NTB - Earnings call 4 2023 | The Bank of N.T. Butterfield & Son Limited

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Operator

Good morning. My name is Nihugi, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Full Year 2023 Earnings Call for The Bank of N.T. Butterfield & Son Limited. [Operator Instructions] 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. sir. ahead, go Please

Noah Fields

morning, will thank quarter be financial year Good us. and for Today, XXXX we reviewing results. everyone, you. you and joining full Thank Butterfield's fourth

I'm Group Chief Officer; Chairman call, On Chief Collins, and Schrum, Financial by Risk Officer; Bridgewater, Executive Officer. and Butterfield's the Craig and joined President Chief Group Michael Michael

call, and results. Following remarks, we release the remind for today's in press discussions afternoon, are our session.Yesterday turn call of question-and-answer over a with their non-GAAP section will refer to presentation performance. everyone will press up the that to XXXX our I the prepared that refer we our which important available on to are Investor certain we Michael announcing full release, believe along quarter Relations like we evaluating I website fourth at a this The to measures, open company's www.butterfieldgroup.com.Before the year remarks issued Collins, the slide on call during would will

reconciliation to factors a actual from certain the U.S. presentation. to GAAP, slide and associated measures of and uncertainties contemplated are call those to cause these to and release press which subject statements, may Today's by also earnings forward-looking materials that please contain materially may risks, other refer these results For differ statements.

filings.I Additional can found turn now will SEC call information the risks to our these Collins. regarding in over Michael be

Michael Collins

increased market the trust upgraded high-net-worth from should in rising and to Page higher efficiencies Bermuda million. will The carefully bank on of Singapore and cost branches in a the the and benefit X. points rates an XXXX. shares prime XXXX. acquisition.The revenues balance net somewhat Islands to presence by costs inflationary properties This Suisse at Wealth earnings interest and Islands per clients basis from to trended trust, of to from in and core our our reduction core we in of due by see earnings. thanks turn This X.XX% the due in in acquired $XX.XX. management the common income from The Cayman with Bermuda custody. year joining value financial insulated.Tangible in help increased deposit retail end XX significant banking system pleased lower leading specialized to and with call excellent net expected on shift XX.X% higher-cost the and jurisdictions, pressures, program, continued core the the mortgages services a services as for offset Switzerland, competitive continue Butterfield's landscape to Noah, share mix Islands. in the noninterest-bearing rate higher to our remains to the term Credit was the banking cost impact offers interest income Channel products, U.K., a with asset onboarding deposits while Cayman, full an franchises private the environment smaller book return We of Islands XX% everyone and interest of XXXX banking, of also Channel well Bahamas, net noninterest Cayman net including continues the expanding for income in core Credit margin balance OCI system managing approximately The improve implementation of management with year in interest we equity common improved had were include Suisse executed normalization important remain in an where we out banking cost to asset X.XX% now The XXXX number an bank tangible I you, net completed deposits the our of paid income.Butterfield $XXX.X We've and and XX% today. dividends. capital operating points core earnings performance expenses, as assets higher XXX committed which highlights Thank market in pressures and a to market quarterly and and in banking investments interest elevated year, increased associated with with projects, $XXX.X Bermuda, resulted basis to throughout retained strong we and Central the offset of as average million to with the have somewhat Butterfield of and to year post-COVID year. as inflationary bank the well London.I our provide which in am in to position earned sheet actively as

effect of In on we over Suisse. also the fourth and business XXXX, to the shares new quarter. anticipated, a Butterfield. on trust deal.I just X, from over up for end highlights across the came quarter, quality that circle bank have On the $XX the total the a which into come at and XXXX X that I'm of of during the have now happy new value addition, been the back XX.As during details common to have million onboarded approved for very assets repurchased share at colleagues call fourth impressed X.X successfully of will walk turn shares, authorization of through we December of the the Credit acquisition with with million. Craig I talented some will December million completed repurchase to Board

