Earnings call: Butterfield reports strong Q1 financials, optimistic outlook

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Earnings call: Butterfield reports strong Q1 financials, optimistic outlook
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The Bank of N.T. Butterfield & Son Limited (NTB) has reported robust financial results for the first quarter of 2024, with a net income of $53.4 million and core net income of $55 million. Despite a slight decrease in net interest margin (NIM) from the previous quarter, the company has maintained a stable balance sheet and is actively pursuing growth opportunities. The board has approved a quarterly cash dividend and the repurchase of shares, underscoring its commitment to shareholder returns. With the recent acquisition of Credit Suisse's assets and the appointment of a new General Counsel, Butterfield is positioning itself for continued success in the private trust sector and beyond.

Key Takeaways

  • Butterfield achieved a net income of $53.4 million and core net income of $55 million in Q1 2024.
  • The net interest margin slightly decreased to 2.68%, a 5 basis point drop from the previous quarter.
  • A quarterly cash dividend of $0.44 per share was approved, and 1.2 million shares were repurchased.
  • Simon Des-Etages was appointed as the new General Counsel and Group Chief Legal Officer.
  • The balance sheet remains strong with deposit balances rising to $12.1 billion and a TCE/TA ratio of 6.7%.
  • Positive tourism outlook for Bermuda and Cayman may benefit the bank's operations.
  • The bank is exploring growth through acquisitions, particularly in private trusts, with an 8-10 times EBITDA valuation focus.

Company Outlook

  • Butterfield anticipates improvement in NIM towards the end of Q2, although deposit pricing pressures may constrain significant growth.
  • The bank expects an increase in investment portfolio yield with reinvestment at higher rates.
  • Positive trends in money market funds and potential cyclical increases in banking fees are expected to drive non-interest income.

Bearish Highlights

  • A slight decrease in net interest margin to 2.68% from the previous quarter.
  • Deposit outflows are expected in the near to medium term, particularly from companies in liquidation.
  • The bank has reduced asset sensitivity in its loan portfolio, with the mix between fixed and variable rates expected to remain stable or decline.

Bullish Highlights

  • Strong capital levels with TCE/TA ratio well above regulatory requirements.
  • Consistent top quartile returns compared to US regional banks.
  • Successful integration of Credit Suisse's assets, client relationships, and staff.


  • The introduction of corporate income tax in Bermuda by reinsurers does not directly impact Butterfield, but it is being closely monitored.
  • Client impacting issues were noted during the core banking system upgrade, though they were managed effectively.

Q&A Highlights

  • The company's board remains supportive of capital return strategies, including stock repurchases.
  • Butterfield's acquisition strategy is flexible, considering both small trust companies and larger ones, with an appetite of 8 times EBITDA, potentially 10 times for significant opportunities.
  • The recent IT upgrade to a cloud infrastructure was successful, with no write-offs and the company is now focused on adding new functionality.

Butterfield's first-quarter performance and strategic initiatives demonstrate the bank's resilience and adaptability in a changing economic landscape. With a solid balance sheet, a commitment to capital management, and a strategic focus on growth through acquisitions, Butterfield is well-positioned to navigate future challenges and capitalize on opportunities in the private trust sector and broader financial markets.

InvestingPro Insights

The recent financial performance of The Bank of N.T. Butterfield & Son Limited (NTB) has been underpinned by several key factors that are worth noting for investors. The company's management has been actively engaging in share buybacks, which can be a sign of confidence in the company's value and future prospects. This aligns with the bank's capital return strategies mentioned in the Q&A Highlights, reflecting a strong commitment to shareholder returns.

InvestingPro Tips indicate that NTB is currently trading at a low earnings multiple with a P/E Ratio (Adjusted) as of Q1 2024 standing at 6.94. This could suggest that the stock is potentially undervalued compared to earnings, making it an attractive option for value investors. Additionally, the bank has maintained dividend payments for 9 consecutive years, which is a testament to its ability to generate consistent cash flow and reward its shareholders, as highlighted by the approved quarterly cash dividend in the article.

