Bank of NT Butterfield & Son (NTB) AI Stock Analysis

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Bank of NT Butterfield & Son

(NYSE:NTB)

74Outperform

The Bank of NT Butterfield & Son's stock score is bolstered by strong financial health, stable revenue growth, and effective cost management, as reflected in the financial performance. Technical analysis shows a positive trend, although momentum indicators remain neutral. The valuation is attractive with a low P/E ratio and high dividend yield. The earnings call highlights strong net income and shareholder returns, but also notes challenges like a declining net interest margin and inflationary pressures. Overall, the stock presents a solid investment opportunity with notable strengths in financial performance and valuation.

Positive Factors

Capital Return

NTB is viewed as a top capital return story due to its conservative balance sheet, high dividend payout, and regular share repurchases.

M&A Activities

M&A activities are anticipated to contribute significantly to EPS growth, with management actively pursuing opportunities.

Negative Factors

Corporate Tax Risk

The introduction of a 15% corporate tax in 2025 is identified as a major risk for Bermuda.

Earnings Pressure

Asset sensitivity pressures earnings per share through 2025, with expectations for significant deposit outflows.

Bank of NT Butterfield & Son (NTB) vs. S&P 500 (SPY)

Market Cap

$1.66B

Dividend Yield4.96%

Average Volume (3M)202.00K

Price to Earnings (P/E)7.4

Beta (1Y)0.92

Revenue Growth7.14%

EPS Growth4.17%

CountryUS

Employees1,295

SectorFinancial

Sector Strength86

IndustryBanks - Diversified

Share Statistics

EPS (TTM)4.81

Shares Outstanding46,943,860

10 Day Avg. Volume191,208

30 Day Avg. Volume202,001

Financial Highlights & Ratios

PEG Ratio1.77

Price to Book (P/B)N/A

Price to Sales (P/S)3.18

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$44.67

Price Target Upside25.23% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Bank of NT Butterfield & Son Business Overview & Revenue Model

Company DescriptionThe Bank of NT Butterfield & Son Limited (NTB) is a leading financial services institution headquartered in Hamilton, Bermuda. Established in 1858, the bank operates primarily in the banking and wealth management sectors, offering a comprehensive range of financial products and services. These include personal and commercial banking, asset management, trust services, and treasury solutions. With a strong presence in Bermuda, Cayman Islands, and the Channel Islands, NTB serves a diverse clientele, including individuals, businesses, and high-net-worth individuals.

How the Company Makes MoneyThe Bank of NT Butterfield & Son generates revenue through multiple streams, primarily from its core banking operations and wealth management services. Key revenue sources include interest income from loans and advances to customers, as well as income from securities and investments. Additionally, the bank earns fee-based income from various services such as asset management, trust and fiduciary services, and transaction banking. The bank's geographic diversification across Bermuda, the Cayman Islands, and the Channel Islands helps it capture a wide market and mitigate regional risks. Strategic partnerships and the provision of bespoke financial solutions to high-net-worth individuals also contribute significantly to its earnings, enhancing its competitive positioning in the financial services industry.

Bank of NT Butterfield & Son Financial Statement Overview

Summary

The Bank of NT Butterfield & Son demonstrates consistent revenue growth with a slight increase from 2023 to 2024. The net profit margin is robust, reflecting strong profitability, despite a slight decrease in EBIT margin. The stability in EBITDA margin indicates effective cost management. The balance sheet shows a strong equity position with a favorable equity ratio indicating solid financial health. The debt-to-equity ratio is low, reflecting prudent leverage management, and the return on equity is commendable, showcasing efficient use of shareholder funds. The cash flow statement reveals positive free cash flow, though there's a minor decline in operating cash flow.

Income Statement

Positive

Balance Sheet

Positive

The balance sheet shows a strong equity position with a favorable equity ratio indicating solid financial health. The debt-to-equity ratio is low, reflecting prudent leverage management, and the return on equity is commendable, showcasing efficient use of shareholder funds.

Cash Flow

Positive

The cash flow statement reveals positive free cash flow, though there's a minor decline in operating cash flow. The free cash flow to net income ratio suggests good cash generation relative to net income, while the operating cash flow to net income ratio indicates effective conversion of income to cash.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
581.60M	578.60M	551.70M	496.50M	502.70M
	Gross Profit
0.00	404.60M	551.70M	496.50M	502.70M
	EBIT
220.80M	281.80M	177.52M	165.80M	149.60M
	EBITDA
220.80M	262.47M	257.88M	235.25M	0.00
	Net Income Common Stockholders
216.30M	225.49M	214.02M	162.67M	147.22M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.67B	2.29B	2.98B	3.38B	4.11B
	Total Assets
14.23B	13.37B	14.31B	15.34B	14.74B
	Total Debt
98.72M	98.49M	172.00M	172.00M	171.00M
	Net Debt
-1.90B	-1.55B	-1.93B	-2.01B	-3.12B
	Total Liabilities
13.21B	12.37B	13.44B	14.36B	13.76B
	Stockholders Equity
1.02B	1.00B	865.00M	977.00M	982.00M
Cash Flow		Free Cash Flow
243.90M	246.02M	192.40M	235.63M	167.58M
	Operating Cash Flow
265.43M	300.29M	219.27M	251.35M	188.15M
	Investing Cash Flow
-581.02M	681.80M	292.02M	-1.91B	-41.71M
	Financing Cash Flow
735.56M	-1.45B	-506.81M	535.78M	546.45M

Bank of NT Butterfield & Son Technical Analysis

Technical Analysis Sentiment

Negative

Last Price35.67

Price Trends

50DMA

38.10

Negative

100DMA

37.33

Negative

200DMA

36.73

Negative

Market Momentum

MACD

0.31

Negative

RSI

55.54

Neutral

STOCH

61.35

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTB, the sentiment is Negative. The current price of 35.67 is below the 20-day moving average (MA) of 37.91, below the 50-day MA of 38.10, and below the 200-day MA of 36.73, indicating a bearish trend. The MACD of 0.31 indicates Negative momentum. The RSI at 55.54 is Neutral, neither overbought nor oversold. The STOCH value of 61.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NTB.

