Bank of NT Butterfield & Son Ltd (NTB) 2025 Q2 法說會逐字稿

Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2025 earnings call for the Bank of NT Butterfield & Son Limited. (Operator Instructions)

早安.我叫德魯，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巴特菲爾德父子公司 2025 年第二季財報電話會議。（操作員指示）

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.

請注意，此事件正在被記錄。現在我想將電話轉給 Butterfield 投資者關係主管 Noah Fields。

Thank you. Good morning, everyone, and thank you for joining us. Today we will be reviewing Butterfield's second quarter 2025 financial results. On the call, I'm joined by Mike 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 年第二季的財務表現。參加電話會議的還有 Butterfield 董事長兼執行長 Mike 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 second 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.

昨天下午，我們發布了一份新聞稿，宣布了 2025 年第二季的業績。新聞稿和財務報表以及我們在本次電話會議上發言時將參考的幻燈片演示可在我們網站 www.butterfieldgroup.com 的投資者關係部分找到。

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 reconciliation of these measures to US GAAP, please refer to the earnings press release and slide presentation.

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公認會計準則指標，我們認為這些指標對於評估公司績效非常重要。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。

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.

現今的電話會議和相關資料可能還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文件中找到。

I will now turn the call over to Michael Collins.

現在我將把電話轉給麥可柯林斯。

Thank you, Noah, and thanks to everyone joining the call today. I am encouraged by our strong second quarter results, which continue to demonstrate our focus on sustainable profitability and creating shareholder value. Performance was driven by solid net interest income, diversified fee revenue, prudent expense management and a strong stable balance sheet.

謝謝你，諾亞，也感謝今天參加電話會議的所有人。我們第二季的強勁業績令我感到鼓舞，這繼續證明了我們對可持續獲利能力和創造股東價值的關注。業績的動力來自穩健的淨利息收入、多元化的費用收入、審慎的費用管理和強勁穩定的資產負債表。

The Butterfield franchise continues to generate long-term value in a dynamic external environment. Butterfield stands as a market leader in offshore banking and wealth management, with universal banking models in Bermuda and the Cayman Islands complemented by an expanding retail presence in the Channel Island.

在動態的外部環境中，Butterfield 特許經營權繼續創造長期價值。巴特菲爾德是離岸銀行和財富管理市場的領導者，在百慕達和開曼群島擁有全能銀行模式，並在海峽群島不斷擴大零售業務。

Our comprehensive suite of wealth management solutions spans trust services, private banking, asset management and custody tailored to meet the sophisticated needs of clients in these island jurisdictions. Our tailored wealth management services are also available to customers in the Bahamas, Switzerland, Singapore while we provide high net worth mortgage lending for properties located in prime Central London. I will now turn to the second quarter highlights on page 4.

我們全面的財富管理解決方案涵蓋信託服務、私人銀行、資產管理和託管，旨在滿足這些島嶼司法管轄區客戶的複雜需求。我們也為巴哈馬、瑞士、新加坡的客戶提供量身訂製的財富管理服務，同時我們也為位於倫敦市中心黃金地段的房產提供高淨值抵押貸款。現在我將翻到第 4 頁的第二季亮點。

Butterfield reported high-quality financial results in the quarter net income of $53.3 million and core net income of $53.7 million. We reported core earnings per share of $1.26, with a core return on average tangible common equity of 22.3% in the second quarter. The net interest margin of 2.64% in the second quarter was a modest decline of 6 basis points from the prior quarter, with the cost of deposits falling 4 basis points to 156 basis points from the prior quarter.

巴特菲爾德公佈了高品質的財務業績，本季淨收入為 5,330 萬美元，核心淨收入為 5,370 萬美元。我們報告第二季每股核心收益為 1.26 美元，平均有形普通股核心回報率為 22.3%。第二季淨利差為2.64%，較上一季小幅下降6個基點，存款成本較上一季下降4個基點至156個基點。

During the second quarter, the bank completed the early redemption of its $100 million subordinated debt which resulted in the immediate recognition of $1.2 million of unamortized issuance costs and a 2 basis point onetime negative impact on NIM. With the redemption of the subordinated debt, we also took the opportunity to review the bank's overall capital levels and capital return strategy.

