The Bank of N.T. Butterfield & Son Limited (NTB) 11 Feb 212020 Q4 Earnings call transcript

Good morning. My name is Andrew and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Year-End 2020 Earnings Call for The Bank of N.T. Butterfield & Son Limited. All participants will be in listen-only mode. presentation, be today’s ask opportunity After questions. Instructions] there an will to [Operator note, being event Instructions] this [Operator Please is recorded. Investor I would Noah of to conference the Relations. now like Fields, to Butterfield's turn over Head

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

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

we along question-and-answer issued we remarks, open call section session. will during our Yesterday call, on our a quarter we The afternoon, slide at our press Following year-end their prepared Relations this to of website that are fourth a up the be announcing with release results. for on referring available presentation www.butterfieldgroup.com. Investor remarks will and press a release, the

the performance. turn refer discussions today's would believe are evaluating to everyone, Michael important measures, we over will remind to call which Collins, in like company's I I that to non-GAAP certain Before the

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

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

at fourth CFO, will observations a everyone the will our then today. provide and to thanks with call detailed quarter review I call bank’s to the an the COVID-XX. Noah, back to financials. in on on experience and the full over discussion our some of XXXX then year update I Thank turn you, Schrum, provide look Michael begin the provide a and joining

equates as model. four, very performance produced slide and $X.XX I business Turning a interest core Butterfield's or return now whole a $XXX of points income net the of net rate X.XX%, or the cost tangible for year we core proud million, In zero am share, to of basis average on XX.X%. which the income $XXX with XXXX, equity a an common per year. share, NIM $X.XX XX and to near of per deposits million, finished of for of the at of resilience average environment,

million the with and a We per $X.X most cash program repurchase quarterly a during $X.XX continued the activity with and share share second completed dividend quarters. third

improved our also model, this managing continued credit to capital perform debt The period jurisdictions tested uncertainty. X.XX% We maximizing business all which and proved and the million $XXX on Butterfield's successful well. offering returns, subordinated while focuses profile pandemic of us in global risk, June. across during closely qualifying operational with bank

technology conditions Our us to and safe environments, required. office allowed decisively our between for working remote the services by maintain clients, and uninterrupted and as moving collaborative culture

of out a XX% low historically conservative securities. with investment of rates XX% an improving relatively agency loan-to-deposit just Our XXXX and interest XX% residential government of also in and consists focus The no consisting LTVs, lending, market profile mortgages, of U.S. credit a efficiency. on brought federal low ratio portfolio renewed

as year. the to UK products bank-wide time. deposits Islands portion business centers over to complete to a a The complement mortgages were represent for to sterling us, retail and continue activate very wherever As moving acquisition potential lower service lower-cost We positions through program and both of implemented Islands ABN we growth are launching opportunity organic acquisitions. of XXXX, our a possible. Channel In restructuring well our we result, lending a to this to AMRO non-client-facing headcount, integration as Channel pleased

and to this business five and four develop underwriting could Cayman. over the years. be book in to plan $XXX We in next organically million, to portfolios our it to expect the Bermuda and character, to We anticipate standards loan grow similar around

I XXXX, which and during management and and and the potential. the I fresh operations, right in would additions place have executive to recognize we proud human perspectives to in reach and the management in team, its experience like trust, our to people Finally, roles from grow believe Butterfield communications, now risk team compliance am benefits confident and deep to our resources.

the and have bank active to through now an context slide Islands, some activity. domestic here overview to Bermuda how X, and our have continues Channel we Cayman economic the Turning and provided the of pandemic. manage markets, to core continue

norms. However, And the historical much of below government-sponsored well. jurisdictions is vaccination industry rollout The well is progressing tourism operating all programs. have vaccine travel active and

numbers to expect We continue seasons, tourism XXXX. that in through visitor as fall we move and the will improve, summer

to restore we As to ability to we borrowers', programs, program At am book. customer delinquency better discussed exceeded to Bermuda last had and quarter, work mortgage following payments. the best continue the calling the status implemented in the residential we say, customers this the And way pleased that from indications understand a rates of actual are the assistance payment I less to loan short-term have determine total than seeing forward. point, program. X%, closely of with

to Bermuda these monitoring results, close by maintain the pandemic While And mortgage the Cayman. we continues and that of customers. we'll books, we impact are initial recognize encouraged in

the Schrum, not issues. continues to of detailed significantly lending, by a commercial quarter. Direct lending over solid review well and hotel been provide Michael remains COVID-XX call turn fourth and underwritten restaurant the and I impacted loans. to performing be has limited, now related to Our book will