From the data provided by InvestingPro, NTB's Market Cap stands at $1.48 billion, and the stock is trading near its 52-week high, at 99.59% of this peak value. This could be indicative of strong market confidence and momentum in the stock's performance. The Dividend Yield as of the mentioned date is 5.49%, which is compelling for income-focused investors, especially when considered alongside the bank's history of consistent dividend payments.

For those interested in exploring these metrics further and uncovering additional InvestingPro Tips that could provide deeper insights into NTB's financial health and investment potential, consider visiting https://www.investing.com/pro/NTB. There are 10 additional InvestingPro Tips available, offering a more comprehensive analysis for those considering an investment in Butterfield. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which could be a valuable tool in making informed investment decisions.

Full transcript - Bank of NT Butterfield Son Ltd (NTB) Q1 2024:

Operator: Good morning. My name is Dorwin and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2024 Earnings Call for The Bank of N.T. Butterfield & Son Limited. All participants will be in a listen-only mode. [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.

Noah Fields: Thank you. Good morning, everyone, and thank you for joining us. Today, we will be reviewing Butterfield's first quarter 2024 financial results. On the call, I'm joined by Michael Collins, Butterfield's Chairman and Chief Executive Officer; Craig Bridgewater, Group Chief Financial Officer; and Michael Schrum, President and Group Chief Risk Officer. 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 first quarter 2024 results. The press release and financial statements, along with a 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 US 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. Additional information regarding these risks can be found in our SEC filings. I will now turn the call over to Michael Collins.

Michael Collins: Thank you, Noah. And thanks to everyone during the call today. Butterfield's first quarter 2024 results continue to benefit from our leading market positions and highly regarded international financial centers. As a reminder, we operate well-established banking and wealth management franchises in Bermuda, Cayman Islands and the Channel Islands. We also offer specialized financial services in the Bahamas, Switzerland, Singapore, and the UK where we provide mortgages to high net worth clients with properties in prime Central London. I will now turn to the first quarter highlights on page 4. Butterfield reported strong financial results in the first quarter, with net income of $53.4 million and core net income of $55 million. We reported core earnings per share of $1.17 with a core return on average tangible common equity of 24.5% for the first quarter of 2024. The net interest margin was 2.68% in the first quarter, a decrease of 5 basis points from the prior quarter, with the cost of deposits rising to 178 basis points from 172 basis points in the prior quarter. The increase in deposit cost was primarily the result of continued mix shift from demand deposits to term products as well as term deposit rollovers. The board has again approved a quarterly cash dividend of $0.44 per share. We also continued to repurchase shares during the quarter totaling 1.2 million shares at an average price of $30.40 per share. Before I turn the call over to Craig, I would like to welcome Butterfield's new General Counsel and Group Chief Legal Officer, Simon Des-Etages. Simon joins us following the planned retirement of Shaun Morris. Simon has over 30 years of legal experience in London, New York, and Bermuda with a majority of that time spent in the banking sector. I am confident Butterfield will benefit from his extensive experience advising banks on legal and regulatory matters. I will now turn the call over to Craig for details on the first quarter.