Craig Bridgewater

quarter as margin of fourth income income net Thank We tangible I a $XX.X common financial fourth $X.XX the on from in with the turn the quarter now on of from costs continued $XX.X rising XXX interest you, with quarter.Deposit of modest core all higher prior highlights for X.XX% return Michael, reported as fourth The shift deposits net of The of has sequentially cash fourth increase reported term the rates quarterly our dividend in net was strong deposits rolled will average million in everyone. $X.XX to banking with core the morning, Board deposits. a across X.Butterfield mix pace XXXX quarter jurisdictions XXX and a demand well the and as points basis points deposits core per of million. term the share. to per of earnings again basis X quarter, share of from at to a of equity basis XXXX. of approved XX.X% cost quarter good fixed into prior results decrease points Page a deposits to in

continued of to share.Turning $XX.XX shares We with average buybacks repurchase price at the Slide quarter an also X.X per to shares during million totaling X.

fourth prior the interest and The interest-earning improved $XX.X interest net margin. the for volume the X.X% million, yield a from quarter of we short points increases in assets and decrease continue at curve in X.XX% assets yield In be lower, of decrease asset in improved was runoff points to treasury net levels. investment versus the the end income.The resulted were interest-earning on before billion reported of lower net the sequentially quarter. $XX.X prior a investment of interest by as a XXXX fourth the income and quarter, basis offset portfolio quarter, interest-earning by Here, we provide X.XX%, versus costs, of yield the basis summary a increased income assets third XX loans on higher XX and provision net at invested of to losses interest yields.Average income was interest decrease were in in higher portfolio the in the produced deposit partially from quarter which the driven X.X% prior during quarter. on X.XX% The assets rates which of average X.XX% yield deposit than quarter X.XX% credit

cloud-based expenses were strong million This in have yield rate to of decreased also Slide expenses stable and from were we short-term a Michael and $XXX.X quarter. to of prior core from the X $X.XX we Credit IT taken securities to well and incentive In transaction paydowns addition, as in the investments invested review In X.XX%. IT income, seasonal fees $XX.X of the associated quarter, billion maintenance in the out Schrum announced $XX Trust treasury source restructure return acquired million are the the noninterest activities capital-efficient onboarded fourth the maturities $XX clients turn $XX uplift on Total quarter or expect million banking X.X% upgrades due property paydowns noninterest remuneration X.X% U.S. well quarterly prior core liquidity of over The expect revenues amortization also a expected which in system sheet. to maturities, expenses. income summary of Noninterest the client loan QX.I to earned mix and and of Suisse basis the expected group-wide increased branch recent to by revenue the core compared versus XXXX. a quarter call be foreign income from new timing $XX a balance continues the some during portfolio with for of clients proceeds the to as points fee to quarterly to a infrastructure core trust incorporates million we the coming rate book $XX.X volumes investment provides stabilize from noninterest run prior investment colleagues, and range.On Average mainly and with and volumes. were higher to the million to the higher the expenses cost agency increase group investing the services, to as of increases in million, of run attributable will year. increased XX.X%. XX.X% noninterest accruals compared totaled levels now X, which primarily the upgrades million, benefit as of while balances proceeds half balances exchange our recently earnings.We a the core consideration servicing card in to and into noninterest to in in around as revenues by due medium-term XX up in the performance-based of the and quarters, incentive completion well ladder U.S. expenses recommenced of using expected as MBS the ratio across present income banking assets.Since treasuries.Slide to second excess as the the year-end,

Michael Schrum

increased billion capital for density Butterfield's deposits XX% Craig.Slide Client our deposit our XX.X% slightly deposit banking regulatory detail bank year, Period-end the of prior market.Turning of demand composition to from we XX, We for risk-weighted which Butterfield's stable. XX% of residential levels represents group noninterest-bearing further out XX the additional $XX.X mortgage total on with balances breaks remain well deposits, managed. segment. funds liquid Page type, provide our portfolio, to representing stabilization business to risk location, loans the billion reflects to the the on you, shows cost now deposit continues Slide with remained loan by end, as the with of and base. assets.On the type. activity $XX.X diversified of remain total each to balance left generally Compared this balance loan measures provide volumes XX. across sheet Thank conservatively remains against prior reflect which in The jurisdictions residential efficiency at chart deposit portfolios deposits. lower has Butterfield's seeking by low segment top quarter by and loan sheet balance rate expected, deposit and annual the the that