average XX quarter. of $X.XX common net equity points. for on the XXXX cost net interest tangible highlights improved XX%. X.XX% the slide core or and quarter. I'll And Michael. the of you, to with million core fourth $XX.X which income begin share, year, from provides the was Thank ended We return net for X, per average income The deposits some million, profitable $XX.X most quarter on margin the basis of of with

book Turning continued of moderated yields compared to quarter, be fourth in to interest than slide third are Prepayment the slightly portfolio the net lower to market in particularly securities quarter. by investment X, lower speeds the reinvestment rates, income our impacted maturities. and

million to However, points with fourth the they prior in prior $XXX were $XXX million in basis paydowns, were compared quarter. the still compared to the XX of elevated quarter. Investment yields down quarter,

fourth New X.X X.XX% money than the points basis or yields in quarter. prior the averaged higher quarter

can to blended the the for originations from prior quarter, new that income non-interest from originations X.X%, asset was in quarter, $XXX X.XX% million million and capital-efficient you lines. to fourth slide prior On and down loan the of management, During for continues due quarter. $XXX loans represent of stable economic improving for and across rate bank's contribution our up the FX, X.XX% compared jurisdictions earnings. The to see fees X, business was banking, trust activity increases across

XX% reduced to quarter, fourth of achieved experience fourth run total Expenses XX, the provides in a program prior the fell, improved non-interest were quarter, the fees X.X% core in For restructuring as of quarter, rate. Slide the of benefits which the expected the third summary we which to the quarter. cost compared revenue. by expense started

improved, increased with taxes In which addition, that and economic along indirect improving higher marketing technology activity. costs spend, offset was lower by partially

expect summarizes position to of part during to that XX be excellent to this of remain leverage and requirements. ratios capital an regulatory target cost the through in income and ultra-low cycle. We well in in capital continue capital ratio continues cycle a regulatory Slide mid-XXs the rate of we levels excess XX% with

management book bank. our value that have driver tangible pleased the an over remains increased X.X% the per year. to been Capital note calendar We value has also for important share past

We at per protecting sustainable quarterly continue share. with emphasis an to the capital manage dividend common cash rate $X.XX on

part to growth period. also markets maintain of Directors Board the as for program levels to capital million in as the support addition authorized for market repurchase well new XX-month growth opportunities. to core to Share the we planned EPS continues two a share of conditions up repurchases coming shares organic and has In M&A subject our be

liquid government-guaranteed the Turning credit the limited Deposit quarter quarter $XX.X that the quarter. slide previously increase NCL The for CECL XX% assets from of end at the overall expect the has provision assets. total ballooned low. sheet. crystallized and asset X.X% be charge-off gross the XX.X% balances comprised $XX.X and show we to quality agency slide ratio the last was represented were assets next loans. loans XX% the in recorded at will to billion loan bank just standard under total investment and ticked exceptionally end low-risk now down model of AAA-rated to $XX.X from accounting resulted XX, down the total fourth continues with due of with billion prior of of of of in end were overall. the is our portfolio or securities. risk-weighted Butterfield's bank the remains very assets some fourth net density sale the whereas secondary versus At commercial do higher million of slightly loss the one over ratio highly and We balance On of The portfolio deposit well-managed XX% loan the The of few about that to has quarter. the market only quality U.S. strong Non-accrual high liquid implementation its XX, manage normalize credit quarter a a at the that temporary over CECL previous maintained XX.X% quarters. of assets Butterfield improved at remains that risk of to conservative will balances

portfolio Butterfield cash has XX sensitivity gain weighted to with call both protection interest we X.X The continues to down securities summary Collins. model was years For the past rates. securities million performance quarters On continues life December, the up a increase offer sheet income balance discuss the I some forecast in Similar and been Butterfield, near interest against impact slide back interest medium average of the in now in to turn parallel and low macroeconomic Butterfield's XXXX. expected. potential term to to $XXX.X the expect analysis. Michael responsive average future XX, few unrealized will rate varying net periods at around on a and mark-to-market scenarios. income of to rate invested as

environment to at tangible our a economic to of our I also rate return with faced business communities common in other average express my interest ultra-low Michael. deferrals time and programs core mortgage during of people the an to many were contributions when was and Butterfield's thanks communities and our targeted to contraction. uncertainty. as able throughout your past economic time of markets XXXX in the well-positioned recovery like a equity to It to proud year. XX.X% were local a the you, we when from contribute on and anticipated global XXXX. I I of our confidence great facing charitable Thank during business support clients, support offer actions. we offer security that strength a were performance staff, is and and proud for partners pandemic at in would the were benefit achieve home well-positioned am We Butterfield food all believe

