Butterfield Bank Reports Strong Financial Results for 2023, Declares Dividend and Authorizes Share Repurchase Program
The Bank of N.T. Butterfield & Son Limited (BSX: NTB.BH; NYSE: NTB) has announced its financial results for the fourth quarter and full year of 2023, demonstrating a robust fiscal performance. The bank reported a net income of $225.5 million, or $4.58 per diluted common share, for the year ending December 31, 2023. This represents an increase from the previous year’s net income of $214.0 million, or $4.29 per diluted common share.
In the fourth quarter of 2023, Butterfield recorded a net income of $53.5 million, or $1.11 per diluted common share, compared to $48.7 million, or $0.99 per diluted common share in the previous quarter. The core net income for the quarter stood at $55.3 million, or $1.15 per diluted common share.
The bank achieved a return on average common equity of 24.2% for 2023, with a core return on average tangible common equity of 27.0%. The net interest margin for the year was 2.80%, while the cost of deposits was 1.40%.
Butterfield declared a dividend of $0.44 per share for the quarter ending December 31, 2023. Additionally, the bank authorized a new share repurchase program for up to 3.5 million common shares.
Michael Collins, Chairman and CEO of Butterfield, attributed the favorable results to effective balance sheet management and a focus on long-term client relationships. He also highlighted the successful integration of Credit Suisse trust clients and the approval of a new share repurchase program for 2024 as contributing factors.
Despite a decrease in net interest income in the fourth quarter, driven by higher deposit costs and a reduction in balance sheet size, non-interest income increased. This was primarily due to higher banking fees, trust fees from the Credit Suisse acquisition, and foreign exchange revenue.
Butterfield ended the year with a strong capital position, maintaining a total regulatory capital ratio of 25.4% under Basel III guidelines. The bank’s total assets slightly decreased from $14.3 billion at the end of 2022 to $13.4 billion at the end of 2023. However, Butterfield continues to maintain a liquid position, with a significant portion of its assets in cash, bank deposits, and liquid investments.
With a market capitalization of $1.45 billion, Butterfield’s P/E ratio stands at 6.38, adjusted to 6.13 for the last twelve months as of Q3 2023. The bank also has a PEG ratio of 0.27 for the same period, indicating that its stock may be undervalued relative to its earnings. Moreover, with a dividend yield of 5.85%, Butterfield remains committed to delivering value to its shareholders.
Analyst comment
Positive news. Butterfield Bank reported strong financial results and declared a dividend. The bank also authorized a share repurchase program. Analysts expect the market to respond positively, with the bank’s stock potentially being undervalued and a commitment to delivering value to shareholders.