在第二季度，該銀行完成了 1 億美元次級債務的提前贖回，這導致立即確認了 120 萬美元的未攤銷發行成本，並對 NIM 產生了 2 個基點的一次性負面影響。藉由贖回次級債務，我們也藉此機會檢討銀行的整體資本水準及資本回報策略。

Over the past five years, we have increased stable fee revenue through M&A and significantly reduce the number of shares outstanding following our share repurchase programs. As a result, we are now rebalancing our capital return strategy with a 14% increase to the quarterly cash dividend rate to $0.50 per share.

在過去五年中，我們透過併購增加了穩定的費用收入，並透過股票回購計畫大幅減少了流通股數。因此，我們現在重新平衡我們的資本回報策略，將季度現金股息率提高 14% 至每股 0.50 美元。

The Board has approved this increase in the dividend rate as well as a new share repurchase authorization of 1.5 million shares to commence following completion of the current program. During the second quarter, we continued to repurchase shares with a total of 1.1 million shares in the second quarter at an average price of $40.69 per share.

董事會已批准提高股息率，並批准在當前計劃完成後開始回購 150 萬股新股票。第二季度，我們持續回購股票，第二季共回購110萬股，平均價格為每股40.69美元。

Finally, we had a few Board composition changes during this quarter. We would like to take a moment to thank Sonia Baxendale, for our commitment and guidance during her five-year tenure in Butterfield's Board of Directors. Due to other time commitments and opportunities, Sonia has chosen not to stand for reelection at the bank's AGM this past May, and we wish her all the best in her future endeavors.

最後，本季我們的董事會組成發生了一些變化。我們想藉此機會感謝索尼婭·巴克森代爾 (Sonia Baxendale) 在她擔任巴特菲爾德董事會成員的五年期間給予我們的承諾和指導。由於其他時間安排和機會，索妮亞選擇不參加今年 5 月的銀行年度股東大會競選連任，我們祝福她未來一切順利。

Yesterday, we also announced the appointment of Andrew Henton to the Board of Directors. Andrew has been serving as a Director for Butterfield subsidiary banking business in the Channel Islands, and I'm very pleased to welcome him to the group Board. Andrew brings an extensive knowledge of governance, private banking, private equity and investment banking to Butterfield, and I look forward to his continuing contributions.

昨天，我們也宣布任命安德魯亨頓 (Andrew Henton) 為董事會成員。安德魯一直擔任海峽群島巴特菲爾德子公司銀行業務的董事，我非常高興地歡迎他加入集團董事會。安德魯為巴特菲爾德帶來了豐富的治理、私人銀行、私募股權和投資銀行知識，我期待他繼續做出貢獻。

I will now turn the call over to Craig for details in the second quarter.

我現在將把電話轉給 Craig，以了解第二季度的詳細資訊。

Thank you, Michael, and good morning. On slide 6, we will provide a summary of net interest income and net interest margin.

謝謝你，邁克爾，早安。在第 6 張投影片中，我們將提供淨利息收入和淨利差的摘要。

In the second quarter, we reported increased net interest income before provision for credit losses of $89.4 million. The increase was primarily due to an increase in average interest-earning assets partially offset by lower yields on treasury assets.

在第二季度，我們報告的提列信貸損失準備前的淨利息收入增加了 8,940 萬美元。這一增長主要是由於平均生息資產的增加，但被國庫資產收益率的下降部分抵消。

The net interest margin decreased modestly settling at 2.64% compared to 2.7% in the prior quarter. This decline is largely attributed to lower treasury yields, which declined by 27 basis points directly in line with decreased short-term market interest rates as well as the accelerated amortization of unamortized sub debt issuance costs, contributing to a one-time 2 basis point contraction in NIM.

淨利差小幅下降，至 2.64%，上一季為 2.7%。這一下降主要歸因於國債收益率下降，國債收益率下降了 27 個基點，這與短期市場利率下降以及未攤銷次級債發行成本的加速攤銷直接相關，導致淨息差一次性收縮 2 個基點。

Average loan balances were slightly higher compared to the prior quarter predominantly driven by the impact of foreign exchange translation from the strengthening of the Pound Sterling against the US Dollar. Absent the FX translation impact, loan volume decreased by $55 million as we recovered the full outstanding loan balances from a large legacy hospitality facility that was under receivership in Bermuda. Average interest-earning assets in the second quarter increased $166.7 million to $13.6 billion.

