Bank of NT Butterfield & Son Ltd (NTB) 2025 Q1 法說會逐字稿

Good morning. My name is Michael, and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2025 earnings call for the Bank of NT, Butterfield and Sun Limited. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press 2. 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. Please go ahead.

早安.我叫邁克爾，今天我將擔任您的會議主持人。現在，我歡迎大家參加北領地銀行、Butterfield 和 Sun Limited 的 2025 年第一季財報電話會議。所有參與者將處於只聽模式。如果您需要協助，請按星號鍵然後按 0 向會議專家發出信號。今天的演講結束後，將有機會提問。若要提問，您可以按下電話鍵盤上的星號，然後按 1。若要撤回您的問題，請按 2。請注意，此事件正在被記錄。現在我想將電話轉給 Butterfield 的投資者關係主管 Noah Fields。請繼續。

Thank you. Good morning, everyone, and thank you for joining us. Today we will be reviewing Butterfield's first quarter of 2025 financial results. On the call, I am 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.

謝謝。大家早安，感謝大家的收看。今天我們將回顧 Butterfield 2025 年第一季的財務表現。參加電話會議的還有 Butterfield 董事長兼執行長 Michael Collins、集團財務長 Craig Bridgewater 和總裁兼集團首席風險長 Michael Schrum。在他們發表完準備好的發言後，我們將開始問答環節。

Yesterday afternoon we issued a press release announcing our first quarter of 2025 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-gap measures which we believe are important in evaluating the company's performance.

昨天下午我們發布了一份新聞稿，宣布了 2025 年第一季的業績。新聞稿和財務報表以及我們在本次電話會議上引用的幻燈片簡報可在我們網站 www. 的投資者關係部分找到。Butterfieldgroup.com。在我將電話轉給麥可‧柯林斯之前，我想提醒大家，今天的討論將涉及某些非差距措施，我們認為這些措施對於評估公司業績非常重要。

For 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 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.

有關這些措施與美國公認會計準則 (US GAAP) 的協調，請參閱收益新聞稿和投影片簡報。今天的電話會議和相關資料也可能包含某些前瞻性陳述，這些陳述受風險、不確定性和其他因素的影響，可能導致實際結果與這些陳述所預期的結果有重大差異。有關這些風險的更多資訊可以在我們的美國證券交易委員會 (SEC) 文件中找到。現在我將電話轉給麥可柯林斯。

Thank you, Noah, and thanks to everyone joining the call today. I'm really pleased with our strong first quarter results. Barfield continues to manage a conservative and highly liquid balance sheet that supports our low credit risk investment portfolio and disciplined loan book, as well as our relationship led fee generating businesses. Our ongoing dedication to efficiency was evident during the quarter as we successfully executed a group-wide voluntary early retirement program, resulting in a moderate reduction in future expense loads.

謝謝你，諾亞，也感謝今天參加電話會議的所有人。我對我們第一季的強勁業績感到非常滿意。Barfield 繼續管理保守且高流動性的資產負債表，以支持我們的低信用風險投資組合和嚴格的貸款帳簿，以及我們的關係主導的收費業務。本季度，我們成功實施了全集團自願提前退休計劃，持續致力於提高效率，這在一定程度上減少了未來的開支負擔。

Butterfield is a market leading bank in Bermuda and the Cayman Islands with a growing retail presence in the Channel Islands. We offer wealth management solutions across these island jurisdictions including trust, private banking, asset management, and custody. We also provide specialized financial services in the Bahamas, Switzerland, Singapore, and the UK, focusing on high-net-worth individuals with mortgage needs for prime central London properties.

Butterfield 是百慕達和開曼群島的市場領先銀行，其在海峽群島的零售業務不斷成長。我們為這些島嶼司法管轄區提供財富管理解決方案，包括信託、私人銀行、資產管理和託管。我們也在巴哈馬、瑞士、新加坡和英國提供專業的金融服務，專注於滿足對倫敦市中心黃金地段房產有抵押貸款需求的高淨值個人的需求。

I will now turn to the first quarter highlights on page 4. Butterfield reported excellent financial results in the quarter with net income of $53.8 million and coordinate income of $56.7 million. We reported core earnings per share of $1.30 with a core return on average tangible common equity of 24.2% in the first quarter. The net interest margin was 2.7% in the first quarter, an increase of 9 basis points from the prior quarter, with the cost of deposits falling 13 basis points to 160 basis points from the prior quarter.

現在我將翻到第 4 頁的第一季亮點。巴特菲爾德報告本季財務業績優異，淨收入為 5,380 萬美元，協調收入為 5,670 萬美元。我們報告第一季每股核心收益為 1.30 美元，平均有形普通股核心回報率為 24.2%。第一季淨利差為2.7%，較上季增加9個基點；存款成本較上季下降13個基點至160個基點。

This more than offset reductions in asset yields. The board has again approved a quarterly cash dividend of $0.44 per share. We also continued to repurchase shares during the quarter, purchasing a total of 1.1 million shares at an average price of $37.78 per share. I will now turn the call over to Craig for details in the 1st quarter.

這足以抵銷資產收益率的下降。董事會再次批准每股 0.44 美元的季度現金股利。我們也本季持續回購股票，共回購 110 萬股，平均價格為每股 37.78 美元。現在我將把電話轉給 Craig，以了解第一季的詳細資訊。

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 increased net interest income before provision for credit losses of $89.3 million. During the quarter, NII benefited from a lower cost of deposits as we experienced a positive mix shift in deposits to demand from term and re-pricing on rollovers. Yields on new investments continue to be higher than expiring maturities, adding to the overall portfolio yields. Central bank cuts in overnight rates during the prior quarter resulted in lower loan and treasury yields during the first quarter of 2025.

