The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) Q2 2020 Earnings Conference Call - Final Transcript

Jul 23, 2020 • 10:00 am ET

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The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning. My name is Isley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2020 Earnings Call for The Bank of N.T. Butterfield & Son Limited. [Operator Instructions]

I would now like to turn the conference over to Noah Fields, Butterfield's Head of Investor Relations.

Executive
Noah Fields

Thank you. Good morning, everyone, and thank you for joining us. Today, we will be reviewing Butterfield's second quarter 2020 financial results as well as some information related to COVID-19 and the Bank's operational activities and asset quality.

On the call. I'm joined by Butterfield's Chairman and Chief Executive Officer, Michael Collins; and Chief Financial Officer, Michael Schrum. Following their prepared remarks, we will open the call up for a question-and-answer session. Yesterday afternoon, we issued a press release announcing our second quarter results. The press release, along with the slide presentation that we will refer to during our remarks on this call, are available on the Investor Relations section of our website at www.butterfieldgroup.com.

Before I turn the call over to Michael Collins, I would like to remind everyone that today's discussions will refer to certain non-GAAP measures, which we believe are important in evaluating the company's performance. For a reconciliation of these measures to U.S. GAAP, please refer to the earnings press release and slide presentation. Today's call and associated materials may also contain certain forward-looking statements, which are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. On Slide 25 of the presentation, we have also included a list of potential factors relevant to the implications of COVID-19 for the Bank. Additional information regarding these risks can be found in our SEC filings.

I will now turn the call over to Michael Collins.

Executive
Michael Collins

Thank you, Noah, and thanks to everyone joining the call today. The Bank's second quarter results were strong despite some of the challenges associated with COVID-19. As an essential service provider, the Bank was able to support its clients throughout the health crisis with strict adherence to all recommended health and safety guidelines. We are grateful to our frontline staff who braved uncertainty to help keep our island economies operating, and to our customers for their understanding as we temporarily transitioned to a remote working environment. I've been very impressed with the Bank's operational resilience and our ability to quickly adjust to the new safety guidelines and social distancing rules relevant in these jurisdictions.

As you can see in the summary results on Page 4 of the presentation, we reported net income of $34.3 million or $0.67 per share. In the second quarter, net income was 14.9% lower than the prior quarter, due primarily to the COVID-19-related economic slowdown. Our core return on average tangible common equity was 15.5%, down from 18.6% in the prior quarter. Net interest margin was down 15 basis points to 2.48% compared to the linked quarter and our cost of