of of product X- bottom peers. and Slide now maintains due or X the Butterfield's to liquidity as fixed rate has the markets of degree XX. a the the nature as demonstrate a right, Butterfield rising with a window. The in of result represent Fed rate central versus not and conservative to clients.Turning popular total rate to loans balance nature having the to sheet access of a On our X-year high environment bank charts fixed XX% been loans

have conservative ratio We investment continue the deposits and at to in banks. we and of portfolio, with cash with Slide asset repo holdings significant strong Butterfield's addition equivalents, securities cash and show standards.On lending that credit risk XX% to have remains lines analysis. loans continues which low quality in cash interbank loan-to-deposit liquidity sovereign Butterfield XX, U.S. and of in correspondent loan the sheet basis short-dated with to a summary book interest nonaccrual is of balance AA-rated sensitivity average rate at the comprised with Slide we low Credit points.On of XX, government-guaranteed agency X.X% also X a gross securities XX% present continues loans securities. charge-off to quality strong standing be rate and with

was conservatively the investment losses Asset in the $XXX.X in capital sensitivity the regulatory XX the cash regulatory quarter increase million due or leverage end million an to be minimum AFS did higher levels. a Unrealized of the equivalents. and improvement levels levels of in fourth and at to summarizes cash quarter.Slide continue portfolio Butterfield's and capital fourth included from lower $XX.X quarter, prior OCI portfolio of requirements. duration XX% above

a and is to to the also capital has TCE Collins. not of While our quarter now indicative X.X% the back overall ratio, Michael increased target levels.I our health will this of call our X% range TA regulatory above turn to of

Michael Collins

remarks, Thank you, highlights the provided help frame Michael.Before our would XX of deal. trust completed from to to acquisition. the conclude a like I Slide our information asset prepared Suisse we recently have of On provide Credit presentation, we summary

an us structured us page, than only an growth select clients been significant top consistent purchase, XXXX, will consuming, given at September a each in there flexibility has resulted client our line you see Butterfield's the entity review the deal continue after book closings. been increases where significance, market. deal Singapore, in that trust to as initial distinct was As of tolerance. expect to of are private risk high-quality business. have the This take the purchase presence help X Of the has but the we asset to our in in process from rather announcement has the which time The and time with of

XX to onboarded.New approximately We clients the more have totaled under new than billion. help assets administration we have during Butterfield pleased $XX to XXX are trust new colleagues service now

to $X from annual with $X total We the million. million new around expect annual of business expenses fees new approximately

efforts asset from of of sheet and year allowed and to to business trust search expect for I continue our banking X/X help we This market strong client ratio, resilience fee liquidity jurisdictions, banking profitable turmoil growth.The degree book grow $XX.X new last high a us to to high our expenses. opportunities this balance Butterfield's investment with regional strength In XX% M&A around look positioning, base and a over and deal consisting development other intangible conservative model. relationship to total, across recognized demonstrate time. management a total benefit space liquidity of also the continuing our in to a banking demonstrate robust continue million, forward sectors We continues portfolio, the model currencies. and in diversified and limited the income a of of onboarding to loan-to-deposit and deposit our ratio, credit risk and

to focus positioned XXXX, successes are to be that, will your we with future questions. you. create the a of driven XXXX value.Thank Operator? by for And client M&A. to We expect organic both growth be well potential take and and would strong experience and we In on happy continuing the build on shareholder with

Operator

with Our Instructions] Perito Michael comes [Operator KBW. first question from

Andrew Stimpson

fee be QX? on This side? income is would a good Were just start the XXXX seasonality filling run what Andrew, point noninterest side. on rate Mike's I associate there wanted in. launch to any fees in wise in -- the for and Or

Craig Bridgewater

Yes. Craig. It's

-- in card and kind of seasonally volumes. of income kind driven QX, So have by we high do fee season

the companies as we payments is the some acquired obviously, Credit get in big with the obviously, included. well credit well. increased be assets from coming from That from incentive at a as shopping we revenue then will season And year-end, as card So Suisse. had driver Christmas

going of kind in quarterly remarks, new normalizing go about drove $XX increases you to think on at clients. That look I kind to basis. mentioned those that, of So formal the revenue million as also well.If down in a we're

the had mark. we income normalize just to that in $XX QX -- back around expect we've would into QX, so million got additional million So of $X of but about kind we that