平均貸款餘額與上一季相比略有上升，主要原因是英鎊兌美元走強帶來的外匯換算影響。除去外匯翻譯的影響，貸款額減少了 5500 萬美元，因為我們從百慕達一家被接管的大型傳統酒店設施中收回了全部未償還的貸款餘額。第二季平均生息資產增加 1.667 億美元，達 136 億美元。

Treasury yields were 27 basis points lower at 3.71%, loan yields were comparable at 6.31%, whilst average investment yields were 1 basis point lower at 2.67% due to day count effect. During the quarter, the bank maintained its conservative strategy of reinvesting the proceeds of investment maturities and paydowns into a mix of US agency MBS Securities and medium-term US treasuries. Slide 7 provides a summary of noninterest income, which totaled $57 million, a decline of $1.4 million linked quarter, resulting from a number of underlying movements.

公債殖利率下降 27 個基點至 3.71%，貸款收益率與上年持平，為 6.31%，而受計日效應影響，平均投資收益率下降 1 個基點至 2.67%。本季度，該銀行維持了其保守的策略，將投資到期和償還的收益再投資於美國機構 MBS 證券和中期美國國債的組合。幻燈片 7 提供了非利息收入的摘要，總計 5700 萬美元，環比下降 140 萬美元，這是由於一系列潛在變動造成的。

First, banking fees were lower due to the seasonal reduction in merchant and international money transfer volumes, partially offset by an increase in card volumes. Similarly, a seasonal reduction in volumes led to a decrease in foreign exchange revenue. Custody and other administration fees saw a decline as transaction volumes and assets under custody trended lower.

首先，由於商家和國際匯款量的季節性減少，銀行費用較低，但被卡片量的增加部分抵銷。同樣，季節性交易量的減少也導致外匯收入的減少。隨著交易量和託管資產的下降，託管費和其他管理費用也出現下降。

We are pleased to report offsetting positive contributions from an increase in trust revenue attributable to annual fee increases, the repricing of acquired business relationships, new client onboarding and an increase in special and time-based fees. The capital-efficient fee ratio was consistent with the prior quarter at 39%, continuing to compare favorably to historical peer averages. On Slide 8, we present core noninterest expenses.

我們很高興地報告，信託收入的成長帶來了積極的貢獻，這歸因於年度費用的增加、已獲得的業務關係的重新定價、新客戶的加入以及特殊費用和基於時間的費用的增加。資本效率費用率與上一季持平，為 39%，並繼續與歷史同業平均保持良好。在第 8 張投影片上，我們展示了核心非利息支出。

Total noninterest expenses were $91.4 million higher than the $98.3 million in the prior quarter, but continuing to be within our expectations. This increase was due to several factors, including the FX impact of a strengthened Pound Sterling relative to the US Dollar and increased performance-based incentive accruals in addition to lower staff health care costs recorded in the prior quarter. Offsetting these increases was a decrease in payroll taxes, which are classified as indirect taxes.

總非利息支出為 9,140 萬美元，高於上一季的 9,830 萬美元，但仍在我們的預期之內。這一增長歸因於多種因素，包括英鎊兌美元走強的外匯影響、基於績效的激勵計劃增加以及上一季記錄的員工醫療保健成本降低。抵銷這些成長的是工資稅的減少，工資稅被歸類為間接稅。

In terms of our expense expectations, we continue to think that a quarterly core expense rate of between $90 million and $92 million for the remainder of the year is appropriate, but continue to monitor inflation and FX fluctuations across the franchise.

就我們的費用預期而言，我們仍然認為今年剩餘時間的季度核心費用率在 9000 萬美元至 9200 萬美元之間是合適的，但我們會繼續監測整個特許經營權的通貨膨脹和外匯波動。

I will now turn the call over to Michael Schrum to review the balance sheet.

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 the Butterfield's balance sheet remains liquid and conservatively positioned.

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。

Period-end deposit balances increased to $12.8 billion from $12.6 billion at the prior quarter end. This movement was due to a $260 million effect from the strengthening British Pound, which was partially offset by a decrease in actual customer deposits of $30 million. Butterfield's low risk density of 28.6% continues to reflect the regulatory capital efficiency of the balance sheet.