謝謝你，邁克爾，早安。在第 6 張投影片中，我們提供了淨利息收入和淨利差的摘要。第一季度，我們報告稱，提列信貸損失準備前的淨利息收入增加了 8,930 萬美元。在本季度，NII 受益於較低的存款成本，因為我們經歷了存款結構從定期到需求的積極轉變以及展期重新定價。新投資的收益率持續高於到期投資的收益率，從而增加了整體投資組合的收益率。上一季央行下調隔夜利率，導致 2025 年第一季貸款和公債殖利率下降。

Average interest earning assets in the first quarter were flat compared to the prior quarter at $13.4 billion despite some anticipated client outflows partially offset by the impact of FX translation from a strengthening British pound versus the US dollar. Treasury yields were 27 basis points lower at 3.98%, and loan yields were 11 basis lower at 6.32%, while average investment yields were 17 basis points higher at 2.68%. During the quarter, the bank maintained its conservative strategy of reinvesting maturities into a mix of US agency MBS securities and medium-term US treasuries.

第一季平均生息資產與上一季持平，為 134 億美元，儘管預期會有部分客戶流出，但因英鎊兌美元走強而產生的外匯換算影響被部分抵銷。公債殖利率下降 27 個基點至 3.98%，貸款殖利率下降 11 個基點至 6.32%，而平均投資殖利率上升 17 個基點至 2.68%。本季度，該銀行維持了其保守的策略，將到期債券再投資於美國機構MBS證券和中期美國國債的組合。

Slide 7 provides a summary of non-interest income which total of $58.4 million a decrease compared to the seasonally elevated fourth quarter, primarily due to lower transaction volume and incentive fees. Fee income did see an increase in FX revenue and asset management fees due to increased client activity, as well as an increase in trust income due to an expanded mandate with an existing client, as well as special project fees. Non-interest income continues to be a stable and capital efficient source of revenue through the cycle with a fee-com ratio of 39.4% in this quarter.

投影片 7 提供了非利息收入的摘要，總計 5,840 萬美元，與季節性成長的第四季相比有所減少，主要原因是交易量和激勵費用下降。由於客戶活動增加，外匯收入和資產管理費用增加，同時由於現有客戶的授權擴大，信託收入以及特殊項目費用也有所增加。非利息收入在整個週期內持續成為穩定且資本高效的收入來源，本季的手續費收入比率為 39.4%。

Or slide 8 represent core non-interest expenses. Total core non-interest expenses were $90.3 million which is which is slightly lower than $90.6 million in the prior quarter. The largest relative movements in salaries and benefits, technology and communications, markets, marketing, and indirect taxes were a result of seasonal payroll taxes on the annual vesting of share-based compensation.

或投影片 8 代表核心非利息支出。核心非利息支出總額為 9,030 萬美元，略低於上一季的 9,060 萬美元。薪資和福利、技術和通訊、市場、行銷和間接稅的最大相對變動是由於對年度股權激勵歸屬徵收季節性工資稅造成的。

Salaries and benefits improved due to a better-than-expected experience in healthcare costs for the quarter, offset by the impact of annual salary reviews and promotions. During the first quarter of 2025, we implemented a group-wide voluntary early retirement program, which will benefit the ongoing expense run rate and was contemplated in the expense guidance we have already provided.

由於本季醫療保健成本優於預期，薪資和福利有所改善，但年度薪資審查和晉升的影響有所抵消。2025 年第一季度，我們實施了全集團自願提前退休計劃，這將有利於持續的費用運行率，並且已在我們已經提供的費用指導中考慮到了這一點。

At this point, we continue to expect a quarterly core expense run rate of between $90 million to $92 million in 2025, but we should caution that there are a number of inflationary risks that are emerging. Overall, core non-interest expenses continue to be within our run rate expectations as discussed on previous calls. I will now turn the call over to Michael Schrum to review the balance sheet.

目前，我們仍然預計 2025 年季度核心支出運行率將在 9,000 萬美元至 9,200 萬美元之間，但我們應該警告，一些通膨風險正在出現。總體而言，核心非利息支出繼續符合我們在先前的電話會議上討論過的運行率預期。現在我將把電話轉給邁克爾·施魯姆來審查資產負債表。

Thank you, Craig. Slide 9 shows that Butterfield's balance sheet remains liquid and conservatively positioned. Period and deposit balances decreased to $12.6 billion from $12.7 billion at the prior quarter end. During the quarter we experienced volume. Outflows of $238 million which was partially offset by a $110 million FX translation on the strength of the British pound versus the dollar. We continue to expect some customer outflow over the coming quarters and expect average deposits to settle into a range of around $11.5 billion to $12 billion. Butterfield's low risk density of 30% continues to reflect the regulatory capital efficiency of the balance sheet.

謝謝你，克雷格。投影片 9 顯示，Butterfield 的資產負債表仍保持流動性且處於保守狀態。定期及存款餘額從上一季末的 127 億美元下降至 126 億美元。在本季度，我們經歷了交易量。流出金額為 2.38 億美元，但由於英鎊兌美元走強，外匯兌換額為 1.1 億美元，部分抵銷了這一影響。我們預計未來幾季仍將出現部分客戶流出，預計平均存款將穩定在 115 億美元至 120 億美元左右的範圍內。Butterfield 30% 的低風險密度持續反映資產負債表的監理資本效率。

On slide 10, we show that Butterfield continues to have a strong overall asset quality with low credit risk in the investment portfolio, which is 100% AA or higher rated US Treasuries and government guaranteed agency securities. The net charge off rate was negligible. And both non-accrual loans of 2.3% of gross loans, along with an allowance for credit losses coverage ratio of 0.6% remain within expectations.

在投影片 10 中，我們展示了 Butterfield 繼續保持強勁的整體資產質量，其投資組合的信用風險較低，其中包括 100% AA 或更高評級的美國國債和政府擔保機構證券。淨沖銷率可忽略不計。非應計貸款佔總貸款的2.3%，以及信貸損失準備金覆蓋率為0.6%，均在預期之內。

As a reminder, Butterfield's loan portfolio continues to be 68% full recourse residential mortgages, of which 81% have loans to values below 70%. We're also pleased that a legacy loan for a sizable hospitality facility in Bermuda has been fully resolved following a period of receivership. On the 9th of April, the buyer announced to close and a plan to redevelop the historic Elbow Beach Hotel property and that is currently progressing. This event occurred after the current reporting period, and it's expected to be reflected in the 2nd quarter results.