Andrew Stimpson

to XXXX? expect the half the rate NIM in the And just to back get margin. Great. if we cuts of How would moving react you then

Craig Bridgewater

have I trough still that think think we we will a NIM in QX.

interest have impact yields. coming of our going down, expect a I if net come rates reduce we interest overall guess, look on will that's -- kind if have income you loan We overall reasons. few would to Obviously, at to income, net to for

was and prime at U.S. -- you yields if rate and beta on look one you of Jersey. treasury and U.K. I'll Cayman in point we I to tell in in Cayman guess, with kind for still starting, a down, -- So XX cut. expect a Guernsey. basis follow particularly U.K. loan the move, likely Bermuda, would In Guernsey way with every XX% the There other

Michael Schrum

Yes, sorry, and Michael it's Schrum.

that. Just of shift adding this of to an which of gives sort of a the XXX. impact indication On Slide sort we of XX, asset parallel have sensitivity, you

modest impact net on income, interest for down fairly minus So a XXX. X.X% really overall

kind rates products at the I in closely, we significant something deposit of kind improvement probably of on So we've term said side, as pretty on of it's now. well think clearly have watching the rates as of cost seen as we're But flip and the deposits. particularly stabilized. OCI right mark a peak

we we pretty now. where about feel So good are right

modestly asset are market We there's a volatility lot still sensitive. But rates. obviously, in of

Andrew Stimpson

the lastly Appreciate there. color for And Great. me. just

On And announcement QX, incrementally all whatnot. should color we and also then the new pipelines in the near the term? I buybacks M&A expect capital side, buyback appreciate on

Just looking looking for bit again color the kind more CS be a like it trust for the of that there. of be little you close would Would deal? following a deal

Michael Schrum

to -- quite we fourth the as market quarter, is very a kind of buybacks. you'll here. of mean, we conditions, of but supportive way to amount significant shareholder the in augment the Obviously, I Yes. buyback return a did see Board always overall the subject

for dynamics rates were ensure opportunities, least was felt say, better one pipeline we businesses fee-based such just terms Credit still and some dynamics.In little that the lower I deposit at were in understanding set stabilization we I trust in we completed think stabilization looking the volatility deposit initially, the terms It's essentially that what is a that we the market and of to primarily as cost NIM bit for would of the private opportunity post-COVID obviously that Suisse. we with us. were or looking of we're looking. of rate, kind other

have to profile the I to pretty that good a have order our would want we tolerance a sure risk acquired template make think that of do in we newly assets. existing of we how that matches

pretty a is still to burn Suisse out seem back. there into down the in some seems coming and of OCI laddering have line we OCI the scale, and is Although to capital. we're others Credit rates. stabilizing bottom are higher deal the lot be happening of was there.But The small remaining

levels where And just dynamic now range of that both kind TCE terms in business above -- X%, shareholders, of successful of been are continue in is our capital, has then X.X%. range of TCE right with have capital, regulatory So capital plenty that and of and excess and we'll of that normalized -- we buybacks. the share ROE terms reflecting we've to risk-light that back regulatory dividends

Andrew Stimpson

Great. Appreciate color. the all

Operator

James. question next David The Raymond Feaster from comes with

David Feaster

lag side us then help of it. on right? most these just up -- following the us just you And that. assets just side. repricing probably timing gut you cut severe of you about of some the the of lag. think impacts as is or rate well and got on remind My Because -- to the Maybe liabilities help because offset the know first the know X again curious that cut I a would some Could of the say probably reprice impacts. I how it,

go and managing longer And just thoughts some overall So sensitivity, appetite to then deploy maybe that. that rate just excess of liquidity? about think there's whether us on any help

Craig Bridgewater

Yes.