Bank of NT Butterfield & Son Risk Analysis

Bank of NT Butterfield & Son disclosed 54 risk factors in its most recent earnings report. Bank of NT Butterfield & Son reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Bank of NT Butterfield & Son Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BCS	81 Outperform	$44.30B	7.58	9.14%	3.14%	8.58%	35.39%
BBVA	78 Outperform	$69.55B	6.96	18.77%	4.74%	30.24%	28.90%
NWG	77 Outperform	$45.44B	8.25	13.34%	4.75%	18.85%	14.85%
ING	75 Outperform	$53.02B	8.43	12.75%	5.83%	4.07%	9.97%
NTB	74 Outperform	$1.66B	7.39	21.37%	4.96%	7.14%	4.17%
EWBC	70 Outperform	$9.85B	8.55	15.89%	3.16%	13.84%	2.04%
Sector *	64 Neutral	$13.21B	9.26	9.39%	4.87%	16.14%	-8.87%

* Financial Sector Average

Performance Comparison

NTB

Bank of NT Butterfield & Son

35.67

6.45

22.07%

BBVA

Banco Bilbao

13.03

3.05

30.56%

BCS

Barclays

13.94

5.03

56.45%

EWBC

East West Bancorp

72.16

1.23

1.73%

ING

ING Groep

18.22

3.49

23.69%

NWG

NatWest Group

11.61

5.05

76.98%

Bank of NT Butterfield & Son Earnings Call Summary

Earnings Call Date: Feb 10, 2025 | % Change Since: -3.62% | Next Earnings Date: Apr 23, 2025

Earnings Call Sentiment Positive

The earnings call reflected a strong financial performance with significant achievements in net income, tangible book value growth, and shareholder returns. However, challenges included a decrease in net interest margin and inflationary pressures. Overall, the highlights slightly outweigh the lowlights.

Highlights

Strong Financial Performance in 2024

Net income for the year was $216.3 million, with core net income of $218.9 million, resulting in a core return on average tangible common equity of 24%.

Increase in Tangible Book Value

Tangible book value per common share grew by 12.5% to $21.70.

Shareholder Returns

Quarterly cash dividends represented 37% of earnings, with 4.5 million shares repurchased at a value of $155.3 million.

Tourism and Financial Services Growth

Increased visitor numbers in Bermuda and Cayman, along with growth in reinsurance and asset management sectors.

Non-Interest Income Increase

Non-interest income totaled $63.2 million for Q4, up 12.9% due to seasonal increases in card services and foreign exchange volumes.

Strong Asset Quality

99% of investment portfolio is AA-rated U.S. Government-guaranteed agency securities, with low non-accruals and charge-off ratio.

Lowlights

Decrease in Net Interest Margin

Net interest margin decreased to 2.64% for 2024 from 2.80% in 2023 due to rising deposit costs.

Inflationary Pressure on Expenses

Expectation of slightly elevated expenses in 2025 due to inflationary pressures on salaries and investment in technology.

Impact of Central Bank Rate Cuts

Lower loan and treasury rates following rate cuts partially offset benefits from lower deposit costs and higher investment yields.

Company Guidance

During the fourth-quarter and full-year 2024 earnings call for The Bank of N.T. Butterfield & Son Limited, the company provided guidance indicating strong financial performance. Net income for the year was reported at $216.3 million, with core net income slightly higher at $218.9 million, resulting in a core return on average tangible common equity of 24%. The net interest margin decreased to 2.64% from 2.80% in 2023, attributed to rising deposit costs. However, the margin stabilized quarterly as market rates and deposit costs decreased. Tangible book value per common share increased by 12.5%, ending the year at $21.70. The company declared cash dividends representing 37% of earnings and repurchased approximately 4.5 million shares valued at $155.3 million. The board approved a new share repurchase of up to 2.7 million common shares. For the fourth quarter, net income was $59.6 million, with core earnings per share of $1.34, and a core return on average tangible common equity of 25.2%. Net interest margin was stable at 2.61%, supported by lower deposit costs and higher investment yields. Non-interest income rose by 12.9% to $63.2 million, driven by seasonal increases in card services and higher foreign exchange volumes. Total core non-interest expenses saw a 2.2% increase, attributed to marketing expenditures and costs related to professional services. The company plans for continued expense management in 2025, with expected quarterly core expenses between $90 million and $92 million. The balance sheet remains strong with period-end deposit balances at $12.7 billion, and a low-risk density of 32% in the loan portfolio. The company anticipates transitioning to updated Basel IV capital guidance in 2025, potentially improving capital adequacy ratios.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.