We quartile you. continue top management. take maintain focus And with and offshore be to questions. your business that income Thank the Operator? to to non-interest bank leading happy world's capital and we'd efficiency building limited conscious and emphasis meaningful on risk-adjusted credit trust on risk returns contribution, with and shareholder aim

KBW. session. begin Please question of We question-and-answer [Operator first The will Instructions] Schiavone the from comes go ahead. now Michael

everyone. Hi. morning, Good

Michael. morning, Good

the with this should your deployment we the discuss capital strategy? levels, for and And also bottom aggressiveness think and point can deployment opportunity healthy, capital how of priorities very on any but your the the near just you regulatory if amount So seeing about your your M&A? you're target of TCE

Schrum. Thanks, Michael. Its Yes. Michael

M&A. I'll sort the on side bit can kick BAU Michael So it a of, and talk Collins, just off the, of about

So saw, well obviously tangible as we measure regulatory both as as capital. you

allowed in that made the quite mix fairly last right from builds a that program QX much terms a also capital little rate priorities to at in obviously being cheaper to you're are, as moment, is stack been from debt the we But year. sustainable. protect the we obviously and than obviously the particularly existing which to but issued view getting around at have was procyclicality dividend for slight which very Payout as the we and probably stated reserve is buyback the ratio has So I regulatory us, capital of subordinated with The continue of a us benefited due this efficacy year. year, beginning QX. the earlier midyear, shift bit bit at last executed lower XX% CECL our that of substantial think, rates

look markets that million share at and provide the private shares up or also in repurchase Bermuda the a might the risk-weighted we repurchases Secondly, some and profile then home we Cayman, see opportunities obviously obviously, where need credit fairly next that in look account so risk fee Board other really companies additional also obviously, another for strict. fourthly, has look And X synergies from we assets haven't. can to criteria and any pleased that are markets far experiencing at just program see assets the banking stable so million at migrations to approved shares. we growth where for that's regulatory months we're thirdly, to where for then M&A We in the XX and that's our side multiples. income on at X help reasonable And organic get come issues which trust capital-efficient we accretive we and

will so subject market that obviously to And executed be conditions.

at at deep dilution to obviously If potential share on the peers. P/E a relative to discount we're at moment, you relative still of look conscious fairly sitting but price-to-book we're book repurchases,

we'll the look and So couple years buybacks as obviously, and at when. of that last execute I would say, of

the bottom expenses ex-cash post-retirement Obviously, you higher. in it OCI by saw that sort a down X.X. the from loss the medical it's And cycle. tangible come from driven impact lot range material the a valuation the to, of annual middle On partly having of, was at to

strategy. as So we're the capital part monitoring well that of overall as

last as M&A. nothing that has to priorities have well. just exercise same Michael obviously, let And now we I'll changed firepower year. the really talk So as about

happy year. us to ABN we provided were AMRO And of with things. So finish integration it the last you if three remember,

got, provided growth to share. First market platform harder market a we've Obviously, jurisdiction XX% XX% share it it's sort and with Cayman grow. Bermuda where of, very in a low have so us we

jurisdictions. risk Secondly, parity amongst it our reduced our banking concentration balance And sheet thirdly, it three Bermuda. in created relative

So strategically given that slow Last did year, the pretty a lot conversations were for pandemic. obviously us.

and We are about across vaccines starting to of that people our jurisdiction. have sense a now get about to transactions, think and starting more starting think travel

going the are they're want conversations, always right, thinking about So, cautious whether having to we're about or AML to where is we it very we some or pricing come be. is but the fruition, to

strategy The the same. are we So is conversations. having

we'd existing more our focus overlap particular So the acquisitions. secondly, sort scale Islands. in it's existing stressed like there. as Bermuda a build it to of jurisdictions across our likely acquisitions And overlap companies jurisdictions With be on Singapore, whether or Cayman, Channel

have a conversations, operate. very So we we AML think because and to due diligence to could focused to on we given this conclusion, but cautious, we're always continue year and good be something are we where bring

continue having just we'll those So discretions.

are books the the any to Thank offset XXXX? there second at you your and compression mature expect Great. or Or in that all this as my to And the stabilize for opportunities environment? low to within we then relates continuation continue question margin. the of color. least rate creep Should mature downward slow further

Yes. Great question.

try Obviously, and front backlog. there's unpack starting with little book a assets. just that I'll bit So a loan

balance you loans of As know, all our sheet. amortize we on

So they're recourse full manually underwritten loans.