from looking So of to different we're Obviously, not market. kind kind we're -- unpack bit of quite there. a the at

the obviously, moves book we that. are taking employ expect Jersey kind from U.S. rate. position beta there kind XX% on mentioned that looking and and of at out So of the the base rates -- necessarily Guernsey loan employ not forward in to and book. the and book Cayman with of prime market moves And Bermuda the U.K. going with are U.S. any Kind as to earlier, we're different that's rates

the On side. back the the the on -- actually to portfolio. loan side.On guess, we that's I into starting asset So are the kind of investments, -- on re-ladder

portfolio. we're of of yields to back portfolio, back kind investing And been ladder into an treasury we've maturities cash supporting now, on the to increase some excess to starting assets. the in up again. now the short get the obviously, and We're duration portfolio going investment the into more ends So into

So X%. at we're yielding like

Now XXX, what more XXX. so [ now XXXs we're of is investing of in ], kind

side.And quite matured GBP just -- take obviously, quite expect we should I we to bit -- see U.K. at have of significant back just January. the had ladder a kind increasing of but we million XXX to mean, in, we expect some on yield going it's that So asset to end actually gilts do a the

well, we So rates, around U.S. during current kind of pick we more treasuries also -- reinvesting the kind have some August to expected that And have up. year we at that's of time maturing frame. as

pickup some deposits. should deposit term side.On to breakdown guess -- I X expecting the the to average months. maturity going on manage on deposits to on in we're the deposits, now, continue I around Right moment look of say, the obviously, So and is the the side, asset deposits cost see you at

just to kind duration. So the at repricing those look really, on of to of have that going

So reinvested that's get probably time. mature on -- those X as they'll And well. probably duration months' X-month we'll in

rates kind follow of reinvestment. market of So actually the time that will kind at of

Michael Schrum

Michael sorry, it's -- Yes. And Schrum. just

resi We the Obviously, beta immediately. and first on Just of on breakdown that -- XX% side. all, resi there Page it is on now product U.K. would floating XX Well, of beta on David. rate the loan any fixed. the U.S., the yes, you'll float XX. timing, Bermuda XX% It's side, note loan see --

and U.K. now has to in Bank Islands think rates implementing a immediate following England. XX-day a it's and I lag a has the allow customers but on Cayman rate lag to change Channel of book, Bermuda XX-day in adequate for notice new

David Feaster

Or deposit is deposit a the is there Okay. that repricing And the immediate? -- on lag side?

Michael Schrum

we X The just term the noninterest and on months. rollover. average yes, of On obviously, the noninterest-bearing, lot is of so -- demand be wait a book would demand obviously. on interest-bearing around the bearing, immediate obviously, for although we're term, on paying term But not

the So of be off lag a little a there will coming bit top.

David Feaster

deepen then And do just Suisse. from Perfect. Okay. Credit growing maybe where I'm see to it book in, Or curious the clients? seeing there relationships cross-sell footprint opportunity? just acquired that increased and the expand in that more are additions, comments market. digging the or organic given those Michael, you maybe for opportunity you some client -- your on you Is have just just of

curious think book. that about how Just you growing

Michael Schrum

Yes.

So great question.

I in So book the the there pretty but it's the -- standstill of reason is we mean, -- why a in small terms and agreement a fees charging. and overall, that the are existing book

So that we're to But inflation we going for go we're standstill years -- but going do in through is is reviewing then adjustments that. can X meantime. that obviously on there and the -- book that and some

think of in nonfinancial expand assets, do trust we business. client there rapidly the the for the we've space But book to with customers opportunities particular, private our I like definitely in use that most is quite properties the or maturing, parts there's where assets. in market other Singapore, tend to growing and seen in companies product trust financial of

getting company the seeing sort of of of pretty in terms name now sort inbound Singapore, and recognize a just trust in more private And the so acquired. lot I should people market think in then as fee in growth. we're the a market And clients on there's the that we've the growth not but There's that drive because we've book income.So higher that finally, sizable well. acquired, RFPs with book we're

when excited pretty the those growth the think small, market elements it's look X to about of is the have book, the but better known which name. at there's that there we're and growth you now, presence we So pretty which kind becoming a I

Michael Collins

period higher of these asset and a real generally, complexity more sort it businesses standstill trust and much also these and in as the trusts And when management originally encouraging actually the is assets the a we takes of by and time. justifies art said, fee do clients that for expand Michael acquisitions, wrappers were a of Yes. opportunity estate, And then have we and agreement to put in real type are really on fees. most for of

