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

Good morning, everyone. My name is Vaishnavi, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2022 earnings call for the Bank of NT, Butterfield and Sun Limited. All participants will be in a listen-only mode. If 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 one on a touchstone phone. To withdraw your question, please press star, then two. Please note, this event has been recorded. I would now like to turn the call over to Noel Fields, Butterfield's Head of Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us. Today, we will be reviewing Butterfield's third quarter 2002 financial results. On the call, I'm joined by Michael Collins, Butterfield's Chairman and Chief Executive Officer, Craig Bridgewater, Group Chief Financial Officer, and Michael Scrum, President and Group Chief Risk Officer. 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 third quarter results. The press release and financial statements, 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 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. 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. Butterfield continued to deliver strong earnings across our offshore network of banking and wealth management platforms. We demonstrated consistent and solid fee income and remain well positioned for this period of rising market interest rates. We continue to see improving post-pandemic economic activity across our operating jurisdictions, with the vast majority of border restrictions having been relaxed and tourism and business travel improving. I will now turn to slide four, where we provide the third quarter highlights. Waterfield reported net income for the third quarter of $57.4 million, or $1.15 per diluted common share, and core net income of $57.6 million, or $1.16 per diluted share. Our core return on average tangible common equity was 31.6% in the quarter, compared to 27.8% in the prior quarter. Our net interest margin improved 33 basis points to 2.59%, with the cost of deposits rising 18 basis points to 34 basis points. When compared to the last interest rate cycle, we are experiencing heightened U.S. dollar deposit costs in the Channel Islands, which has grown in recent years through acquisitions. and is a more competitive market than Bermuda and Cayman. The Board of Directors again declared a quarterly cash dividend of 44 cents per share. Share repurchases remained unpaused in the quarter due to the elevated OCI loss marks, which has held the TCA to TA ratio to around 5%. We continue to view share repurchases as an important part of capital management and plan to resume share buybacks as a path to our targeted TCE to TA range a 6% to 6.5% emerges. During the quarter, we announced the strategically important acquisition of Credit Suisse's trust business in Singapore, the Channel Islands, and the Bahamas. This excludes business in Liechtenstein, which was sold to a separate and unrelated buyer. We were able to structure the acquisition as an asset deal, which will allow Butterfield to thoroughly due diligence each client before onboarding and therefore reduce any reputational risk transfer. The deal meets all of our longstanding requirements for M&A. For example, it is significantly focused on private trust, is within our existing geographic footprint, with a forecasted IRR of more than 15 percent, with a total consideration of less than $50 million, and is well below eight times EBITDA. The deal is also forecast to increase trust fee income, which would help maintain our significant and stable fee income ratio. and will position Butterfield as one of the largest private client trust companies in Singapore. We are excited to welcome new clients and colleagues and anticipate the onboarding period to complete in the first half of 2023. I will now turn the call over to Craig Bridgewater to provide more details on the third quarter results.