the yield So front X.XX% look – last of the we recent relatively little originations, though down of see a overall, that slightly opportunity gave time quarter, book But whole Islands. the you be which organically bit the which will stabilizing, a at the on loan little of I to the do out loans, residential in lower But was detail loan and as at loan, kind so whole. around it would side. a take even book again in stable bit at are some Those be there, the through that effectively. a rate. modest activated launch would as cash as some expect come shift our we Channel mix We lending sterling balances most

that should to be helpful NIM. So

on discussions watching on if reasonable that's been then there. of prepayment might floor terms cash, terms future. XXXX. the go obviously the you end they and throughout In fully in to probably pretty at elevated the speeds pretty where in And finally current the X been That's We're much obviously of realized, points. basis pretty XX elevated sterling short of But investments, curve. rates, have at will are there

from approximately of seeing deploying book cash quarter, ABN that, X% excess into forward investment thereof total double obviously, over of And we securities almost the the opposite which the what we're saw years, a flat in So a side AMRO the combination roll very is yield curve. prior on we're book. a then

impact volume, So volume that. you see positive a from

a that sort seems of stabilization XX-year obviously, of expecting I'm a long But to are the normal more the reasonable for as of there's floor curve recently. seen overall, end longer time. sloping some So be and as period yield short we've a curve

we stabilization So are I where around would medium-term expect.

helpful. Thanks questions. taking for Okay. Very my

of question The Piper next comes from Twerdahl ahead. Alex go Sandler. Please

guys. morning, good Hey,

Alex. Good morning,

Hey, Alex.

give So And the we you expect first of and off-balance what hoping bit the move that happen? sort to saw that little guess inflows then off, color more deposit quarter. and I I why large those that around drove time sheet to fourth the was in we for frame a could

Schrum. It's Yeah. Michael

bit I'll little So it. talk a about

into that, in was I the driven mortgages on pretty of deposits, You were quarter. it that people bank and by accounts. the deferrals can payments retail of the combination unusual where base on keeping Really, their that much it would a but obviously see deposit slightly say, end the towards flows retail the in balance here, average put was probably we it putting

fiscal either some could one-off real retirement could stimulus that Again time, flow back that out migrate portfolios. time, some in by of or property is over into it migrate think to mostly withdrawals, there. pension I assets, driven expect of provided that would I allowable again out, a So Cayman over kind to which was

uncertain other again are call money. So a but retail deposits hot the obviously which sort to what of helpful. half And roughly little here, I'd is they related is very

flows there's Bermuda, hedge quite of the the again deposits. not I'm a So premium of funds end which claims and a we're towards management lot in capital quarter quarter. banking of at the in end not -- deposits cycle fourth -- Cayman in those insurance of asset space in typically on follows and sort activity the the But

will quarters. some think the of of that I out next flow over couple

have are deposits necessarily our can't and obviously in over put clients these reasonably lot it's sense it's been to we sheet not our balance on successful. Yes, good not difficult of it. you clients year-end. corporate We'll to But retain retain year-end at said, some we've as RMs But we're talking encouraging a to because a away all them of it. turn but expecting Michael deposits, of difficult

And whatever to is over that flow potentially flat Or to into kind goal different the is out then the of cash keep all just such per to guess quarter? consistently going that and next $XXX of about million, thinking has laddering changed still aiming of then there of just Okay. the strategy just And securities NII amount there is it $XXX deploying million could environment? by this rate in quarters into back as investments at target cash a cash? the I put couple

core really changed Yes. terms I of nothing's balances. mean in the

Obviously, we over onto we about good of handle and to been feel it very think a there. and integrate key So our now ABN deposits relationships. those behavioralized watching what's kind have piece them a one of for the was the on underlying platform the as get systems nature year we've

quarter. that's the continued see you'll So fourth that throughout

of deploying would a we million that also lower rolling that which maturities the the obviously around So investments, that over quarter. and extra get above clip of into the at $XXX sort keep we're rates, from

little quite lot, Obviously, So obviously deposit to increased pleasing we'll see hasn't as what a we the lately. can sticks It's that. the to really base strategy just bit have around higher that see and with been wait do XX-year and changed. a has if

down rates. helps slow rates the to helps prepayment and that So also reinvestment

it when of terms $XXX pretty then in And five XXXX over in of loan how assume And inflated million? Islands a that flow think other million the versus Is it. actually years, know Channel loan around other we sheet? consider it other that strategy of is you'll by fair the about straight-line potential little may around growth potentially a we end categories $XXX to up? based on that be balances overall the balances the the could should ramp I growth off just that stimulus be that pandemic Got items loan balance sort loan or