Kong we said, domicile help. this will I lot places and been, point. could Hong Singapore have we're of Singapore gradually, versus a at other Singapore mean, X as a So that of Michael And choice top the some -- as sense, in or makes

David Feaster

Okay. And on asset one held It's last then maybe me, quality. really for touching just steady.

clients. done some You do the a locking health What I'm clients you hearing just job you great -- for But obviously of guys point? have are how you feel at curious your as in rates just how as any like from is this watching book, And them? point? by either the seeing you at or are this dig you're maybe that any closely approaching geography more you're what weakness, there asset spots and seeing into or curious you're overall quality your

Michael Schrum

Yes.

mean, So great David. question, I

so The well mostly resi, first thing is, secured. obviously,

have We lending standards our of in conservative and most amortizing loans are Bermuda and Cayman.

-- really as down to has sub-XX%. of LTV has sort amortized profile the So been

but of anything lots the period concern financial are are collateral The book, difficulty due customers from pretty of help definitely hopeful again, we've pockets better people's the seeing really see probably kind on. and not just and that a particularly that lot, whole watching, into summer we in tourism cash that not a game, a as we're perspective, customers of would some sort of seeing puts opportunities again, the And more -- I high. real this it's outside But resi something we're significant eye seen And in an international so Obviously, U.K. and well spot adopted well. skin business can cured. -- be that during say. a Bermuda sector Bermuda of goes book, resi, where lots of to the we in growth.And a to So rates then past we've disclosures most that of collateralized. London keep in Bermuda where

an we're U.K. LTV -- some There's prime you have the lending only election standards. in Central We London, coming XX%, XX% as up know,

government are changes impact if non-dom labor obviously market has And a again, big getting inheritance about there coming overall. of that changing with So rid they've tax in, not rules. been talking but concern, a rule a potentially res rules and

well. watching staying we're and pretty with as our that touch there something in So closely customers

Michael Collins

-- out sort But the we've intentionally said I Jersey the of be that think over and we relatively mass flat, I portfolio of GBP And London are bank and continues mortgages that there. building the retail we're to and Guernsey we've Yes. in case. past terms in affluent million in kept XXX our

the there. So we're it hit on Michael head. expanding

We really Bermuda, in well doing point. at on terms although really and to an And is have population. in eye growth economy nothing Cayman keep the of this

there. unlikely very stresses see So we'd

So good. far, so so

David Feaster

And Any doing is well. pretty that? the on housing market thoughts

Michael Collins

in fact it's the Bermuda, No, last years, by miles. obviously risen have it's driven the Prices only doing XX Yes. well. really it's square few and

limited So there's international well, the island. still supply set and reinsurance on the that quite doing business and up have a businesses life particularly is

a population still is got lot there's Cayman's of So more over a but XX,XXX now. demand. lot land,

they've demand's And stable been increased so well. So as population, have markets always rising. and Jersey pretty to Guernsey expanded

of baseline So sort limited Islands, supply, given always terms have a in of values.

David Feaster

helpful. That's Perfect.

Operator

with Alex comes The from question next Sandler. Piper Twerdahl

Alexander Roberts Twerdahl

back for trying that is A guess, one to versus expectations -- to what or terms geographies? Is skewed England skewed at on really, the I fixed Bank of towards get not Just of the I'm and pieces. of margin. loans. fixed in versus cuts the for floating Like rate versus whether floating question towards any the Fed

Craig Bridgewater

on a quite quite bit in it's in saw of so we Bermuda. and cycle, bit in think quite I fixing a fixing Channel Yes, early of the Islands -- kind of a the bit then

of quite -- So fixed loans few in Bermuda. a lot a of the commercial the

of XX% that of kind and and from kind Channel the a U.K. large that's component Bermuda of Islands So

Michael Schrum

X years. X to again, And

the in months that's looking XX of There terms at repricings those than sort isn't to months are So fix. -- from -- quarter where repricing at others, of we a probably ladder. and about heavier we're of probably moment the XX away obviously out XX particular

