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

Good morning. My name is Dave and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter and full year 2022 earnings call for the Bank of NT, Butterfield and Sons Limited. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the call 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 fourth quarter and full year 2022 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 fourth quarter and full year 2022 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 reconciliation of these measures to US 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's excellent results in the fourth quarter and full year 2022 benefited from strong positioning in our core banking and private trust markets in Bermuda, the Cayman Islands, and the Channel Islands. In addition to these locations, we provide specialized financial and trust services in Singapore, the Bahamas, and Switzerland, as well as United Kingdom-based mortgage lending in high end central London. The bank's geographic footprint is strategically based across best in class offshore banking and trust locations. Our revenue generating operating jurisdictions are efficiently supported in market and in addition by our service centers in Mauritius and Halifax, Canada. I will now turn to the full year highlights on page four. Butterfield had an excellent year with net income of $214 million and core net income of $215.7 million. Operating results have increased with rising market rates and resulted in a core return on average tangible common equity of 28.6% for 2022. In addition to higher net interest income, non-interest earnings were up 4% and expenses held steady despite some inflationary cost pressures. I was also pleased to see tangible book value per common share recover by 15.7% in the fourth quarter. The net interest margin increased to 2.41% from 2.02% in 2021, with the cost of deposits rising to 34 basis points from 11 basis points in 2021. The current cycle deposit costs differ somewhat from previous cycles as a result of our larger banking presence in the Channel Islands. which is more corporate than retail-based and therefore more competitive. We continue to pursue an active capital management strategy and have paid out around 40% of earnings in quarterly cash dividends. We are beginning to see our TCE to TA ratio improve towards our targeted range and expect to recommence share repurchases. The Board has approved a new share repurchase authorization for 2023 of up to 3 million common shares which will replace the expiring authorization at the end of February 2023. One of our growth factors is in-market accretive acquisitions, and we are making good progress towards the first closing in the private trust asset deal with Credit Suisse that we announced in September last year. Throughout 2023, we'll be taking over the administration and servicing of selected private trust client structures in Singapore, Guernsey, and the Bahamas, We still expect the timing of the onboarding to occur progressively by jurisdiction, with the first smaller tranche of Singapore clients coming across at the end of the first quarter and Guernsey and the Bahamas in the second and third quarters. Our compliance team continues to conduct extensive due diligence at the client level, and we are generally pleased with the quality of business so far. I will now turn the call over to Craig for more detail on the quarter.