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

Morning, my name's Nick and I'll be your conference operator today. This time, I'd like to welcome everybody to the first quarter of 2023 earnings call for the Bank of N.T. Butterfield & Sons Limited. All participants will be in listen-only mode. If you need assistance, please signal Conference Specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the call over to Mr. Noah Fields, Butterfield's Head of Investor Relations. At this time, please go ahead, sir.

Thank you. Good morning, everyone, and thank you for joining us. Today, we will be reviewing Butterfield's first quarter 2023 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 first quarter 2023 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. I am pleased with our first quarter performance and the continued strength of our balance sheet and deposit franchise. Barfield remains a longstanding and growing provider of banking and private trust products and services with operations in highly regarded offshore jurisdictions. Our banking business benefits from leading market positions in Bermuda and the Cayman Islands, with a growing presence in the Channel Islands. In the Bahamas, Switzerland, and Singapore, we provide specialized financial services in addition to our prime central London mortgage offerings available to high net worth borrowers. In Cayman and Bermuda, we continue to see a strong post-pandemic recovery in signs of tourism. Cayman had a really strong winter season, and Bermuda is showing much improved occupancy rates for our approaching busy season. Airlift has improved for both jurisdictions, which is expected to improve economic activity levels in 2023. I will now turn to the first quarter of 2023 highlights on page four. Butterfield had a great start to the year with net income and core net income of $62.2 million. We reported a core return on average tangible common equity of 30.5% for the first quarter of 2023, with core earnings per share of $1.24. Net interest income continued to rise in the quarter, while the seasonally higher fee income in the prior quarter resulted in lower normalized non-interest income levels quarter and quarter. Tangible book value per common share improved by 8.8% to $17.32 in the first quarter, helped by lower OCI marks and net income. The net interest margin increased by nine basis points to 2.88% in Q1, with the cost of deposits rising to 110 basis points from 78 basis points in the prior quarter. Our business in the Channel Islands, which has a higher proportion of corporate banking customers, continues to be the most competitive market segment. As expected, Our TCE to TA ratio has improved, and we are now within our targeted range of between 6 and 6.5%. As a result, in addition to our quarterly cash dividend, we have restarted our share buyback program at a modest level and expect to continue repurchasing shares throughout 2023, subject to market conditions. I'm also pleased that we completed the first closing of the acquired Credit Suisse Trust Book of Business. This initial tranche consisted of 180 trust structures associated with just under $2 million in annualized trust fee revenue, and we welcomed six new trust colleagues in Singapore to our client service teams. We currently expect a second close at the end of June to be more substantial, with the deal fully completed by the end of this year. As it stands currently, in total, we would expect to add between $8 to $10 million in annual trust fees from the deal in 2024. I will now turn the call over to Craig for more detail on the quarter.