset management $ 7.8 $ 0.1 Banking 11.2 (2.8) FX Revenue 10.8 0.9 Trust 12.2 (0.8) Custody and Other 3.
Slide 26: Non-interest Expense
1.4 Visible Earnings Non-interest Expense Core Non-Interest Expense Trend(1) (US$ Millions) Core Non-Interest Expenses* vs. 2019Q4 $110.0 (In US$ millions) 2020Q1 $ % 140.0% $91.6 Salaries & Benefits(1) $ 44.1 $ (2.5) (5.4)% $87.6 $90.0 $84.0 $80.3 $79.2 120.0% Technology & Comm. 16.4 (0.1) (0.6)% P
Slide 27: Leadership Team
1.5 Experienced Team with Deep Market Knowledge Leadership Team Title Age Experience Year Joined Michael Collins Chairman & Group Chief Executive Officer 57 30+ 2009 Michael Schrum Group Chief Financial Officer 51 20+ 2015 Elizabeth Bauman Group Head of Human Resources 60 25+ 2015 Andrew Burns Group
Slide 28: Interest Coverage Ratio
Interest Coverage Ratio (dollars in millions) For the Twelve Months Ended Three Months Ended PF for PF for $100mm $100mm Sub Debt Sub Debt Raise & Raise & $70mm $70mm Repayment Repayment 12/31/16 12/31/17 12/31/18 12/31/19 12/31/19 3/31/20 3/31/20 PF Interest Coverage Earnings: Income From Continuin
Slide 29: Appendix
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Slide 30: Consolidated Financial Highlights
Appendix Consolidated Financial Highlights Year Ended December 31, Quarter Ended, ($mm except per share data) 2015 2016 2017 2018 2019 3/31/20 Summary Balance Sheet: Total Assets $10,276 $11,104 $10,779 $10,773 $13,922 $13,197 Gross Loans 4,049 3,615 3,812 4,069 5,166 5,037 Deposits (1) 9,182 10,034
Slide 31: Non-GAAP Financial Reconciliation
Appendix Non-GAAP Financial Reconciliation (in millions of US Dollars, unless otherwise indicated) 2020 2019 Q1 Q4 Q3 Q2 Q1 Net income A $ 40.3 $ 43.9 $ 42.4 $ 38.6 $ 52.1 Non-core (gains), losses and expenses Non-core (gains) losses Gain on disposal of a pass-through note investment (formerly a SIV
Slide 32: Non-GAAP Financial Reconciliation (cont’d)
Appendix Non-GAAP Financial Reconciliation (cont’d) (in millions of US Dollars, unless otherwise indicated) 2020 2019 Q1 Q4 Q3 Q2 Q1 Tangible equity to tangible assets Shareholders' equity K $ 980.5 $ 963.7 $ 964.6 $ 928.7 $ 896.2 Less: goodwill and intangible assets (91.2) (96.5) (93.4) (72.2) (74.
Slide 33: 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 34: Peer Group
Appendix Peer Group Our peer group includes the following banks, noted by their ticker symbols: • First Republic Bank (FRC) • UMB Financial Corporation (UMBF) • SVB Financial Group (SIVB) • First Hawaiian, Inc. (FHB) • East West Bancorp, Inc. (EWBC) • Bank of Hawaii Corporation (BOH) • Cullen/Frost
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