期末存款餘額從上一季末的 126 億美元增加至 128 億美元。這項變更是由於英鎊走強造成的 2.6 億美元影響，但實際客戶存款減少 3,000 萬美元，部分抵消了這一影響。巴特菲爾德 28.6% 的低風險密度繼續反映資產負債表的監管資本效率。

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. Overall, credit quality of the loan and mortgage portfolio improved during the quarter as the net charge-off rate was negligible. Non-accrual loans as a percentage of gross loans decreased 30 basis points to 2% as we fully recovered a couple of commercial loans at Bermuda, and the allowance for credit losses coverage ratio of 0.6% remained consistent with prior quarters.

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 100% 為 AA 或更高評級的美國國債和政府擔保機構證券。整體而言，由於淨沖銷率可以忽略不計，本季貸款和抵押貸款組合的信用品質有所改善。由於我們完全收回了百慕達的幾筆商業貸款，非應計貸款佔總貸款的百分比下降了 30 個基點至 2%，而 0.6% 的信貸損失準備金覆蓋率與前幾季度保持一致。

As mentioned previously, Butterfield's loan portfolio continues to be 70%, full recourse residential mortgages, of which 81% have loan to values below 70%. We remain focused on our conservative credit posture with a preference for residential mortgage lending in Bermuda, the Cayman Islands and the Channel Islands.

如前所述，Butterfield 的貸款組合仍有 70% 是全追索權住宅抵押貸款，其中 81% 的貸款價值比低於 70%。我們仍然注重保守的信貸立場，優先考慮百慕達、開曼群島和海峽群島的住宅抵押貸款。

On Slide 11, we present the average cash and securities balances with a summary of interest rate sensitivity. Duration decreased slightly for the [AFS] book. Net unrealized losses in the [AFS] portfolio included in OCI were $120 million at the end of the second quarter, an improvement of $11.4 million or 8.7% over the prior quarter. We continue to expect improvement with additional burn down of OCI over the next 12 to 24 months of 33% and 42%, 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。[AFS] 書籍的持續時間略有減少。在第二季末，OCI 中包含的 [AFS] 投資組合的淨未實現損失為 1.2 億美元，比上一季改善 1,140 萬美元，降幅為 8.7%。我們繼續預計未來 12 至 24 個月內 OCI 的消耗將分別進一步提高 33% 和 42%。

Slide 12 summarizes regulatory and leverage capital levels. As Michael Collins mentioned earlier, the Board of Directors has approved an increase in the quarterly dividend rate to $0.50 per share. In addition to the increased quarterly cash dividend rate and new share repurchase program, the bank continues to evaluate potential acquisitions as part of our continued growth priorities. Finally, our tangible book value per share continued to improve this quarter by 3.6% to $23.77 as unrealized losses on investments improved.

投影片 12 總結了監管和槓桿資本水準。正如邁克爾柯林斯之前提到的，董事會已批准將季度股息率提高至每股 0.50 美元。除了提高季度現金股息率和新股回購計劃外，該銀行還繼續評估潛在收購，作為我們持續成長重點的一部分。最後，由於投資未實現損失的改善，本季我們的每股有形帳面價值持續提高 3.6% 至 23.77 美元。

I will now turn the call back to Michael Collins.

我現在將電話轉回給麥可柯林斯。

Thank you, Michael. During the second quarter and now into the third quarter, we've seen encouraging signs of economic growth in our island jurisdictions.

謝謝你，麥可。在第二季度以及現在的第三季度，我們看到了島嶼管轄區經濟成長的令人鼓舞的跡象。

Bermuda is currently in its high tourism season, and by all accounts, it is shaping up to be a good year. Bermuda continues to be a premier tourist destination with headline events such as the Butterfield Bermuda Championship, a PGA event; the Bermuda Triple Crown Billfish international fishing tournament; the SLGP 2026 series; and the biannual Newport to Bermuda Sailing Race. The reinsurance industry continues to perform well with added growth and interest in the life reinsurance sector.

百慕達目前正處於旅遊旺季，從各方面來看，今年的旅遊前景都很好。百慕達繼續成為首屈一指的旅遊目的地，其主要活動包括 PGA 賽事巴特菲爾德百慕達錦標賽、百慕大三冠王旗魚國際釣魚錦標賽、SLGP 2026 系列賽以及兩年一度的紐波特至百慕大帆船賽。再保險業持續表現良好，人壽再保險領域的成長和興趣不斷增加。

In Cayman, we continue to see sustained growth across the board, including strong business performance in tourism, real estate and international business sectors. Jersey and Guernsey are both doing well and continue to be recognized as choice locations for international business.