Craig Bridgewater: Thank you, Michael. And good morning. On slide 6, we provide a summary of net interest income and net interest margin. In the first quarter, we reported net interest income before provision for credit losses of $87.1 million, a small increase versus the prior quarter. The net interest income benefited from an increase in average interest earning assets, but was muted by lower NIM and one less day than the fourth quarter. Average interest earning assets in the first quarter of 2024 of $13 billion was 3.2% higher than the prior quarter, driven by an increase in average deposit levels. The yield on the interest earning assets was flat at 4.39%. The yield on treasury assets during the quarter was comparable to the prior quarter at 4.71%, and the investment portfolio yielded 2.23%, which was 7 basis points higher than the prior quarter, reflecting the runoff of low-yield securities and increased yields from more recent purchases. Throughout the first quarter, the bank reinvested maturities, paydowns, and some excess liquidity into a mix of US agency MBS securities and medium-term US treasuries. The yield on loan balances decreased by 10 basis points to 6.58%, principally attributed to net paydowns and higher-yielding loans. Average investment balances decreased by $86.3 million or 0.07% to $5.2 million compared to the prior quarter, mainly due to maturities and changes in the fair value of the securities held. Slide 7 provides a summary of non-interest income, which totaled $55.1 million, down 8.1% versus the prior quarter, primarily due to seasonally higher card services fees included in banking revenue in the fourth quarter of the year. Trust fees declined as a result of lower activity-based fee income, while fees from asset management increased as a result of higher assets under management. Net interest income continues to be a stable and capital-efficient source of revenue through the cycle, with a fee income ratio of 38.6%. On slide 8, we present core non-interest expenses. Total core non-interest expenses were $86.9 million, a 3.8% decrease compared to $90.4 million in the prior quarter. The decline in core non-interest expenses is primarily attributable to lower salary and benefit costs as performance-based incentive accruals decreased from the prior quarter. Expenses in the first quarter also benefited from incurring less technology and communications costs. We continue to expect a quarterly run rate for expenses to total about $88 million per quarter in the second half of 2024. As discussed previously, this contemplates the increased expenses resulting from the amortization of our new cloud-based IT investments and core banking system and branch upgrades, as well as calls for a new team servicing the acquired book of trust clients, all whilst taking into consideration the expected benefit of the group-wide restructure announced in the third quarter of 2023. I will now turn the call over to Michael Schrum to review the balance sheet.

Michael Schrum: Thank you, Craig. Slide 9 shows that Butterfield's balance sheet remains liquid and conservatively managed. Period-end deposit balances increased to $12.1 billion from $12 billion at the prior quarter-end, indicative of a stabilization in the deposit base. We continue to expect a medium-term deposit-level range between $11.5 billion and $12 billion with the understanding that deposit flows can be cyclical due to the nature of some of the trust and larger institutional depositors. Butterfield's low-risk density of 34.4% continues to reflect the regulatory capital efficiency of the balance sheet, with the lower-risk rated residential mortgages now representing 69% of our total loan assets. On slide 10, we show that Butterfield continues to have strong asset quality with low credit risk in the investment portfolio, which is now 100% comprised of at least double-A rated US government-guaranteed agency securities. Loan asset quality also continues to be excellent with non-accrual loans remaining at 1.3% of gross loans, a net charge-off of 1 basis point, and our allowance for credit losses coverage ratio is consistent with prior quarter at 0.5%. In terms of credit trends, we have additional disclosures in Note 6 to the financial statements. I would just point out that our past due and accruing facilities are expected to continue to be somewhat elevated over the next few quarters due to a sizable legacy hospitality facility in Bermuda working through a receivership and sale process, which we expect to conclude later this year. We remain well-secured and continue to expect full recovery of all past due and accruing loan assets. On slide 11, we present the average cash and securities balance sheet with a summary interest rate sensitivity. Asset sensitivity increased in the first quarter of 2024 due to a lower asset duration with higher levels of cash and cash equivalents along with durations of investments and fixed rate loans trending lower. Unrealized losses in the AFS portfolio included in OCI was $178.2 million at the end of the first quarter, an unfavorable movement of $14.3 million or 9% from $163.9 million at 31 December 2023 due to an increase in long-term market interest rates. At current forward rates, AFS OCI is expected to improve by $52 million or 29% in the next 12 months and $83 million or 47% in the next 24 months, allowing for reinvestment in high yielding assets and tangible book value growth. Slide 12 summarizes regulatory and leverage capital levels. Butterfield's capital levels continue to be conservatively above regulatory requirements. While not strictly a regulatory ratio, our TCE/TA ratio of 6.7% remains above our targeted range of 6% to 6.5% and is indicative of the health of our overall capital levels. I'll now turn the call back to Michael Collins.