提醒一下，Butterfield 的貸款組合仍有 68% 是全追索權住宅抵押貸款，其中 81% 的貸款價值比低於 70%。我們也很高興看到，經過一段時間的破產管理後，百慕達一家大型飯店設施的遺留貸款問題已完全解決。4 月 9 日，買家宣布完成並重新開發歷史悠久的 Elbow Beach Hotel 酒店，目前該項目正在推進中。該事件發生在當前報告期之後，預計將反映在第二季業績中。

On slide 11, we present the average cash and securities balances with a summary of interest rate sensitivity. Duration decreased slightly for the EFS and increase for the HTM. As a result of the increased spreads and elevated market rates. Net unrealized losses in the EFS portfolio included in OCI were $131.4 million at the end of the first quarter. An improvement of 31.9 million or 20% over the prior quarter. We continue to expect improvement with additional burn down of OCI over the next 12 to 24 months of 31% and 55% respectively.

在投影片 11 中，我們展示了平均現金和證券餘額以及利率敏感度的摘要。EFS 的持續時間略有減少，而 HTM 的持續時間則增加。由於利差擴大和市場利率上升。第一季末，OCI 中包含的 EFS 投資組合的淨未實現損失為 1.314 億美元。較上一季增加 3,190 萬，增幅達 20%。我們繼續預計未來 12 至 24 個月內 OCI 將進一步下降 31% 和 55%。

Slide 12 summarizes regulatory and leverage capital levels. Butterfield's capital levels continue to be conservatively above regulatory requirements. On the 1st of January we transitioned to the new Baer 4 rules which resulted in lower risk weighted assets due principally to the banding of LTVs in our residential mortgage portfolio under the updated standardized approach. This change improved our regulatory capital ratio by 1.9% for this quarter. Tangible book value per share also continued to improve this quarter and increased by 5.7% to $22.94 as unrealized losses on investments declined. I'll now turn the call back to Michael Collins.

投影片 12 總結了監管和槓桿資本水準。巴特菲爾德的資本水準繼續保守地高於監管要求。1 月 1 日，我們過渡到了新的 Baer 4 規則，這導致風險加權資產降低，主要是因為根據更新的標準化方法，我們的住宅抵押貸款組合中的 LTV 進行了分級。這項變更使我們本季的監管資本比率提高了 1.9%。由於投資未實現損失的減少，本季每股有形帳面價值也持續提高，成長 5.7% 至 22.94 美元。我現在將電話轉回給麥可柯林斯。

Thank you, Michael. Recent US trade discussions have created significant uncertainty around changes to global supply chains, taxes, inflation, and interest rates. At this point, we do not expect any significant direct impact on Butterfield's business, as our small and stable operating jurisdictions have not been in direct scope. Early indications are that hospitality bookings for the upcoming 2025 season in and Cayman remain robust. Barfield's strong balance sheet is supported by capital efficient and recurring non-interest income, disciplined expense management, and net interest earnings.

謝謝你，麥可。最近的美國貿易談判為全球供應鏈、稅收、通貨膨脹和利率的變化帶來了巨大的不確定性。目前，我們預計 Butterfield 的業務不會受到任何重大的直接影響，因為我們的小型且穩定的營運管轄區並未受到直接影響。早期跡象表明，即將到來的 2025 年開曼群島的酒店預訂量仍然強勁。巴菲爾德強勁的資產負債表由資本效率和經常性的非利息收入、嚴格的費用管理和淨利息收入支撐。

Our capital management strategy focuses on delivering a sustainable quarterly cash dividend while supporting organic growth and the potential for select trust and bank acquisitions. Butterfield remains highly profitable and stable, which consistently exceeds regulatory requirements as we provide clients with essential financial services and tailored services to the communities we serve and helps create value for our shareholders. Thank you, and with that we would be happy to take your questions, operator.

我們的資本管理策略專注於提供可持續的季度現金股息，同時支持有機成長以及精選信託和銀行收購的潛力。Butterfield 保持高利潤和穩定，始終超越監管要求，因為我們為客戶提供必要的金融服務和針對我們服務的社區的客製化服務，並幫助為我們的股東創造價值。謝謝，接線員，我們很樂意回答您的問題。

We will now begin the question-and-answer session. To ask a question, you may press, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press 2. At this time, we'll pause momentarily to assemble our roster. The first question comes from David Feesters with Raymond James. Please go ahead.

我們現在開始問答環節。若要提問，您可以按下，然後按電話鍵盤上的 1。如果您使用揚聲器，請在按下按鍵之前拿起聽筒。如果您的問題已得到解答，而您想撤回您的問題，請按 2。此時，我們將暫時暫停以整理我們的名冊。第一個問題來自 Raymond James 的 David Feesters。請繼續。

Hi, good morning, everybody.

大家好，早安。

Hey, good morning, David.

嘿，早上好，大衛。

Maybe just starting, one question on the credit side, we've seen continued migration within the residential mortgage book. I was hoping, you obviously, you talked about in the par marks like very conservatively underwritten low LTV, I was hoping you could just touch on maybe where you're seeing, some of this, pressure and your approach to it and just kind of any thoughts on the housing market probably.

也許才剛開始，信貸方面的一個問題是，我們看到住宅抵押貸款帳簿中的遷移持續存在。我希望，您顯然在平價中談到了非常保守承保的低 LTV，我希望您可以談談您所看到的一些壓力以及您對此的態度，以及對房地產市場的任何看法。

Yeah, good morning, David. It's it's Michael Schrum. So I'd say, It's really focused, a good question. It's really focused around two markets, so a little bit in Bermuda and a little bit in the Prime Central London book. Two different markets, I think Bermuda is less of a concern. We're seeing valuations kind of coming through on the other side and sales are kind of picking up, so. not really worried about sort of the LTV profile. It's more of a DSR issue for the Bermuda book a little bit. And obviously we have a couple of commercial facilities there. I mentioned one earlier, Elbow Beach Hotel, which has been in receivership for a while and obviously it was still accruing, so that's going to impact you a little bit going forward.

