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

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Bank of NT Butterfield & Son

(NYSE:NTB)

Rating:83Outperform

Price Target:―

Bank of NT Butterfield & Son scores strongly due to robust financial performance supported by strong profitability and efficient cash flow management. The stock also benefits from an attractive valuation with a low P/E ratio and high dividend yield. Technical indicators suggest a bullish trend, although caution is advised due to potential overbought conditions. The recent earnings call provided a positive outlook, despite some challenges.

Positive Factors

Capital Returns

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

Mergers and Acquisitions

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

Earnings are expected to be stagnant for the coming quarters due to the asset-sensitive and largely static balance sheet.

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

Market Cap

$1.87B

Dividend Yield3.87%

Average Volume (3M)149.30K

Price to Earnings (P/E)9.2

Beta (1Y)0.89

Revenue Growth5.36%

EPS Growth9.07%

CountryUS

Employees1,295

SectorFinancial

Sector Strength75

IndustryBanks - Diversified

Share Statistics

EPS (TTM)1.23

Shares Outstanding41,203,102

10 Day Avg. Volume122,969

30 Day Avg. Volume149,300

Financial Highlights & Ratios

PEG Ratio3.92

Price to Book (P/B)1.84

Price to Sales (P/S)0.00

P/FCF Ratio6.98

Enterprise Value/Market Cap-0.06

Enterprise Value/Revenue-0.04

Enterprise Value/Gross Profit-0.22

Enterprise Value/Ebitda-0.12

Forecast

1Y Price Target

$51.33

Price Target Upside11.13% 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 Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 21.91%|

Next Earnings Date:Jul 28, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance, strategic expansions, and effective cost management. However, challenges such as decreased noninterest income, deposit outflows, and economic uncertainties were also noted. The positive aspects slightly outweigh the negative, indicating confidence in the company's future plans.

Q1-2025 Updates

Positive Updates

Strong Financial Results

Butterfield reported net income of $53.8 million and core net income of $56.7 million for Q1 2025, with core earnings per share of $1.30 and a core return on average tangible common equity of 24.2%.

Net Interest Margin Improvement

The net interest margin increased by nine basis points to 2.7% compared to the prior quarter.

Successful Early Retirement Program

A group-wide voluntary early retirement program was successfully executed, resulting in a moderate reduction in future expenses.

Share Buyback and Dividend

The company repurchased 1.1 million shares at an average price of $37.78 per share and approved a quarterly cash dividend of $0.44 per share.

Asset Quality and Regulatory Capital

Butterfield maintains a low-risk investment portfolio, with a regulatory capital ratio improvement of 1.9% due to Basel IV rule changes.

Channel Islands and Singapore Expansion

Growth in retail presence in the Channel Islands and successful integration of Credit Suisse in Singapore, with over $10 billion in assets under trust.

Negative Updates

Decreased Noninterest Income

Noninterest income decreased to $58.4 million due to lower transaction volume and incentive fees.

Deposit Outflows

Period-end deposit balances decreased by $238 million, partially offset by FX translation gains, with expected further customer outflows.

Impact of Economic Uncertainty

Economic uncertainty from global trade discussions and inflationary risks could impact costs and interest rates, affecting overall performance.

Elbow Beach Property Resolution

The resolution of the Elbow Beach Hotel property receivership will impact NII due to penalty rates no longer accruing.

Company Guidance

During the first quarter of 2025, The Bank of N.T. Butterfield & Son Limited reported strong financial results, including a net income of $53.8 million and core net income of $56.7 million. The bank achieved core earnings per share of $1.30 and a core return on average tangible common equity of 24.2%. The net interest margin increased to 2.7%, reflecting a nine basis point improvement from the previous quarter, while the cost of deposits decreased by 13 basis points to 160 basis points. The bank's board approved a quarterly cash dividend of $0.44 per share, and Butterfield repurchased 1.1 million shares at an average price of $37.78 per share. Noninterest income totaled $58.4 million, with a fee income ratio of 394%, despite a seasonal decline from the previous quarter. Butterfield maintained a conservative balance sheet with $12.6 billion in deposits and a low-risk density of 30%. The bank's asset quality remained strong, with 2.3% of gross loans and an allowance for credit losses coverage ratio of 0.6%. The bank's expenses were well-managed, with core noninterest expenses at $90.3 million, and it implemented a group-wide voluntary early retirement program to further reduce costs.