Michael Collins: Thank you, Michael. The outlook for tourism in Bermuda and Cayman is very positive, with improved airlift and a good pipeline of cruise ships scheduled to visit the island. Bermuda continues to maintain its status as a world class jurisdiction to host high profile international events. Early next month, SailGP, an offshoot of the America's Cup Sailing Race, will be hosting televised races in Bermuda. Butterfield is a proud supporter of the event, as we were with the America's Cup. In November, the PGA will once again hold the Butterfield Bermuda Championship in Bermuda at the Port Royal Golf Course, where the event has been held since 2019 and is televised internationally. In Cayman, the peak season for tourism is winding down as we head towards summer after a great season. Available visitor statistics show air arrivals heading back towards records with bed capacity continuing to increase. In addition to Bermuda and Cayman, the Channel Islands also benefit from strong economic contributions for international business. At the end of 2023, the Bermuda government tabled legislation on moving to a corporate income tax from 2025. The legislation will implement minimum corporate income tax of 15% on multinational enterprises with total global revenues in excess of €750 million in at least two of the previous four accounting periods and will fall within the scope of the Pillar Two global minimum tax rules. During the fourth quarter of 2023 reporting cycle, we saw a number of Bermuda reinsurers announce deferred tax assets in preparation for the expected implementation of a first ever corporate income tax in Bermuda. We do not expect the tax to impact Butterfield directly in the near future, but we will be monitoring the progress closely. At this point, reinsurers are mostly planning to accept the changes and maintain their significant and economically important operations in Bermuda. In Cayman, the government has taken a less active approach legislatively with a wait and see position. Butterfield continues to benefit from capital efficient and recurring non-interest income, disciplined expense management, and net interest earnings. The bank has consistently maintained top quartile returns relative to US regional banks with operating returns on tangible equity in the range of 16% to 28% over the most recent economic cycle. Our strong returns require active capital management, which we deliver through regular quarterly cash dividends and share repurchases. Additionally, capital is utilized to support organic growth and contemplates potential M&A activity. We remain committed to exploring growth opportunities through acquisitions and are regularly in contact with targets to assess potential prospects. We continue to look for accretive deals, primarily in private trusts, while also building organically from previous acquisitions and will remain disciplined to ensure M&A is consistent with our strategic and financial objectives. Thank you. And with that, we would be happy to take your questions. Operator?

Operator: [Operator Instructions]. The first question comes from Tim Switzer with KBW.

Tim Switzer: Could you guys talk about the level of non-interest income in Q1? It was a little bit above the run rate you guys talked about last quarter, and a lot of it was the FX revenue, which there might be some one-timers in there. Could you talk about what drove the upside and what your expectations are going forward?

Craig Bridgewater: This is Craig, and I can speak to that. So, you're right, we did see increases in FX revenue, and it's really due to just a handful of significant transactions that took place in our Channel Islands segment. The bulk of the FX revenue on a quarter-to-quarter basis is really kind of from the ten currencies in Cayman Islands versus US dollar, as well as Bermuda dollars versus US dollar. And that accounts for somewhere around 70% of that FX revenue on a quarter-to-quarter basis. And then just depending on client volumes and client transactions, the FX would tend to kind of vary from quarter-to-quarter. So this quarter we had, again, a handful of large transactions in our Channel Islands segment. The other piece is that we've also seen some positive results coming through on our asset management piece. We are seeing more inflows into our money market fund as an example. And I think as rates stay higher for longer, obviously, customers continue to seek higher yields on their investments, any excess cash. So we have seen some favorable flows into our money market funds, as well as just increases in the fair value of those [indiscernible] that are managed by asset management. So that's largely driving the first quarter fund interest income.

Tim Switzer: What are your going-forward expectations? Is some of that sustainable that can repeat in the coming quarters?

Craig Bridgewater: I think, again, as long as we see rates higher for longer, I think we'll still continue to see pretty good levels in our money market fund that that connects with. So, we're earning fees on those, so that's going to be positive. Depending how equity markets perform, again, that's going to basically support assets under management. So, perhaps, we'll see those levels continue to be where they are or increase slightly, again, depending on market conditions. And then I guess under that, you'll probably see cyclical increases that we have seen in the past. So in Bermuda, as the tourism season comes in, you'll see more kind of credit card volumes, and that's going to drive banking fees. And then, obviously, in Q4, we have seasonally high fees on the banking side as well.