是的，早上好，大衛。是 Michael Schrum。所以我想說，這是一個非常有針對性、非常好的問題。它實際上集中在兩個市場，一部分在百慕大，一部分在倫敦市中心黃金地段。兩個不同的市場，我認為百慕達不太令人擔憂。我們看到估值正在從另一方面上升，銷售額也在回升，所以。我並不真正擔心 LTV 概況。對於百慕達書籍來說，這更像是一個 DSR 問題。顯然，我們在那裡有幾個商業設施。我之前提到過 Elbow Beach Hotel，它已經進入破產管理程序一段時間了，而且顯然還在累積債務，所以這會對你未來的發展產生一些影響。

But size of hospitality, it's coming out and then there's a couple of commercial facilities that have been in litigation for a while and some encouraging news. To see some normalization in that over the next couple of quarters, I hope. And in the London burg it's really been more impacted by Sort of the government changes around res, stamp duty increases, inheritance tax increases, as we only underwrite 60 to 65 LTV in prime central London, so Knightsbridge, Chelsea, Kensington area.

但是酒店業的規模正在顯現，而且有幾家商業設施已經訴訟了一段時間，也有一些令人鼓舞的消息。我希望在接下來的幾個季度內看到這種情況逐漸正常化。而在倫敦市，它實際上受到政府在房地產方面的變化、印花稅增加、遺產稅增加的影響更大，因為我們只在倫敦市中心的黃金地段承保 60 到 65 LTV，所以騎士橋、切爾西、肯辛頓地區。

And so what's happened there is demand has really dried up a little bit. There's been a lot of conversations about people upping from the prime central London market and moving, other places like Monaco, Switzerland, etc. Because they're no longer able to live there for long periods of time and not pay taxes on overseas earnings. And so there's been I think less turnover in that market. Now remember that market is 3 to 5 years revolving, so there is a certain amount of refinancing that's going on. But I think valuations are still holding up. Broadly we've seen some good sales, but there's also some sizable facilities there that have gone into non-accrual really.

所以現在發生的情況是需求確實有點枯竭了。有很多關於人們離開倫敦市中心黃金市場並遷往摩納哥、瑞士等其他地方的討論。因為他們不再能夠長期居住在那裡並且不繳納海外所得稅。所以我認為該市場的營業額已經減少。現在請記住，市場循環週期為 3 至 5 年，因此正在進行一定數量的再融資。但我認為估值仍保持穩定。總體而言，我們看到了一些良好的銷售業績，但也有一些規模可觀的設施實際上已進入非應計狀態。

Nothing systemic, but divorces post-COVID and business sales being delayed, etc. And so there's also repayment for those who are mainly either the sale of the property or the refinancing, and they've just kind of gone into hibernation a little bit in that market for the last couple of years and seeing some encouraging signs, not really worried about credit content as you can see on the provisions, but certainly something to watch that.

沒有什麼系統性問題，但新冠疫情後離婚和企業銷售被延後等。因此，對於那些主要出售房產或再融資的人來說，也有還款需求，他們在過去幾年裡在這個市場上有點進入了冬眠狀態，看到了一些令人鼓舞的跡象，並不真正擔心信貸內容，正如你在條款中看到的那樣，但肯定有一些事情值得關注。

Yeah, that's good color. And then maybe just staying on the market side. I mean, in the fair marks you talked on about growing the retail presence in the Channel Islands. I know that's been a big focus. We've also had the expansion into Singapore. I was hoping you could just touch on the reception in those markets where you're having success, and then, maybe other markets you're expanding into and just again how that plays into the M&A landscape and what you're seeing.

是的，顏色很好。然後也許就只是停留在市場方面。我的意思是，在展會上您談到了擴大海峽群島的零售業務。我知道這是一個重點。我們也將業務擴展到了新加坡。我希望您能簡單談談您在取得成功的市場中的反響，然後，也許談談您正在拓展的其他市場，以及這些市場對併購格局的影響以及您所看到的情況。

Sure, yeah, so we're doing quite well in the Channel Islands. So, we actually got a good mortgage loan book now, fully supported by local deposits, or credit card product is being taken up quite well, so we're pretty excited about how that's been going, no concerns there. So, the growth is good. And corporate deposits and everything are holding up, but as our, I mean, our plan is to Try to make it look more like Bermuda and Cayman, so the funding is stickier than corporate funding, and we're getting close to 10,000 local clients in both in across Guernsey and New Jersey, so. That's going quite well in Singapore, the Credit Swiss integration is also going well.

當然，是的，我們在海峽群島做得很好。因此，我們現在實際上獲得了良好的抵押貸款帳簿，完全由當地存款支持，或者信用卡產品也得到了很好的支持，所以我們對事情的進展感到非常興奮，沒有任何擔憂。因此，成長是好的。公司存款和一切都在維持，但正如我們的計劃，我的意思是，試圖讓它看起來更像百慕達和開曼群島，因此融資比公司融資更具粘性，我們在根西島和新澤西州都有近 10,000 名本地客戶，所以。新加坡的進展非常順利，瑞士信貸的整合也進展順利。

We're actually working quite well with UBS in terms of referrals and transfer some other business, so that's going well and we're making decent money there now. We're up to over 10 billion in assets under trust in Singapore alone, so we're pretty excited about that. So both the retail expansion of the Channel Islands and the integration of Great Suites in Singapore are in good shape.