在開曼群島，我們繼續看到全面持續成長，包括旅遊、房地產和國際商業領域的強勁業務表現。澤西島和根西島都發展良好，並繼續被公認為國際商業的首選地點。

Butterfield has benefited from this environment through the provision of banking, private trust custody and fiduciary services. We're also seeing growth in the retail business as we focus on our competitive local credit card offering as well as local banking services.

巴特菲爾德透過提供銀行、私人信託託管和信託服務從這種環境中受益。由於我們專注於具有競爭力的本地信用卡產品以及本地銀行服務，零售業務也實現了成長。

Butterfield continues to be a responsible steward of capital by consistently returning excess funding to shareholders through a quarterly cash dividend and share repurchases when appropriate. In addition, I would like to emphasize that we continue to pursue M&A fee growth, particularly in private trust. The increased dividend and new share repurchase authorization reflects the strength of our business over the past few years and our efforts to increase long-term value for our shareholders.

巴特菲爾德繼續扮演負責任的資本管理者的角色，透過季度現金股利和適當時的股票回購持續向股東返還多餘的資金。此外，我想強調的是，我們將繼續追求併購費用的成長，特別是在私人信託領域。股利和新股回購授權的增加反映了我們過去幾年的業務實力以及我們為股東增加長期價值的努力。

Thank you. And with that, we would be happy to take your questions. Operator?

謝謝。我們很樂意回答您的問題。操作員？

(Operator Instructions)

（操作員指示）

David Feaster, Raymond James.

大衛菲斯特、雷蒙詹姆斯。

Hey. Good morning, everybody.

嘿。大家早安。

Maybe I want to start out. You touched on the impact of the treasury market in the press releases on the margin this quarter. I know you're really disciplined about laddering the book. I was hoping maybe you could touch on your bond investment strategy just given the shape of the curve and whether that's changed at all and whether your approach has adjusted just given the prospect of declining short-term rates perhaps later this year.

也許我想開始。您在本季的新聞稿中談到了國債市場對保證金的影響。我知道你對這本書的分級非常嚴格。我希望您能談談您的債券投資策略，考慮到曲線的形狀，以及這種策略是否有所改變，以及考慮到今年晚些時候短期利率下降的前景，您的方法是否進行了調整。

Yes. Good morning, David. It's Michael Schrum. Great question to kick off.

是的。早安，大衛。我是麥可‧施魯姆。這是一個非常好的問題。

I think at the moment, we're just reinvesting maturities from the bond portfolio. So we obviously get both HTM and AFS maturities coming back at around $30 million to $35 million a month, and it's going into a blend of sort of primarily 15-year mortgage-backed securities and sort of 50% of that and then 50% into a T-bill ladder or US Treasury medium-term ladder, so two, three, five years. We're obviously looking for kinks in the curve.

我認為目前我們只是在對債券投資組合中的到期債券進行再投資。因此，我們顯然會以每月約 3000 萬至 3500 萬美元的價格獲得 HTM 和 AFS 到期債券，這些債券將用於購買主要為 15 年期抵押貸款支持證券的混合債券，其中 50% 將用於購買國庫券階梯或美國國債中期階梯債券。我們顯然正在尋找曲線中的彎折。

There is quite a lot of movement in the market. As you know, we've seen kind of a gradual steepener and there's definitely downward pressure on short rates. So it's definitely an active conversation in terms of all the excess liquidity that's sitting on the balance sheet.

市面上有相當多的動靜。如您所知，我們已經看到利率逐漸變陡，短期利率肯定面臨下行壓力。因此，就資產負債表上的所有過剩流動性而言，這絕對是一場正面的對話。

And then you have the whole Fed decisions coming up next year. So we're definitely looking at it at the moment, we feel very comfortable with where the strategy is. It's gradually shortening the overall duration of the investment portfolio and we're obviously able to reinvest at higher rates. But it is a slow process, and there's a lot of movement in the market. So it's definitely top of mind at the moment.

然後聯準會將於明年做出全部決定。所以我們目前正在研究這個問題，我們對目前的策略感到非常滿意。它正在逐漸縮短投資組合的整體期限，我們顯然能夠以更高的利率進行再投資。但這是一個緩慢的過程，而且市場上有很多變化。所以這絕對是目前最受關注的問題。

Okay, that's helpful.