Tim Switzer: My other question is, I know you guys like to hold a lot of liquidity on the balance sheet, but the cash increased a little bit. It's around 24% of earning assets. Can you remind us what your target liquidity level is and if there's any opportunity for you to deploy cash into either loan opportunities or higher-yielding securities?

Michael Schrum: It's Michael Schrum. I'm going to kick off, and maybe Craig can pitch in as well. Yeah, you're absolutely right. As we see the maturities in the investment portfolio kind of coming back, we've been sort of building the cash position a little bit here. One, it's not adding any OCI risk at the moment. We've had some deposit stabilization and some volatility prior to that, obviously after the regional bank sort of volatility last year. And so, we've just been kind of building the cash position a little bit. I think in a stable environment, 15% to 20% of a lot of deposits typically would be what we call working capital or cash positions, which is – again, because we don't have a central bank or lender of last resort, we don't have a Fed window, so we have to manage our treasury effectively. And because we put pervasive multi-currency accounts across a number of different markets, that ends up with liquidity flows kind of being sort of a little bit higher than you might otherwise normally see. So I think there are definitely opportunities for us to think about laddering out, just as a reminder. Cash and short-term securities are up to one year, so there's a little bit of summer repricing lag on that, but there's not substantial duration. So that again we'd just like to continue to see the investment portfolio run down a little bit. And then as that happens, then we're rolling it into higher yielding securities. I will let Craig add anything.

Craig Bridgewater: I guess maybe what I want to add is that what we did see during the quarter was, I guess, we saw an increase in deposits. So again, that was a contributor to the increased levels of liquidity that we have. So in addition to kind of managing the investment portfolio and the re-investments there, we did have deposits increase, and obviously, we kind of have to see how those deposits are going to behave the investment into longer-term assets.

Operator: The next question comes from Alex Twerdahl with Piper Sandler.

Alex Twerdahl: Michael, your comments about expected medium-term deposit range being $11.5 billion to $12 billion implies maybe a little bit of expected outflow over the next couple quarters, which I know is not atypical for sort of the middle of the year, but do you in fact have line of sight on some deposits that are flowing out or expected to flow out in the near term, and then would those deposits be non-interest-bearing, or would they have some costs associated with them that we can take into consideration when our modeling?

Michael Schrum: Yes is the answer. I think we do have a number of depositors that are sitting – they're sitting on the balance sheet, but the company itself is in liquidation, it's going through the courts, and it's just very difficult to predict how they're going to flow out. And as you've seen, well, we're expecting some of that to be in the sort of near to medium term. It just depends on when exactly the court process is completed and the liquidation proceeds. And those would typically be non-interest-bearing, so there's a couple of those. And then I think we're also sitting with some reasonably expensive deposit, and we continue to see some mix shift. And so, I think the normalization period is probably still ongoing. We're seeing some inflows and we're seeing some money fund inflows at the moment, but I think there's still a little bit of a ways, a couple, maybe three quarters to go just to kind of make sure that we feel that this is completely stabilized. We came out of post-COVID and financial assistance, monetary policy pretty ramped up and then going into a much higher interest rate environment. So I think it's a normal sort of stabilization period here. And yes, we do have some line of sight to some depositors, and then there's a normal kind of volatility.

Alex Twerdahl: You guys have made a pretty considered effort to reduce the asset sensitivity in the loan portfolio over the last couple of years. Is that process and that effort kind of done at this point? The mix between the fixed and the variable, is that kind of what it's going to be at this point?

Michael Schrum: Yeah, I would say so. I think you never know what's happening with interest rates. One day, it's two cuts, and the next day it's longer-term increases. But I think if we kind of think that the Fed's kind of done hiking here and we're kind of – most customers would be looking probably to come into floating rate, more sophisticated customers, I think, and so we'd probably not expect for people to kind of go three to five-year fixed here at this point. It's going to be obviously different for each market, but I would suspect that we're probably sitting at the 50% for the medium term. Those would be pricing from here to like 2027, right, so there's not a particular lumpy tranches in those repricing. But as they come up, I think we should probably see that fixed percentage total kind of either stable or declining.