實際上，我們在推薦和轉移其他業務方面與瑞銀合作得很好，所以進展順利，我們現在在那裡賺了不少錢。光是在新加坡，我們的信託資產就已超過 100 億美元，因此我們對此感到非常興奮。因此，海峽群島的零售擴張和新加坡 Great Suites 的整合都進展順利。

Yeah, maybe I'll just add to that, David. It's Michael Schrom. Just on the M&A side, as we're particularly focused around fee businesses and in particular private trust businesses. So, good conversations, but we're also a little bit picky in terms of, any new jurisdictions or anything like that. So where we have franchise level conversations there can sometimes be jurisdictions that we that we don't want to be in. But overall, I mean, so we're kind of sticking with our existing trust jurisdictions and obviously we would always look at banking overlap in our existing jurisdictions as well.

是的，也許我只需要補充一點，大衛。我是麥可·施羅姆。僅在併購方面，我們特別關注費用業務，特別是私人信託業務。所以，對話很愉快，但我們對任何新的司法管轄區或類似的事情也有點挑剔。因此，當我們進行特許經營級別的對話時，有時可能會出現我們不想進入的司法管轄區。但總的來說，我的意思是，我們會堅持我們現有的信託管轄區，而且顯然我們也會始終關注現有管轄區內的銀行重疊情況。

Yeah, and the one thing that we compromise on the trust acquisitions is obviously AML and fiduciary risk, we're willing to negotiate a bid on price because, we do have to compete with private equity occasionally, but the real sacrosanct part is, AML, it's got to be really pretty pure, so that's why it takes so long. But as Michael said, we are having some good discussions.

是的，我們在信託收購上做出妥協的一件事顯然是反洗錢和受託人風險，我們願意就價格進行談判，因為我們確實需要偶爾與私募股權競爭，但真正不可侵犯的部分是反洗錢，它必須非常純粹，所以這就是為什麼它需要這麼長時間。但正如邁克爾所說，我們正在進行一些很好的討論。

That's great. And then just wanted to touch a bit on the margin side. There's a lot of moving parts in here, right? I mean, we've got the lag impacts on repricing, and from the recent rate cuts, on both loans and deposits, and then we've got a ton of volatility in the bond market of late. I'm curious, maybe how that volatility impacted your securities investment strategy and how that plays in the margin and just help us think through about the again the repricing side on both loans and deposits is that, impacts the margin trajectory as we look forward.

那太棒了。然後只是想稍微觸及一下邊緣方面。這裡有很多活動部件，對嗎？我的意思是，重新定價以及最近的降息對貸款和存款都產生了滯後影響，而且最近債券市場也出現了很大的波動。我很好奇，也許這種波動性如何影響您的證券投資策略以及它在保證金中扮演什麼角色，這可以幫助我們再次思考貸款和存款的重新定價方面，這對我們未來的保證金軌跡有何影響。

Yeah, hi David, it's Craig. So, I mean kind of only last quarter and we've seen a bit of kind of stabilization in regard to kind of rates, on deposits and on loans. We've actually seen the rate cuts just kind of said in the in the period comments we've seen some of the rate cuts from last quarter actually now kind of coming in and taking and making an impact. So that's we had a Kind of downward draft impact on kind of the treasury, what we're seeing on kind of short term cash balances as well as what we're receiving on loan balances as well. So, I mean, as you're aware, kind of came in as well as the kind of CI UK book moves directly, as a result of moving to the Fed fund rate came in or US Prime. And then for the kind of UK book, directly in regard to changes in the Bank of England rates, and we've seen decreases in both of those over the last quarter. So that's impacting kind of the yields as we would expect.

是的，嗨，大衛，我是克雷格。所以，我的意思是，就在上個季度，我們看到存款和貸款利率穩定。我們實際上已經看到了降息，就像在期中評論中提到的那樣，我們看到上個季度的一些降息實際上已經開始生效、產生影響。因此，這對我們的財政產生了一種下行影響，我們看到的是短期現金餘額以及我們收到的貸款餘額。所以，我的意思是，正如你所知，由於轉向聯邦基金利率或美國優先利率，CI 英國帳簿的變動也直接出現了。對於英國的帳簿來說，直接與英格蘭銀行利率的變化有關，我們看到上個季度這兩種情況都有所下降。正如我們預期的那樣，這會對收益率產生影響。

I guess we continue to have, kind of positive yield, pick up on the investment book. We continue to reinvest proceeds from any maturities or pay downs back into the investment book, investing in MBS securities or kind of, medium term US Treasuries, given the volatility in the market over the last, a couple of the last couple of months, sorry, I should say, we've kind of been putting more leaning more towards kind of medium term US Treasury. Kind of gives us a bit more certainty around, the yield that we're going to get over the lifestyle of those treasuries, and not be, subject to kind of the pre-payment risk that will come with MBS securities, but again, kind of still high quality or kind of, above rated, so no credit risk that's that we're, getting, as a result of acquiring the securities. And again, the yield is, very much high is high above the existing portfolio yield. So we're investing. Somewhere in the kind of 390 basis point range, compared to the portfolio yield which is substantially lower than that, so you'll continue to get pick up there.

我想我們會繼續獲得某種正收益，並在投資帳簿上有所收穫。我們繼續將到期或償還的收益重新投資到投資帳簿中，投資於 MBS 證券或某種中期美國國債，考慮到過去幾個月市場的波動，抱歉，我應該說，我們更傾向於投資某種中期美國國債。這讓我們更確定我們將獲得的收益率，而不是那些 MBS 證券帶來的提前還款風險，而且品質仍然很高，或者說，高於評級，因此，我們不會因購買這些證券而承擔任何信用風險。而且，收益率非常高，遠高於現有投資組合的收益率。所以我們正在投資。大約在 390 個基點的範圍內，相較之下，投資組合收益率要低得多，因此你會繼續從中獲益。

But I guess if you know kind of the rate environment stays as it is, then you know that's very constructive, for our NM as well as for our for our balance sheet. Having said that, as Michael said, some of these larger facilities that we are now kind of getting some resolution on. Those were at, kind of, I guess rates that are, quite favorable to the bank, and as those get resolved, then, we should see some headwinds on the yield on the portfolio or the portfolio. So, to sum it all up, I think we'll still continue to see some limb expansion, but at a slower rate than what we saw in Q1. So really driven by the pickup on the investment book, but again, the headwinds are on the book.