we've a month had it lot to discussion. Yes. launch of lost now, half we right increase. think taper would or fair whatever, We're but and just a phase that annual so Obviously, really of in and a a the as be probably

exciting we're not as but we're -- really pretty story secondary for moment that at gilts, to particularly growth to whether at look even market excess alternatives sterling it's deploy which haven't loan think se, zero. you We are really some the flat a sterling able per I it's the or

just and it of will Some reception. the reaction on in get depend the we market

There positive. the obviously street the players exactly far good. in. so there going be I there other And to conversations sure are filter pent-up so demand market there. But some -- not we're But to it's well. in far how as are actually high think So banks seems

to turn a -- our balance bit bank more to our and percentage is it's of full-service on want we portfolio, been London sheet loan obviously Central into percentage plan book. obviously Bermuda the it UK, be the of and like a Alex a Cayman little to to the a to we the overall dampen Islands Channel of but sides And also Yes. portfolio loans want great look of as don't XX% both

Michael But get into little as will up it. year slowly this bit. So as said, more it think Channel will help bit quite a ramp actually growing the I in a Islands we

a broker product? a more the market, Or in it is that driven type of the U.K. the that is? Is helpful. book way That's of branch an Okay. originated

Yeah.

societies -- traditional a underwriters buildings property not number So as well of brokers But of it's are there's number a It's market. and there operate broker building, in as market. a -- market. underwriting that It's that a direct buildings.

we quite available. of for mostly looking at So character underwriting there's breadth the product of that do Cayman. and We're, obviously, a Bermuda same types

So be whole underwriting. the it loan will in

Yeah. actually well corporate it like mortgages, jumbo management It's relationships. with interacts a lot And I our more really company guess.

if a we you the well. or companies, lot the executives as start know trust companies relationships once management So then of in have into these fund or turn mortgages, managers companies. all relationships And launching corporate all mortgage personally captive you

questions. Thanks taking Perfect. for my

Alex. Thanks,

of The next Sachs. Will comes question from Goldman Nance Please go ahead.

Hi, guys. Good morning.

Hi, Will.

now? seems Maybe incremental gilts and sterling that rate like decent on at amount just mean, zero. you was of you -- that paying deposits growth -- out reinvestment heard a heard to be something of on to some the the I I the like margin. money impacts think time? follow-up on some over able the that sense kind a or initiatives charging, the just lever It to how just a close you to what about just -- can are us how you margin for, I of, give

the so in higher be the And how And positive? offset largely loans is on -- that portfolio kind your you of in that can minds thoughts declines in is any just to of margin? Or of just security impact the run-off yielding and a going net the do jurisdictions? maybe that legacy think some that can

period. Will. Great -- to it's It's it's half too almost positive year offset a but a Yeah. question, net over small

will stabilizing. get terms a of obviously, in a helpful to, of, be portfolio sort more of basis, we once So that

rates types book the more to front I London. are of prime similar think, Central

in gross talking the you're sterling. So XXX

about activate and market would flat. helpful it Obviously I assets is mean it's cash. So talking the like be super they're for It's current zero and almost secondary rates to rates. to -- sterling now negative XX.

have for paying overall that pricing. dollar more I Guernsey deposits But challenging -- and we secondary I There that considerations so both it's think a it's deposits, not Jersey service market. environment are the in are relationship of clearly in client and sterling some following But, we're sterling and up based say. funds of there would obviously, both a So it's challenging a ABN.

But the underwriting also residential I the definitely that we're think the we're would be lending you on the obviously, this talking we're it's doing standards other I particular side. about if accretive to program will at say. look -- market, pretty but given the volumes organically, players in margin

it's almost too totally small. makes going not to It's going So -- it's if be be to offset but that sense. helpful,

sense. then the maybe And question that No a on the discussions follow-up strategic on earlier. makes Yeah.

just of, take you'd you footprint more like share, take I new how build of being your the pieces Islands today? Cayman the in just place How what it a over are to in make more like Do terms Can market thoughts happen? market bank. to, think like build wanting to to acquire is the the you you vision expand it mentioned you infrastructure on light? have a organically? you jurisdictions need you about mean, that kind Bermuda maybe look the order to entering for that Channel to in full-service what that Can on like be brick-and-mortar can and to time? I'm curious I like there? just are thinking

Yes. Sure.