Alexander Roberts Twerdahl

I deposit maybe side. come down. question a Channel bit a come little different Okay. lot a that sort terms I a up Bank asked the little correctly, room Islands And of guess, expectation a we for But Fed down there's of way would cut, we of if the the deposit get deposit cut, on much then, same get be the maybe to costs bit. more if costs England were If beta on remember higher deposits in

Michael Schrum

Channel -- before, talked we it's as mean, very I is Islands, about Yes. competitive.

that of setter rate so And we're not market. in kind a

of what leading. we are doing, kind the market to high there follow the of have market is street So banks kind of some

RBS, HSBC, et cetera. So

in would already market. cost we've deposit expect area on both cut of any the follow our been other dollars really Channel And way in focus but the and where banks have right in the than to we terms betas of in term one the to actually of much longer-term being sterling that we seen expect markets, rates higher the bucket. market definitely have down of -- So on deposits we some that's that bigger would to Islands and the the

Alexander Roberts Twerdahl

of Okay. some that gave little noise What the should And On of fully the recent that quarters cost expectations expenses, about Craig, X XXXX? presume you et for you first fully cetera, quarter. be restructuring a bit of and of I is these little last color going in online? as the think all of mean, I there we half in the come a more saves from systems, 'XX. for second IT there to for terms expenses bit incorporating announced is expenses

Craig Bridgewater

about that's Yes, right. Yes.

balance intangible then amortization the then sheet and -- kind of onboard, I and guess, think cost at with kind of But the hosting So -- kind to of base come of given costs the systems to, going QX fees. restructure associated higher QX. acquisition IT will we've will coming and be the meantime, new on guidance the that there by kind of the implemented employees and that a end that of back the asset obviously, compared be on now of fully amortization in I of end those there's adding that accrued

Alexander Roberts Twerdahl

for then back credit. on question And me, final just Okay.

Maybe cited that think provision a can the higher credit little bit you press related to you're card. higher what I release drove what seeing there and a about talk provision.

Craig Bridgewater

-- legacy a loan. mean think that driven I art by so some on have, of I an provisioning legal the really was fees Yes. loan fees kind we

the on process of loan, allowance go along. incurring fees So the so for that kind as collection to we it's and through going that art and accruing kind or adding of the

[ it, -- lot also as facilities loan of of part then and that settlements a So ] well. there's some some of

it. [indiscernible] [indiscernible] charged driving been has So off

Alexander Roberts Twerdahl

$X a so things, million fair those I in below I that would to be XXXX? it quarter mean, without drop guess provisioning Okay. down should assume starting

Michael Schrum

experience Yes, it's tough on as -- depend I well. mean, it does actual

longer, difficulties the things input client more probably becomes to performance, freight push equal, just that experiences be that then and out at are be If is watching. more experience. the drive model an client level. all spots about the would to seems But actual to potentially we're to going stable. that that for actual or inputs But think macroeconomic which have model. I being stable before, some obviously, that right given of that resolve provisioning then going the going obviously, to, to talked stay subject And into is we're other the again, we what a high still couple

out at holding is of other the So sales the anything of that's moment, in coming terms value. end properties

that thinking it's or not sell that, provisions. going anything like higher we're cost to So sort of drive to

to So down to be it's going really actual experience.

Operator

Fargo. next Braziler Wells from Instructions] question [Operator Timur comes Our with

Timur Braziler

bonds, On book the I'm like million back into a there? the something mistaken, cash duration laddering putting think if not right I still was that Is And what's bond the flow. it you're $XXX number? quarter on

Craig Bridgewater

Yes.

of investments currently, securities. the MBS last So of kind our with kind

X MBS kind of -- on is at kind the is So of -- moment. about the the it years securities

the million the currently. kind we've treasuries. the gilts, behavioral other so U.S. made, on GBP recent So we investment treasuries, then And XXX U.S. of the the X is then And investments duration. is making in been two-year months most

Timur Braziler

amount the cash quarterly? of flowing just And Okay.

Craig Bridgewater

Say again, sorry?

Timur Braziler

The the amount cash quarterly? the book of of flowing bond off

Craig Bridgewater

$XX about It's million.

Timur Braziler

quarter. a million $XX

Okay.