但我想，如果您知道利率環境維持現狀，那麼您就會知道，這對我們的 NM 以及我們的資產負債表來說都是非常有建設性的。話雖如此，正如邁克爾所說，我們現在正在對一些較大的設施進行一些解決方案。我猜這些利率對銀行來說相當有利，隨著這些問題得到解決，我們應該會看到投資組合收益率或投資組合出現一些阻力。所以，總而言之，我認為我們仍將繼續看到一些肢體擴張，但速度會比第一季慢。因此，這確實是受到投資帳簿回升的推動，但同樣，帳簿上也存在阻力。

Okay. That's helpful. Thanks everybody for the color.

好的。這很有幫助。感謝大家的顏色。

Thanks, and your next question will come from Timur Braziler with Wells Fargo. Please go ahead.

謝謝，您的下一個問題來自富國銀行的 Timur Braziler。請繼續。

Hi, good Morning, Maybe Circling back on the M&A discussion, I'm just wondering with all of this trade war noise if the level of conversations has changed at all in recent months and just maybe give me your thoughts on getting a deal done in this current backdrop if it changes at all.

嗨，早上好，也許回到併購討論上，我只是想知道，在所有這些貿易戰的喧囂中，最近幾個月的對話水平是否有所變化，如果有變化的話，請告訴我您對在當前背景下達成交易的看法。

Yeah, good question. I don't think that necessarily the trade situation really has an impact. If anything, it sort of creates more uncertainty and on the part of the sellers, it creates sort of more impetus to get things done given the market risk backdrop. I think we operate in, as on the trust side in multiple jurisdictions, so we've seen quite a lot of this uncertainty play out in FX. Whether it's the sterling, as you can see on our balance sheet or EUR or any other currency, so it's kind of moving things around quite a bit as we go through these discussions and obviously it has an impact both on the underlying business that we're talking about in terms of the earnings profile and so and also ultimately on valuation of things. So, I think that's probably the main thing. The FX piece is probably more important, to this than the trade situation really.

是的，好問題。我認為貿易情勢不一定會產生真正影響。如果有的話，它會造成更多的不確定性，對於賣家而言，在市場風險背景下，它會創造更多的動力來完成任務。我認為我們在多個司法管轄區的信託領域開展業務，因此我們看到外匯領域存在相當多的不確定性。無論是英鎊（正如您在我們的資產負債表上看到的那樣），還是歐元或任何其他貨幣，在我們進行這些討論時，它都會對事情產生相當大的影響，顯然它既會對我們所談論的盈利狀況等基礎業務產生影響，也會最終對事物的估值產生影響。所以，我認為這可能是最重要的事情。實際上，外匯因素可能比貿易狀況更為重要。

Got it and maybe keeping to that same line of questioning, just looking at the fee side. Does all of this uncertainty, I'm assuming you know it it pulled forward maybe some of the fees into one you to your comment on FX. I'm just wondering if there is a slowdown in cross border trade, does that negatively affect some of your fee lines or just how you guys participate there just increased uncertainty can actually drive more business kind of on a prolonged basis and not so much on a pull forward basis.

明白了，也許會繼續同樣的提問，只看費用方面。所有這些不確定性，我假設你知道它可能會將一些費用提前到你對外匯的評論中。我只是想知道，如果跨境貿易放緩，這是否會對你們的一些收費項目產生負面影響，或者你們如何參與其中，增加不確定性實際上可以在長期內推動更多的業務，而不是在向前推進的基礎上。

Yeah, that's, yeah, that is a very kind of insightful question, and I think kind of what we saw and it's probably similar to some of our kind of counterparts as Well what we saw in the first quarter. As a result of a lot of the volatility in markets, we saw some benefit of that both in terms of kind of FX revenue as well as asset management revenue, so. Notable volumes were up in in both of those lines, and obviously that's positive for those for the activity there and revenue that we're earning. So, if that continues, then we would expect to see people keeping a close eye on kind of foreign exchange balances, and also kind of how they're positioning their portfolios as we as we go forward as well.

是的，這是一個非常有見地的問題，我認為我們所看到的可能與我們在第一季看到的一些同行類似。由於市場波動很大，我們在外匯收入和資產管理收入方面都看到了一些好處。這兩條生產線的產量都顯著上升，這顯然對那裡的業務活動和我們所賺取的收入都有好處。因此，如果這種情況持續下去，我們預計人們會密切關注外匯餘額，以及他們在未來如何定位自己的投資組合。

A lot of customers are actually looking at their portfolios and trying to manage liquidity or go into liquid, positions as a result just to kind of get some, stability in their portfolios and banks and kind of many banks have been the beneficiaries of that. But I think again going forward, a large part of the FX is kind of the currency pairs between Bermuda and US dollars as well as Cayman and US dollars, and that's quite stable over time, but so it's really the fluctuation in kind of foreign currency transactions that people will be looking to position themselves to either protect themselves or take advantage of movements in foreign currencies.

許多客戶實際上正在審視他們的投資組合，並試圖管理流動性或進入流動性頭寸，從而獲得投資組合的穩定性，而許多銀行都是其中的受益者。但我認為，展望未來，外匯的很大一部分是百慕達和美元以及開曼和美元之間的貨幣對，而且這種貨幣對在一段時間內相當穩定，但實際上，外匯交易的波動是人們尋求定位以保護自己或利用外匯波動的因素。

Yeah, I think. In terms of the jurisdictions and the impact on the trade discussions we talked about, there's no real direct impact, but the indirect impact is cost of living in Bermuda and Cayman is already very high, and so obviously more expensive goods coming from the US to both jurisdictions will drive our costs up, but the good news is both jurisdictions actually were exempted from the new legislation for Chinese built ships for port fees, so they made an exemption for all voyages less than 2000 miles and for the smaller ships.