Islands say years. for we've actually So, in Channel the been I'd

So, new quite Jersey Guernsey, we've for long we've time. a been there for for market a presence decades. is a there but had us,

So is the we know -- very Cayman. very Bermuda a market corporate It well. much like market a and market

structure. Guernsey and funds it's and but Bermuda the So same companies Jersey and of all management is both reinsurance funds company But companies. captives and are hedge management more trust companies; Caymans sort obviously, and more captives, captives

geared that our RMs to are servicing our So business. and systems

three balance it where so balanced across an exposures understand It's done said our we've from sheet, to as well. And not I jurisdictions perspective. to we've we speak the actually is same what with -- the point, So ABN, relatively earnings our evenly. risk we've the to gotten

size, though core Islands XXXX, even XX% all makes simply so and more similar are in of a Channel balance Channel about from that XX%. so income, made that's Cayman, pricing Bermuda the XX% perspective, the And the sense. So much net Islands, because, our sheet, are competitive

organically. to kind need think we're to Channel where the we of be I grow to allow So Islands

much Singapore. particularly is more on try the but on our now scale right focus our side, fee across to jurisdictions, build trust to in So businesses, the

that's not to say lot sale a that Jersey there if again, not a in was were Now, to are of come there, up decent-sized buyers. for bank natural

So Channel a we where now all that so three not of kind dependent together, completely be portfolio platform have that we I and Bermuda. actually grow got can island we're think, jurisdictions can like we've organically grow I on Islands think But the one the would balanced interested.

branches is product-by-product going thing on of would a So a And it's bricks-and-mortar that we concept. of proof slick, basis we're of is it's just aware NatWest, of there online lending in it It to in keep obviously of lots residential do And need add could the competition why driven don't I right? the et right. light, to bit here Lloyds acquiring we're form true want platform. terms cetera. reason, a We merchant filling and retail only Barclays, processing. the Will, is, to the exactly by be The HSBC,

branches isn't the whole the moment. of So, one that's reasons this at opening a of bunch

the for stuff that's Let's start us. accretive most with

normalize environmental have how rate if what's -- the standpoint? like side? kind where could to mark various Got that and kind just forward? to is, housekeeping just jurisdictions, there just do an squeeze kind of there we a helpful. run -- How of us it. the is activity we go I Super going levels market And in right of like, on from And the you fee are income on if note. depressed across is Can much

board, fourth to it from I increase was across the the great domestic Yes. quarter see activity. mostly mean, obviously,

here. aren't So, probably in domestic People I elevated would is, fourth traveling. spending the activity, say They're quarter.

in boost as for shipping So kind of you domestic Amazon boost shopping to an a and get Christmas Christmas. opposed

that's card quarter fourth that the been severely So good. What's is COVID. normally and fees from during we the tourism Airlift in missing get related obviously, been credit capacity particularly Cayman. reduced has

merchant I and was would So muted. credit domestic the we fees, than substitution probably to in banking well. passports. a in that, some run the rate activity side. rate. see the tourism trust been acquiring smaller the borders that's from run probably a bit a run But quarter see side decent on once fees, few but a within open the that the see, was under items say in in recovery rate fees And smaller get fees, It smaller the There's we related card of would a positive in activity-based probably going there you're banking bit to terms is as vaccine fourth you'll

helpful. super Great, my Thanks taking for questions. all

Wells The go Please of next ahead. comes Braziler Fargo. question Timur from

a of Hi, Channel follow-up product looking of at is in product, the wanted in they rationale doing up? line guess these if Channel what by if now? for good right looking M&A to deal the expense come the be I would an do organically of the launch questioning. I at larger larger guess the some it rationale what's there for Islands morning. presence enough good on kind deals Is I Islands, guess story? the I to

attractive been a of So, XX%. both XX%, about first in being and talk pricing foremost, and share jurisdictions. had our have shares about and we market share Jersey market power and still have is share so a Cayman Bermuda What's market Guernsey market small we I small in and both came think,

can't organically Cayman. really we Bermuda or as we can't So well grow as and

after and estimate on side in our even be private we're market corporate the side only share banking and acquisition, trust about would XX%. and Guernsey So the ABN we

and banks So the there's in Channel a than lot Guernsey. Bermuda in more obviously Islands

opportunistic what a that gives would But we find XX%, an platform where about Jersey more is last Guernsey but So acquisition. our grow XX% market interesting X%. is share at we about organically can XX%, and is be to even XX%, platform we're sense to we're guessing there's at think we attractive an in be XX%. the a acquisition saying even were that nice whether is can if it I we'll be organically where in grow us that

there's So XXX in GBP deposits. about billion

we So it's banking and have only market X% a huge market share. a

we guess the So definitely interested. up think, that more Jersey to But share side. can even would be is But I very there both if come we grow were that were have sale, on bank point priced product we organically. acquisition attractively for and Jersey a interesting enough I across the would market Guernsey be

would So it our opportunistically. to if do don't is happened it at look we but it point need we

quarter-on-quarter? Schrum, quarter, changed you you. looking guess Thank can ahead of commercial of release reserve allowance? Maybe we go this what that color. the good through at kind just How That's maybe kind decline Okay. million Michael much opportunity Or as look further the this there was And foundation to a loan I incremental sale? is driven of for by good the is $X reserves?