好的，這很有幫助。

Just add, David, I mean, as Michael said, we're continuing to invest at higher rates. So investment somewhere around kind of 380 basis points and around a 3-year duration, so 3 or 3.1 year duration, so bringing duration in. But and as I said, we're very focused on it, looking at any excess liquidity that we have and kind of seeing if it makes sense to kind of invest some of that or pre-invest some of that, given that we're looking at a potentially downward interest rate.

補充一下，大衛，我的意思是，正如邁克爾所說，我們將繼續以更高的利率進行投資。因此，投資大約在 380 個基點左右，期限約為 3 年，即 3 年或 3.1 年，從而引入期限。但正如我所說，我們非常關注這一點，關注我們擁有的任何過剩流動性，並看看是否有必要投資其中的一部分或預先投資其中的一部分，因為我們正在考慮潛在的下降利率。

Okay, that's helpful.

好的，這很有幫助。

And then the last couple of quarters, we talked about some transitory, maybe temporary deposits that might be rolling out. In the prepared remarks, I didn't hear anything. I may have missed it, but just kind of curious, an update there whether anything has changed with those? Have they flown out? Just kind of curious how you think about that as we think about the size of the balance sheet.

在過去的幾個季度裡，我們討論了一些可能推出的臨時存款。在準備好的發言中，我什麼都沒聽到。我可能錯過了，但只是有點好奇，那裡的更新是否有任何變化？他們飛出去了嗎？我只是有點好奇，當我們考慮資產負債表的規模時，您是如何看待這個問題的。

Yes. See -- I mean, I think we still kind of feel that there are some deposits that are subject to leaving the bank or kind of might be looked at as hard money. The fund that we talked about for quite a few quarters that's in liquidation and it's still -- those fund is still here with us, but we still expect those to flow at some point given the legal process, and that's going through.

是的。看——我的意思是，我認為我們仍然覺得有些存款可能會離開銀行，或者可能被視為硬通貨。我們談論了好幾個季度的基金都處於清算狀態，這些基金仍然在我們這裡，但我們仍然預計，考慮到法律程序，這些基金最終會在某個時候流動，而這正在進行中。

Some of the other -- maybe some larger deposits in kind of wealth management space have flowed out and kind of put to work. But at the same time, I have also had some deposits coming in as well to replace those.

其他一些——也許是財富管理領域的一些較大存款已經流出並投入使用。但同時，我也收到了一些存款來彌補這些損失。

We don't really kind of behavioralize a lot of that. I mean, it's about 200 or just over 200 when it comes to the fund as an receivership and it's somewhere around 700 to 800 of funds that are above on those. So can we consider not necessarily sticky at this point and may leave the bank. So we have to see how those act over time, which kind of gets us back to we think deposits may settle over the long term -- over the medium term.

我們其實並沒有將很多事情行為化。我的意思是，當基金作為破產管理人時，這個數字大約是 200 或略高於 200，而當基金超過這個數字時，這個數字大約是 700 到 800。所以我們是否可以認為此時不一定要堅持下去，而可以離開銀行。因此，我們必須觀察這些因素隨時間的變化情況，這讓我們認識到，我們認為存款可能會在長期內（中期內）得到解決。

Yes. And I think, David -- sorry, it's Michael. Just in our prepared remarks, I mean, it's tough to see when you have the sterling moving at such a rapid pace or a dollar weakening and is obviously due to rate differentials between the markets as we see divergence between the different rate paths and central banks. So we try to point out, and you can see a slide in the appendix that points out that the actual customer outflows that we're seeing on normalization and customer behavior is somewhat masked by a weakening dollar or strengthening pound. And that's particularly pronounced this quarter, both on the loan asset side when it comes to period-end balances as well as the deposits.

是的。我認為，大衛——抱歉，是麥可。就我們準備好的評論而言，我的意思是，當英鎊以如此快的速度波動或美元走弱時，很難看出情況，這顯然是由於市場之間的利率差異造成的，因為我們看到不同的利率路徑和中央銀行之間存在分歧。因此，我們試圖指出，您可以在附錄中看到一張投影片，其中指出我們在正常化和客戶行為中看到的實際客戶流出在某種程度上被美元走弱或英鎊走強所掩蓋。本季這一現象尤其明顯，無論是貸款資產方面的期末餘額或存款方面。

Yes. That's a good point.