是的，我認為。就我們談到的司法管轄區和對貿易討論的影響而言，沒有真正的直接影響，但間接影響是百慕大和開曼群島的生活成本已經很高，因此顯然從美國到這兩個司法管轄區的更昂貴的商品將推高我們的成本，但好消息是這兩個司法管轄區實際上都免除了中國建造船舶的成本少於新法規，因此他們對所有小型航程的 200 英里規格。

So, there's a bit of a scare early on, but both Bermuda and Cayman and [CARICO], talked to the US, and we were able to get exemptions, so we won't be impacted by that, but we will be impacted by a higher cost of living just because US goods will be more expensive. But it was a good example of, I think, a situation where, there was a reasonable decision because obviously no one wants small island jurisdictions to suddenly, triple the cost of food coming in. So that turned out quite well.

所以，一開始有點恐慌，但百慕達、開曼群島和[CARICO]都與美國進行了談判，我們獲得了豁免，所以我們不會受到影響，但我們會受到生活成本上漲的影響，因為美國商品會更貴。但我認為這是一個很好的例子，這是一個合理的決定，因為顯然沒有人希望小島嶼管轄區的食品進口成本突然增加兩倍。結果相當不錯。

I think finally it's just on the broader FX question, obviously FX is pet currency. Most of it is related to tourism activity on the island. So if there was a GDP or an economic slowdown, obviously we would see some spillover effect into our fees, both in terms of cross-border transactions and also effects flows coming in, but a little too early to say at the moment.

我認為最終這只是更廣泛的外匯問題，顯然外匯是寵物貨幣。其中大部分與島上的旅遊活動有關。因此，如果出現 GDP 或經濟放緩，顯然我們會看到對我們的費用產生一些外溢效應，包括跨境交易和流入的影響，但現在說這些還為時過早。

Great. And then just last for me on the elbow beach resolution, can you just remind us what that means for your numbers you had mentioned, maybe a little bit of a hit to NII, but was there any portion of that had been charged off in the past? Is there any reserves set aside against that? Could you just kind of talk us through the moving pieces for Butterfield as that loan is resolved or that property is resolved.

偉大的。最後，關於肘灘決議，您能否提醒我們這對您提到的數字意味著什麼，也許對 NII 造成一點打擊，但是過去是否有部分資金被沖銷了？有沒有為此預留儲備？當貸款或財產問題解決後，您能否向我們介紹 Butterfield 的後續進展？

Yeah, sure. I mean, there isn't the biggest piece is really in our past due disclosures in 6 of the loans that's been sitting around. It's a legacy facility that was, washing its face while interest rates were low because they were getting rental income on a residential. A part of the part of the hotel development and that was covering basically all the outgoings during a lower interest rate environment when rates went up. There was an equity ask, and I think we all decided we were going to put that into some receivership, and I think that's been a benign and a sales process that's not completed.

是的，當然。我的意思是，最大的問題實際上並不在於我們逾期披露的 6 筆貸款。這是一個遺留設施，由於從住宅中獲取租金收入，因此在利率較低時可以清倉甩賣。這是酒店開發的一部分，在利率上升且利率較低的環境下，基本上涵蓋了所有支出。有一個股權要求，我想我們都決定將其納入破產管理程序，我認為這是一個良性的、尚未完成的銷售過程。

So essentially it will be a significant reduction in us in our 90 days past due. It was an accruing facility at penalty rates and so from that perspective, and I, we would expect to see some pressure on that, going forward, so, but effectively, most of the impact here is just going to be the 90 days past due, bucket is going to move and then you'll see a drop obviously in loan assets on the balance sheet.

因此從本質上來說，這將顯著減少我們逾期 90 天的時間。這是一種按罰款利率提列的設施，因此從這個角度來看，我預計未來會看到一些壓力，但實際上，這裡的大部分影響只是逾期 90 天，桶會移動，然後你會看到資產負債表上的貸款資產明顯下降。

But I don't, is there. Maybe an answer. Yeah, just to be clear, there is, kind of no kind of loss content in there, so we expect to, get, fully repaid on the outstanding principal and interest. There was, there's no provision that's been set aside for that, and we don't expect any losses coming through as a result of selling that.

但我不知道，是嗎？也許是一個答案。是的，需要明確的是，這其中沒有任何損失內容，因此我們期望獲得未償還本金和利息的全部償還。目前還沒有為此預留任何準備金，我們預計出售該資產不會造成任何損失。

Okay, and any lending opportunity to the Lauren group as part of the sale or is that not anticipated?

好的，作為銷售的一部分，有任何向 Lauren 集團提供貸款的機會嗎？還是這是沒有預料到的？

Yeah, I mean, because of the receivership, obviously we were pretty clear and it was a competitive bidding process that we wouldn't, we weren't first out of the gates to be lending into, the initial transaction, but I think there's certainly opportunities. We'll see what the plans are as I said, we're not a big hospitality lending bank, we don't really stretch for credit in that space or at least the ones that we have done have been a very different structure to just a land build. So we'll see what happens and what their plans are and certainly we'll be able to support maybe parts of that as we move forward. It's been a very good relationship over many years and hopefully we'll continue.

是的，我的意思是，由於接管，顯然我們非常清楚，這是一個競爭性投標過程，我們不會，我們不是第一個在初始交易中提供貸款的人，但我認為肯定有機會。正如我所說，我們會看看計劃是什麼樣的，我們不是一家大型酒店貸款銀行，我們實際上並沒有在該領域尋求信貸，或者至少我們所做的事情與土地建設的結構非常不同。因此，我們將觀察接下來會發生什麼以及他們的計劃是什麼，當然，隨著我們不斷前進，我們或許能夠支持其中的一部分。多年來，我們一直保持著良好的關係，希望我們能繼續保持下去。

Great, Thanks for all the call. Thanks.

太好了，謝謝大家的來電。謝謝。

Again, if you have a question, please press then one. Our next question comes from Emily Lee with KBW. Please go ahead.