Yes. question. Great

of sort the recovery forecasting outlook, so a CECL the reflects which V-shaped of a Most now improved is couple in GDP macro obviously the of QX. yes, So – things model there.

to side QX. what and and almost a taking domestic I cautious good vaccine being borrowers in resume on think news bit programs, seeing There's like we're the see root happens. the actually payments all normal obviously we'd obviously

not that. Still pandemic So to out see. continuing the was obviously of still that monitor yet. to We're great

we CECL was credit outlook. opposed reflecting actual would sort an outlook to I of I and half. and model macro think half So think say The the release as about should more about backward-looking improved

corporate which loan tick the the It cleanup of NCO, So was Barbados a loan a we to is legacy crystallized you kind a sovereign we up exercise. a from used lower-rated small also was operation. that This see the in loan. have sale when had And loss. of

which when to more a So the future feeds that reflect CECL as experience intent going -- in back forward, is volatility the is reserve not probably the on into causing of the as the portfolio reserves, macro been model. terms particular was CECL well outlook, was more year It's GDP which you outlook, about the as in of forecasts, objective implemented. in the the think GDP the quite US obviously

the extent outlook. look a you it's level it of hard predict but think the credit underlying predict, macroeconomic to current that coverage release. to difficult book But becomes feel know of ratio, reflects I the some feel I the would the it's et comfortable thing the -- if we in better a conditions To very sure the result that adequately the loan question, direct that obviously underlying at but that wasn't conditions it's that, I'm that today. reserving So, and we sort cetera, speaking, future reflects generally obviously.

I me. and good No, one Right. from that's color. one last that, appreciate

you to guys trajectory? to expectation good the out expect a that out migrate into or base calling of Is quarter. new expense that going of lower weigh modeling some for job did fourth over that Are the expenses course here year? the the that at the kind initiatives looking continue we should to Just these of

also has to release efficiency is coming mean I pay coming rate backfill keep not nearly more of going of dilutive remembering that's but focus a the it a thing think was difficult to the execute We restructure crisis. cost on QX, on it. it And I expense cost to do stay. cost-income a but the following of of subject effect But a as But following mid-XXs income restructuring line, there's ultra-low expenses we into this to bit probably on that, into we're corporate run benefit that ratio. well. of tax, that I health the It Yes. sort obviously right a we're taxes focus XX the is we're X% program. sharp think the appropriate probably rate is our during cycle. cycle a There's program, this I staggered the we bit was all of part is think -- worth keep where in as in X% kind sharp which part of

our QX run reductions year. in Yes. cost hit of rate And this full our in terms will

wouldn't you year, non-client-facing to Halifax. positions focus have to I positions on continue will on did as for retirements, there We'll or want And bone. that us to don't really cost up in we good know, in Halifax model. five now, jurisdictions repeating this cut substantial because would to operational continue as Halifax. into people going obviously been our higher focused But four think redundancies, I it's I on are we move we service say departures, and we XXXX. that's and support voluntary see center XXX very So, and and to risk, years continuing to early move operational a from we

Great. for taking Thank my you questions.

of The Instructions] James. Please from David Feaster go... [Operator comes Raymond question

point. asset morning, start your to asset Good Clearly everybody. at sensitive wanted very this just you're I on sensitivity.

curious some securities have confidence you're in growth? like guys how I'm to the to given and demonstrated some NII rising staying bit you leverage You just to to securities sensitivity. get more pretty accelerating manage the But, does just a your take book rates, It maybe some plan drive that book. looks on that. your you give short yield rate maybe duration

then us to U.S. and talking rates hasn't the really keep been But through. I it's charging negative and mean about people rates start be see I why We out in that now of what to terms could potentially negative impact The what's again coming reason Yes. laddering interesting strategy customers maturing. think why changed. as duration very is to would we in partly well average put fighting which I by market. new the on and as say are speeds and that mark-to-market elevated is pretty short refinancing originations materially the I the think weighted prepayment we're position against rates fueled unrealized and wanted the there life obviously