是的。這是一個很好的觀點。

And then last one, I just want to touch on the capital side. Michael, you touched on it a bit in your prepared remarks. You've already got a really strong balance sheet, you have the dividend increase, we got the increased repurchase authorization. But in the -- you talked about rebalancing your capital return strategy.

最後，我只想談談資本方面。邁克爾，你在準備好的發言中稍微提到了這一點。你已經擁有了非常強勁的資產負債表，你的股息增加了，我們獲得了增加的回購授權。但是在—您談到了重新平衡您的資本回報策略。

I was hoping you could maybe elaborate that. Has there been any shift in your focus? Reading the press release, it kind of read like maybe M&A may be a bigger priority today. I'm just kind of curious if you could elaborate on your capital priorities today.

我希望您能詳細說明一下。您的關注點有發生什麼變化嗎？閱讀新聞稿，感覺好像併購可能是今天的更重要的優先事項。我只是有點好奇您是否可以詳細說明您今天的資本優先事項。

Yes, sure. It's Michael Collins. So we -- first and foremost, dividend is a priority and then, obviously, M&A and then share buybacks. We've been in a number of discussions on the M&A side. I will continue to say that we're quite disciplined on pricing, and there is still competition from private equity, which tries to roll up trust companies and fund admin companies offshore and then take the public or sell it.

是的，當然。我是麥可‧柯林斯。因此，我們首先要考慮的是股息，然後顯然是併購，然後是股票回購。我們在併購方面進行了多次討論。我將繼續強調，我們在定價方面非常嚴格，並且仍然存在來自自私募股權的競爭，私募股權試圖收購信託公司並為海外管理公司提供資金，然後將其公開或出售。

So we're not going to pay the prices that private equity funds pay for some of these franchises because we probably know them a bit better, but we're still very disciplined. But I can say we are in discussions and we have been, but we're going to take our time.

因此，我們不會支付私募股權基金為這些特許經營權支付的價格，因為我們可能對它們更了解，但我們仍然非常自律。但我可以說我們正在討論，而且我們已經在討論，但我們需要花一些時間。

So in terms of the dividend, we have increased dividend in six years. We got down to 34%. Today, we're a 34% payout ratio. This will take us to 36%. What we're trying to do is we bought back a lot of shares. I mean, you can see the share count has gone back, gone down quarter after quarter. So we've been very successful at that, which obviously is great for EPS and the share price. But we just felt that we needed to rebalance in terms of just paying a bit more on the dividend side as opposed to doing 70% of it on share buybacks.

因此就股息而言，我們在六年內增加了股息。我們降到了 34%。如今，我們的股利支付率為 34%。這將使我們達到 36%。我們正在嘗試做的是回購大量股票。我的意思是，你可以看到股票數量已經回落，一個季度又一個季度地下降。因此，我們在這方面非常成功，這顯然對每股盈餘和股價有很大幫助。但我們只是覺得，我們需要重新平衡，在股息方面多付一點，而不是將 70% 用於股票回購。

So that's really what it's about. It's not something that we're going to look at every quarter, it's something that we just occasionally review. And as you can see, it's been six years, we still have a extremely healthy dividend payout ratio and yield. So we're happy with that.

這就是事情的真正意義。我們不會每個季度都關注這個問題，只是偶爾回顧一下。如您所見，六年過去了，我們的股息支付率和收益率仍然非常健康。所以我們對此感到高興。

And I'll give it to Michael Schrum, but I think we want to be a little bit over 100% payout ratio over time.

我會把它交給邁克爾·施魯姆，但我認為我們希望隨著時間的推移，派息率能夠略高於 100%。

Yes. So David, it's Michael Schrum. So as you can also see, our buyback authorization, the Board is very supportive of the strategy here in terms of the overall capital deployment. So we're trying -- so the share buyback authorization maybe is a little bit smaller than we had in the past, and we try and look at sort of a combined payout ratio between the actual activation of retained earnings through cash dividends plus the amount that we authorized in terms of values.

是的。大衛，這是麥可‧施魯姆。因此，如您所看到的，對於我們的回購授權，董事會非常支持此整體資本配置策略。因此，我們正在嘗試——股票回購授權可能比過去的要小一些，我們嘗試研究透過現金股利實際啟動的留存收益與我們授權的價值金額之間的綜合派息率。

We still want to have room to grow. We still want to have room to -- for M&A. So that authorization probably scaled down a little bit. But with the proviso of that, the Board is very supportive, we can come back any time. But obviously, share buybacks are always subject to market conditions. So that's really what the rebalancing is there, a little bit higher cash dividend, a little bit smaller share authorization with the proviso that we can come back and ask.