Alex Twerdahl: In terms of the M&A, Michael, your comments on still looking for a private trust business or continue to be acquisitive, just given the change in the geographies and sort of the spread of that business over the last – with the Credit Suisse transaction, are there any geographies that make more sense today than they did a couple of years ago either from just sort of a synergistic standpoint or another standpoint? And then just remind us overall what the criteria is of – if that's a change at all over the last couple of years in terms of the appetite for the revenues, maybe seek out the size of the businesses, et cetera.

Michael Collins: It's Michael Collins. Well, the geography-wise, that hasn't changed. So whether on the banking side, in terms of Bermuda, it came in, Guernsey and Jersey, or on the trust side, if you add in Geneva and Singapore and Bahamas, that hasn't changed. So there's – the offshore world is very small and there's some very good jurisdictions and there's some jurisdictions that aren't quite as good. So we know what they are, and we're in the right places. Singapore obviously is a particular growth area. We're top five or six private trust company in Singapore now. We would never imagine that we could sort of compete in the banking world there, so we know exactly where we want to be, which is fee income. So geographies are exactly the same. And when you look at private trust companies, the good ones are pretty much across those geographies. So, that's going to stick. In terms of criteria, it's still going to be private trust. There's obviously other fee income businesses, the private equity like, company administration, fund administration which is very technology intensive. We don't want to be in those business We want to stay in private trust which we've been in for 70 years. So we're going to stick to that. The only thing I'd say is in terms of our price appetite, so basically 8 times EBITDA, maybe a little bit more, 10 times EBITDA if it's a bigger acquisition opportunity. And the two ways we can do it is a small trust company or a larger trust company. If we acquire a larger trust company and it's from a reputable seller, then we can acquire a legal entity. If it's a little more difficult, we would just do sort of an asset purchase and choose each trust one by one. So, essentially, nothing's changed. I would say if it's the right opportunity, we might consider paying a bit more. But in terms of geography and what we would be buying, it's consistent.

Operator: [Operator Instructions]. The next question comes from Eric Spector with Raymond James.

Eric Spector: It's Eric on the line for Dave Feaster. Congrats on a good quarter, and I appreciate you taking the questions. Just wanted to start on NII and NIM. Kind of mentioned rate sensitivity is up a little bit quarter over quarter. Just curious how you think about NIM in a higher for a longer environment and if you're considering any actions to manage rate sensitivity here going forward.

Craig Bridgewater: Eric, it's Craig. I guess on NIM, we had previously kind of spoke about NIM troughing kind of in Q1, Q2. We think that is the same. I think probably – I guess towards the end of Q2, we'll start to see some improvement in overall NIM. This is obviously kind of dependent on really the cost of funds, so the deposit pricing. We are actively watching the deposit pricing and average duration on term deposits is around three months. So that's the normal re-price. We're really taking a keen eye to kind of what we are, we're replacing those at. But in a higher for a longer rate environment, we expect that we'll probably still have continued pricing pressures on deposits. So we're thinking carefully about that. So that's going to probably kind of mute any increases in NIM at this point based on the current market environment. On the positive side, as you will see, you will start to ladder back out into your portfolio and you will see an increase in the yield on our investment portfolio. We stood at 2.23% for Q1. And as we continue to ladder back into our portfolio and invest at higher rates, we're going to see some positive contributions to NIM from there. But I think it's the cost of deposits and the cost of funding that's probably going to keep it more or less stable to trending up at this point.

Michael Schrum: Eric, it's Michael Schrum. I think if you look at our OCI, right, and the investment portfolio is pretty large compared to the size of the balance sheet, and so having gone through this sort of whole increase in rates and building large negative – relatively large negative. positions in HDM and although totally unrealized, I think we're also just kind of fine seeing that OCI burn down and sort of being cautious about laddering in and just sitting on a bit of cash, right, which I think we're not sort of a mark-to-market shop. We just kind of need to manage through the different parts of the cycle. And as you can see, earnings are coming through. So I think it's kind of steady. When we say higher for longer, some people are talking about increases in rates, right? I think we also want to be mindful of the risk positions that we have there and make sure that we're not adding to those risk positions as we go through.