Craig Bridgewater

a a month. month, $XX million million sorry. $XX

Timur Braziler

million. $XX

got Okay, it.

Michael Schrum

some the would still we're not And short, rate again, say about mark-to-market discussion Michael important I going sorry, would Obviously, the so shop. when we're quite Schrum. is to particular, and here. I sort -- terminal a still what it's say, -- is us. Fed to cut, medium of there's Tim, in staying is,

of to behavioralized balance the so keep deposits just term staying we're sort in, the laddering years -- we kind mix -- some think MBS duration got rate we're to XX but of sort of treasuries. at moment, So the the interest the shorter-dated of of matching with and I in some on medium kind a of risk profile. But obviously

Timur Braziler

off deposits of we cost to circling rolling this you deposit it. back in David's next repricing, term generally apologize should I are question. deposits, assuming creep? and if addressed activity, just But thinking from where Fed additional be speaking, how repricing quarters, couple then about are during guess, Where no And they levels? Got those? what just term you the And I

Craig Bridgewater

were the deposits as a there's renewed at Obviously, necessary. kind kind of level. kind bespoke range. basically in X% guess I term So similar on of kind And of being -- of a pricing this

on average, months that's, specific good kind would kind And but term X but -- pricing the kind say, moment. may a of the So on that X% guide book again, that take above bespoke the term audits, of on the at a it's around maturity kind deposits. deposit I of of average that's us

Timur Braziler

it. Got

And broadly Okay. then on more maybe just deposits.

a at have floor. I past, least going seem to to to you They billion an billion to the more is think here, in as to a be stabilized strategy $XX $XX.X near-term quarters less or nature? and seasonal talked really the deposit seeing there real the in term in book? are we stability of floor that's deposits. renew anything maybe idiosyncratic in here signs at some of Or you're Is XQ

Michael Schrum

-- it's Tim, I Michael Schrum. Yes. sorry, mean

we the insurance lot a clients have talked of captive our before, There stability claims I book. deposit think premium seeing clients, are flows and is some in about they we've flows. the and seasonality, as are

quarter So seasonality post inflows that claims have the prevalent. that's also typically, we those insurance companies -- pre-quarter also see then settle. and settlements see claims And premium to is ends, extent that to ends, we

we see in we're the $X.X billion-ish some in renewal from building in first outflows see then outflows. up right? some we third inflows then the And funds quarter, that in -- we And so fourth would dates, fourth cash typically, -- quarter, and building there. -- Cayman, the we Bermuda JanX, typically some typically hedge funds quarter, be and up X. talking So in So And July then quarter, we see positions. see

a there's little seasonality. of bit So

franchises We think are the do. obviously size of it core cost deposit sheet always the versus in billion $XX.X we to billion stable. right, It over is the of as I came a was of I the And see off good the balance nice trading to of deposits at $XX number. a top time, the think, really range. question, is

Michael Collins

being banks little behave. out washed think we've there's Bermuda was that Channel was banks. Cayman a And of in Islands, interesting we the deposits then really flat how here. as know more invested. corporate during Yes. And up was whole We competitive. actually fund it see year few the was to the bought very bit to because sort money obviously we

more much competitive. So

we've deposits in kind got plan we're to of as said, opposed GBP we've Michael mortgages. follower got million XXX there setter, well As over retail. to but price million a in go good and a $XXX into And

So actually little at But and act competition. point. attractive more be much forward. bit they we retail have going all to this will obviously, a pricing book disproportionately retail the a And differently

this most and in washed right it's now. whether trust or been, does at understand point. Cayman, But it a pretty well we the out, funds stable of we huge feel that's it So think has been money most hot of deposits pretty

Timur Braziler

color. the Appreciate

Operator

back question-and-answer closing Noah to to would conference Thank like I any turn over you. now remarks. session. This concludes the our for

Noah Fields

to next day. and today. look everyone Thank We speaking for great dialing Have you, quarter. with again a to thanks in forward you

Operator

The concluded. conference you has attending Thank now today's presentation. for

now You may disconnect.

The Bank of N.T. Butterfield & Son Limited (NTB) 13 Feb 242023 Q4 Earnings call transcript