Bank of NT Butterfield & Son Financial Statement Overview

Summary

Bank of NT Butterfield & Son shows strong financial health across all key financial statement aspects. The company exhibits robust profitability, efficient cash flow management, and conservative leverage, supported by consistent revenue growth. While the equity ratio is on the lower side, the overall financial position remains solid, providing a strong foundation for future growth and stability.

Income Statement

Very Positive

The income statement reflects strong profitability with a TTM gross profit margin of 76.6% and a net profit margin of 33.4%. Revenue growth is positive at 11.5% over the past year, indicating a robust upward trajectory. The EBIT and EBITDA margins are solid at 41.9% and 31.8%, respectively, showcasing operational efficiency. Overall, the company demonstrates strong revenue growth and profitability, though the slight dip in net income compared to the previous year suggests potential areas for improvement.

Balance Sheet

Positive

The balance sheet is stable with a low debt-to-equity ratio of 0.09, indicating conservative leverage. The return on equity is high at 20.5%, reflecting effective use of shareholder funds. The equity ratio stands at 7.5%, suggesting a modest level of equity relative to total assets, typical for the banking industry. While the financial leverage is manageable, the lower equity ratio could be a potential risk if asset quality deteriorates.

Cash Flow

Very Positive

Cash flow metrics reveal a strong position with a TTM free cash flow growth rate of 12.0%. The operating cash flow to net income ratio is healthy at 1.38, indicating robust cash generation relative to reported profits. Additionally, the free cash flow to net income ratio of 1.26 suggests efficient conversion of earnings to cash flow. Overall, the company's cash generation and growth are strong, supporting its operational and financial activities.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
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
EBITDA	220.80M	262.47M	257.88M	235.25M	0.00
Net Income	216.30M	225.49M	214.02M	162.67M	147.22M
Balance Sheet
Total Assets	14.23B	13.37B	14.31B	15.34B	14.74B
Cash, Cash Equivalents and Short-Term Investments	4.67B	2.29B	2.98B	3.38B	4.11B
Total Debt	98.72M	98.49M	172.00M	172.00M	171.00M
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

Positive

Last Price46.19

Price Trends

50DMA

43.50

Positive

100DMA

40.65

Positive

200DMA

38.57

Positive

Market Momentum

MACD

0.90

Positive

RSI

61.53

Neutral

STOCH

36.38

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NTB, the sentiment is Positive. The current price of 46.19 is above the 20-day moving average (MA) of 45.19, above the 50-day MA of 43.50, and above the 200-day MA of 38.57, indicating a bullish trend. The MACD of 0.90 indicates Positive momentum. The RSI at 61.53 is Neutral, neither overbought nor oversold. The STOCH value of 36.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (69)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NTB	83 Outperform	$1.87B	9.23	21.11%	3.87%	5.36%	9.07%
BBVA	82 Outperform	$85.20B	7.63	19.22%	6.15%	19.48%	26.26%
EWBC	79 Outperform	$14.54B	12.91	15.66%	2.27%	8.74%	5.81%
BCS	77 Outperform	$65.01B	9.64	9.36%	2.92%	11.33%	47.74%
NWG	77 Outperform	$53.14B	8.96	13.70%	3.99%	18.85%	14.85%
ING	76 Outperform	$66.80B	10.71	11.92%	12.03%	-0.63%	-6.01%
Sector *	69 Neutral	€15.00B	11.82	14.88%	6.05%	7.26%	0.13%

* Financial Sector Average

Performance Comparison

NTB

Bank of NT Butterfield & Son

46.19

8.53

22.65%

BBVA

Banco Bilbao

14.85

4.63

45.30%

BCS

Barclays

19.01

7.51

65.30%

EWBC

East West Bancorp

108.22

29.74

37.90%

ING

ING Groep

22.73

5.57

32.46%

NWG

NatWest Group

13.41

5.09

61.18%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Apr 27, 2025