addition those very buyout offered have in been So the just options elevated MBS that securities. into been also to prepayment speeds have

pace should underlying what's deposits I the has So ABN maturing. not the ABN behavioral then the of really we match the data out And set think of keep changed just we and the duration grow the laddering as out deposits. around laddering

a As we get not shop. -- into and again mark-to-market we're

more speeds provide a it's case been around opportunities for the But deployment. more yield of loan asset bit sort curve speculate and to creeping that's ratio and the and extent have last re-laddering to function deposit rates starting some obviously that see don't But the naturally just that in year review we a a up to But also to just and think normal that the impact does we'll on sensitivity. of in. we a low It opportunities. on looking the just to asset obviously are we prepayment for us some time we're moderating tactically the continue constantly markets we total occurs through very and to asset the a the reinvestment certainly because of So over that. being ratio We're the tactical at asset book. the loan it do

AUM increase it quarter. -- great just to then was see And helpful. That's the in Okay. the in

versus how going asset kind curious market in management assets this client increases of and how translates Just much into was just growth maybe fees increases forward. and new that of from additions underlying

Yes.

half. about So

the AAA-rated money allow the customers additional book money and to their fund. is that's side on or some balance exposures from optionality to particular AUM who is run half really balance hot we the a money on that in about in Bermuda sheet to for want So fund

just we our asset that's subsidiary. management generate that So fees from

discretionary bucket brokerage is other The and fees. really the in half

that's market So responsive in obviously valuations. to changes

So about XX%.

Okay.

and I in just Okay. pulse footprint of health market the kind the housing for and Bermuda we give a you your the in clients market where are your recovery? the across maybe And then of guess in could

Yes. Sure.

COVID So starting with got active cases. Bermuda we've from perspective, a XX

worked it's So of right and really there well. up was saltwater. a small has come a and by testing down. but bit December, of really efficient Again miles the It's place is you're around spike surrounded

tend you So control to to it. able be

a is debt. into in amount national Bermuda good elevated, reasonable of we national public of position by sector but and The COVID, the caused just came in the crisis terms say would shape. is of So it COVID fiscal some I in deficit debt with

flexibility less the government spending. say, local Michael has mentioned, because would there's pretty So market I people aren't active, as traveling. terms been of in

sort that So, outside restaurants of are it's ordering just to like everywhere else people out, thing. going

tourists So, some having think pain of that's I here. kind masks, of not underlying the of

market that So or Surprisingly done up. not is the housing has will -- when surprisingly, I maybe well. think pick tourism things comes quite

-- people and but very are you're whether and it's or and Bermuda just clean So now looking have that future not places few COVID in cases, pandemics. for are Cayman Vermont for safe

locally seen we've Estate both, interest estate. Real Cayman and internationally, real Bermuda of and so, a lot in And

lower to our national bit be came going we're recovery a in into the But Cayman they simply much no deficits. because Bermuda. is doing say I'd is better, own with pretty the So debt. holding And crisis tough.

more Bermuda. than quickly So has growing been their GDP

crisis housing will they the story think housing I So before doing was of out the really in even easily. pandemic. come Cayman the market, Same well more in

has They about to cases. XX XX. they Channel cases, to have think well. Bermudas I Islands, continue compared So XXX do active active

but to Guernsey. the Jersey closer bit and more people obviously UK, a in in XX,XXX they've So also got XXX,XXX

So it's and the three size Bermuda Cayman times of together.

right more and Economically, bit Guernsey again, have economically Jersey managed no so well and countries cases, are more national debt. politically shutdowns bit a So extremely now. both, both

so sector done came a do before. crisis well position. well. And GDP has fund continues fiscal well, The into the from to

So I shape. think they're in great

some underlying like, our the issues of that So a spring activity, masked tourism that I kind it of it's domestic actually different the in jurisdictions the a of across may there's think we sense we think backup. handled do as board, is. pretty bit each will feel sense, have it's come have much island well. sort fiscal situation bit. fake a some because We as so But starts out, its terms is in But, even of missed of where in a bullet that,

to others. pandemic, much all which money spending more money spend, terms Each facilities those of incentive into pretty we've And in getting and out the can some has the part So, borrowed been of been great. island has the than handle community.

it So, have back, think March than we thought been. have -- actually say, thought last would I in it's I year would we worse looking think been would much I

everybody. great. That's for Thanks Thanks color.

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

next you, look again for with joining speaking quarter. Thank Andrew. We everyone And thanks Have us you a to forward today. to great day.

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

disconnect. now may You