Eric Spector: Just curious, you talked a little bit about M&A, but just kind of curious about capital return more broadly. We've obviously been pretty active repurchasing stock the last few quarters. And TCE is now above that 6% to 6.5% level in regular capital. Very strong. Just curious how you think about capital priorities and your appetite for repurchases. Do you expect a similar pace that we've seen in the last couple quarters? And just kind of any color there would be helpful.

Michael Schrum: It's Michael Schrum. So, yeah, we're actually calling in from Cayman at the moment. We just we were down here just for our board meetings and board is very supportive at these levels, very attractive – reasonably attractive valuations. Obviously, half an eye to what's the M&A pipeline, organic growth opportunities and there's certainly quite a bit of opportunity here on the lending side in Cayman. The economy is booming, tower cranes everywhere. So that's a positive in terms of obviously capital consumption and at least replacing the amortization that we're seeing in the loan book at the moment. But, yeah, very supportive in terms of the current strategy, which is, obviously, first priority is the dividend. And we kept that at $0.44 a share. Secondly, obviously, supporting our core markets in terms of organic growth and/or any credit deterioration which we're not really seeing. We've seen a little bit of migration. Again, a few lumpy loans there and some legacy positions. But very confident about the underpinning valuations there, so it shouldn't attract a lot more risk with assets. And then, thirdly, obviously, M&A and/or buybacks. And I think we spoke about the pipeline for M&A, which we are kind of sitting on a lot of capital. And so, we want to return that capital to shareholders. And so, we've been pretty active and I would expect us subject to market conditions to continue. And if we need to be up later in the year, we'll do that.

Eric Spector: Just one last one from me. Curious if you could provide just an update, given that the core banking system upgrades was completed this quarter, just curious how that went. And then maybe just some color on the Credit Suisse acquisition. It's the first full quarter since the final tranche closed. Just curious if you could provide some colors on just trends broadly there and how the team brought on has been doing.

Michael Collins: Maybe I'll kick off and Craig can pitch in as well. Core banking system upgrades are always difficult, right? So, nobody's really – it's not something that's necessarily positive unless you're rolling out a bunch of new functionality. So what we did was a like-for-like conversion. It's a fairly major upgrade. It was a move into a cloud infrastructure, as you can see the expenses, and the capital picture has changed slightly in terms of software as a service rather than the capital depreciation in those lines. I think generally speaking, it went well. There's no write-offs. There's obviously a few client impacting things and we apologize to clients, but they're all still with us. And I think what we're excited about is the opportunity to roll out additional functionality now. And we have a pretty good steady platform, seems to be operating, it's a lot faster for clients. So there's not a lot of noise. Our call centers broadly were able to deal with the elevated volumes. Most of the volumes from the implementation came from the OTP functionality. So one-time password functionality, inability to log in, new splash screens, et cetera. And so, it was really kind of user walkthroughs on that side. Internally, it went very well, like all our staff – the training program was very good. And we ended up, as I said, not having any real reconciliation issues at the backend or process issues. So I think at this point, I think everybody's feeling like that was probably more of the operational risk moment when we went live, and that's kind of in the rear view mirror, and now we can add new functionality. And in terms of Credit Suisse, Craig can just talk a little bit about that.

Craig Bridgewater: Depending on the IT piece, like I said, kind of go on according to plan, that it's working. We're starting to amortize the expenses related to that as well as the hosting fees. And really, one of the important things in the IT upgrade was to kind of get all the current version and remain current. So I guess a positive thing is that we're now looking to apply – planning for the application kind of a new pet set [ph]. So kind of getting that into kind of the regular routine when it comes to maintaining that system, so that's a positive. On the Credit Suisse side, again, that's going well. The assets came over, the client relationships have come over, the people have come over, and they're all settled into the teams. Our head of trust has been very active, kind of getting around to see those teams, having town halls, and just making sure everybody's settled in. And so, that's going well. And really, it's just a matter of making sure we service those clients well, get to know them, and then see how we can leverage those relationships.

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

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

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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