再次強調，如果您有疑問，請按 1。下一個問題來自 KBW 的 Emily Lee。請繼續。

Hi everyone, this is Emily stepping in for Tim Switzer. Thanks for taking my question.

大家好，我是 Emily，代替 Tim Switzer。感謝您回答我的問題。

Sure, good morning.

當然，早安。

Good morning.

早安.

So just expanding on the last few questions surrounding economic uncertainty and tariffs, can you expand a little more on the impact of tariffs on your customer base and more specifically, are there any jurisdictions that are especially impacted by tariff threats or a potential recession, whether that's in the US or more broadly?

因此，就最後幾個有關經濟不確定性和關稅的問題展開討論，您能否進一步闡述一下關稅對您的客戶群的影響，更具體地說，是否有任何司法管轄區特別受到關稅威脅或潛在經濟衰退的影響，無論是在美國還是更廣泛的地區？

No, so I think again, I think there are not any direct implications for Bermuda, Cayman, Guernsey, and Jersey. Quite H1stly, we get overlooked sometimes during these geopolitical battles between the continents, which is not a bad place to be. Obviously, all of our different industries, so Bermuda's reinsurance cayman and captive cayman as captives and hedge funds are all invested and involved in different businesses and different geographies, so there may obviously there'll be impacts there individually and by industry, but it's pretty complex to try to figure out.

不，所以我再想想，我認為這對百慕達、開曼群島、根西島和澤西島沒有任何直接影響。老實說，在各大洲之間的地緣政治鬥爭中，我們有時會被忽視，這並不是什麼壞事。顯然，我們所有不同的行業，例如百慕達的再保險開曼群島和自保開曼群島，作為自保公司和對沖基金，都投資並參與不同的業務和不同的地區，因此顯然會對個別行業產生影響，但要弄清楚這一點相當複雜。

The real impact is cost of living. So, both Bermuda and Cayman and the Channel Islands have huge international business and fund industries, which is fantastic, but that, obviously it's driven up. The cost of living for the local population, which is a big issue of discussion. So, I think anything that increases the cost of a loaf of bread in the US, which is then shipped to Bermuda, including, the tariffs on the loaf of bread, plus the cost of the shipping to Bermuda is going to impact us. So, it really is mostly cost of living and people struggling, and that could have some impact on mortgage payments as well if all groceries go up as an example. So, it's really drilling indirect, but I think, we're pretty happy that we're sort of under the radar at this point.

真正的影響是生活成本。因此，百慕達、開曼群島和海峽群島都擁有龐大的國際商業和基金產業，這很棒，但顯然這是推高的。當地居民的生活成本，這是一個值得討論的大問題。因此，我認為任何增加美國麵包成本（然後運往百慕達）的因素，包括麵包的關稅以及運往百慕達的運輸成本，都會對我們產生影響。因此，這實際上主要是生活成本和人們的掙扎，如果所有食品雜貨的價格都上漲，那麼這也會對抵押貸款支付產生一定的影響。所以，這實際上是間接鑽探，但我認為，我們很高興我們目前還沒有被發現。

That's great, very helpful. Thank you. One more question I have was, in the case of a potential economic downturn, if, say, loan growth or revenue doesn't come through as strong as expected, what levers do you have to pull on the expense of the non-interest income side to kind of hit your earnings targets?

太棒了，非常有幫助。謝謝。我還有一個問題，在可能出現經濟衰退的情況下，如果貸款成長或收入沒有預期那麼強勁，那麼您必須採取什麼手段來利用非利息收入方面的支出來實現盈利目標？

So expenses, we've just completed a voluntary early retirement program, which was quite successful actually, a number of people took it up and It has two impacts basically gives opportunities for younger employees to move up in the organization and we even if we backfill, we eliminate more expensive positions and take on less expensive positions and actually set most of those up in Halifax, which is a less expensive jurisdiction. So we we've just done that in Q1.

因此，就費用而言，我們剛剛完成了一項自願提前退休計劃，實際上，該計劃非常成功，許多人都參與其中，它有兩個影響，基本上為年輕員工提供了在組織中晉升的機會，即使我們進行補充，我們也會取消更昂貴的職位，並承擔更便宜的職位，實際上將大多數職位設立在哈利法克斯，這是一個成本較低的司法管轄區。所以我們在第一季就做到了這一點。

Every year we look at that and we either do. A round of redundancies or early retirement and beyond that we have been building the Halifax office which including the Canadian dollar is sort of 60% of the cost of Bermuda and Cayman in terms of employee we're up to 250 people so it's a combination of Sort of immediate tactical cost reductions which we will absolutely do if we see revenue starting to decline, but the longer term cost plays really to build Halifax and just have all processing and operations, compliance, alert monitoring in a jurisdiction that's a little less expensive, so it's a combination, but we have in the past when we sense that we're going to have some revenue troubles down the road, we will take tactical action to reduce expenses, and we can't do that.

每年我們都會關注這個問題，我們也會這麼做。在經歷了一輪裁員或提前退休之後，我們一直在建造哈利法克斯辦事處，包括加元在內，其成本約佔百慕達和開曼群島員工成本的 60%，我們最多有 250名員工，所以這是一種即時戰術成本削減的結合，如果我們看到收入開始下降，我們絕對會這樣做，但長期成本實際上在於建設哈利法克斯，並將所有處理和運營、合規、警報監控放在成本稍低的司法管轄區，所以這是一種結合，但過去，當我們感覺到未來將面臨一些收入問題時，我們會採取戰術行動來削減開支，但我們不能削減開支。

Great. Thanks so much for taking my question.

偉大的。非常感謝您回答我的問題。

Thank you.

謝謝。

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

我們的問答環節到此結束。我想將會議交還給管理階層，請他們發表結束語。

Thank you, Michael, and thanks to everyone for dialing in today. We look forward to speaking with you again next quarter. Have a great day.

謝謝你，邁克爾，也謝謝大家今天的來電。我們期待下個季度再次與您交談。祝你有美好的一天。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。