Bank of N.T. Butterfield & Son Limited (The)

Good morning. My name is Ilie and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2020 earnings call for the Bank of N.T. Butterfield & Son Limited. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Noah Fields, Butterfield's Head of Investor Relations.

Thank you. Good morning, everyone, and thank you for joining us. Today, we will be reviewing Butterfield's second quarter 2020 financial results. as well as some information related to COVID-19 and the bank's operational activities and asset quality. On the call, I'm joined by Butterfield's Chairman and Chief Executive Officer Michael Collins and Chief Financial Officer Michael Schrum. Following their prepared remarks, we will open the call up for a question and answer session. Yesterday afternoon, we issued a press release announcing our second quarter results. The press release along with a slide presentation that we will refer to during our remarks on this call are available on the investor relations section of our website at www.butterfieldgroup.com. Before I turn the call over to Michael Collins, I would like to remind everyone that today's discussions will refer to certain non-GAAP measures which we believe are important in evaluating the company's performance. For a reconciliation of these measures to U.S. GAAP, please refer to the earnings press release and slide presentation. Today's call and associated materials may also contain certain forward-looking statements which are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contemplated by these statements. On slide 25 of the presentation, we have also included a list of potential factors relevant to the implications of COVID-19 for the bank. Additional information regarding these risks can be found in our SEC filings. I will now turn the call over to Michael Collins.

Thank you, Noah, and thanks to everyone joining the call today. The bank's second quarter results were strong despite some of the challenges associated with COVID-19. As an essential service provider, the bank was able to support its clients throughout the health crisis with strict adherence to all recommended health and safety guidelines. We are grateful to our frontline staff who braved uncertainty to help keep our island economies operating and to our customers for their understanding as we temporarily transition to a remote working environment. I've been very impressed with the bank's operational resilience and our ability to quickly adjust to the new safety guidelines and social distancing rules relevant in each jurisdiction. As you can see in the summary results on page four of the presentation, we reported net income of $34.3 million, or 67 cents per share. In the second quarter, net income was 14.9% lower Thank you for joining us. and as a result, the board approved a quarterly cash dividend of 44 cents per share while we continued to repurchase shares throughout the quarter. During the quarter, we successfully issued $100 million of 5.25% 10-year fixed to floating rate subordinated debt which will mostly be used to replace existing debt. It is beneficial for the bank to be a known issuer in the debt capital market and the latest sub debt issuance helps us to continue the dialogue with fixed income investors. Turning now to slide five. Butterfield operates in 10 locations with each jurisdiction managing through the health crisis relatively well at this point. In Bermuda, the Cayman Islands, Guernsey and Jersey, the suppression of COVID has overall been effective. Bermuda was just entering its tourism season when the pandemic struck and the island entered a mandatory shelter-in-place period for the month of April. The island was essentially closed and has gradually reopened in May and June with the airport opening on July 1st. The number of flights are significantly below historical norms but are expected to increase in August and into the fall. The cruise ship season is effectively lost which will cost the government passenger fees and local businesses such as transportation companies, bars, restaurants and retailers will also miss out on significant revenue. With fewer flights to the island, hotels will also be impacted by the limited tourist season, which typically is most active through October. The timing of shutdowns in Cayman came toward the end of their 2019 tourism season, and they have been in their summer slow season, which has moderated the severity of the impact on their economy so far. They're hoping to open their airport in the next couple of months as they approach the traditional autumn and winter tourist season. The Channel Islands have had more COVID cases due to their proximity to the UK and France, but tourism is not as significant a contributor to the economy compared to Bermuda and Cayman, where tourism is approximately 17% and 25% respectively. We've been making significant strides to help support our communities through these challenging times. In addition to local community-based programs, we have offered residential mortgage deferrals to clients in good standing in both Bermuda and Cayman for up to six months and three-month interest-only options to small and medium-sized businesses. We are also working closely with larger corporate clients who may need to adjust terms of their loans and working capital requirements. We will continue to look at how we run our business in the near and longer term Reviewing Costs and Potential for New Fee-Generating Opportunities with Less Reliance on Interest-Rate Sensitive Revenue Sources Butterfield's exposure to hotels and restaurants remains limited, with well-structured loans and collateral packages in place. The remaining mortgage deferrals expire in September after six months and we will be keeping in close contact with clients and will continue to work with customers who may need assistance. I will now turn the call over to Michael Schrum to provide more details on the second quarter.