我們仍然希望有成長的空間。我們仍然希望有進行併購的空間。因此授權可能會縮減。但有條件的是，董事會非常支持，我們可以隨時回來。但顯然，股票回購總是受市場條件的影響。所以這其實就是重新平衡，稍微提高一點現金股息，稍微減少一點股票授權，但前提是我們可以回來詢問。

Okay, that's helpful. Thanks, everybody.

好的，這很有幫助。謝謝大家。

(Operator Instructions)

（操作員指示）

Timur Braziler, Wells Fargo.

富國銀行的 Timur Braziler。

Hi. Good morning, everyone.

你好。大家早安。

Back on the capital question, CET1 is now closer to 26%, was down somewhere between kind of 17% and 20% pre-pandemic. I get the lender of last resort and the need to hold additional capital, but even that statement seems a little excessive for you guys. I guess, how are you thinking about your level of capital here? And what is ultimately the right level that we should think about that getting to over time?

回到資本問題，CET1 現在接近 26%，比疫情前下降了 17% 到 20% 左右。我了解最後貸款人和持有額外資本的必要性，但即使是這樣的說法對你們來說也似乎有點過分。我想，您如何看待您這裡的資本水準？那麼，隨著時間的推移，我們應該考慮最終達到什麼樣的正確水平？

Yes. Sorry, Tim. Yes, it's Michael Schrum. It's great -- another great question.

是的。抱歉，提姆。是的，他是麥可·施魯姆。太棒了——又一個好問題。

I think we're burning down a little bit more than we're earning at the moment so it will take a few years to get down into the sort of mid-20s. As you know, we've had Basel IV implementation, gave us a red cap boost.

我認為我們目前消耗的錢比賺的多一點，所以需要幾年時間才能降到 25 歲左右。如您所知，我們已經實施了巴塞爾協議 IV，這為我們帶來了紅色上限的推動。

Some of that, if you want to think about it that way, was recycled into an improvement in the quality of the capital stack by redeeming the subordinated debt and putting more of the interest earnings to the bottom line effectively by not having the interest expense on that. That was coming up to a five-year reset to floating and tapering capital relief anyway. And so that seemed to make sense to us to use some of that benefit and some our access to return to common shareholders so it will take a few years.

如果你願意這樣想的話，其中一部分資金被回收利用，透過贖回次級債務，並透過不產生利息支出，有效地將更多的利息收入投入到利潤中，從而提高了資本結構的品質。無論如何，這即將迎來為期五年的浮動和逐漸減少的資本減免重置。因此，對我們來說，利用部分利益和部分管道回報普通股股東似乎是有意義的，但這將需要幾年時間。

We still would love to conclude at a fair value and M&A transaction that would be accretive to shareholders because I think that would ultimately help stabilize our earnings over time through stable fee income and make us less reliant maybe on net interest earnings. So that's still in the background in terms of keeping that excess capital. It's not a war chest, but it's enough that we could do a sizable deal without having to come back to existing shareholders to ask more capital.

我們仍然希望以公平的價值和併購交易來完成，這將為股東帶來增值，因為我認為這最終將有助於透過穩定的費用收入來穩定我們的收益，並使我們減少對淨利息收益的依賴。因此，就保留過剩資本而言，這仍然是一個背景問題。雖然這不是一檔戰爭基金，但足以讓我們完成一筆相當大的交易，而不必向現有股東索取更多資金。

And finally, there's always the opportunity for us to come back to the subordinated debt market. It's just at these rate levels just didn't make any sense for us to reissue at this point. So ongoing conversations, as you know, most of the deals have been sort of sub-$30 million outlay in terms of consideration. So there's room for a couple of deals in the excess capital layer, but ultimately, we want to -- at 25% rate cap, it's questionable whether additional capital would solve any problems with.

最後，我們總是有機會重返次級債務市場。只是在這樣的利率水準下，我們目前重新發行是沒有任何意義的。因此，如您所知，正在進行的對話中，大多數交易的對價都在 3000 萬美元以下。因此，在超額資本層面上還有進行幾筆交易的空間，但最終，我們希望——在 25% 的利率上限下，額外的資本是否能解決任何問題還是值得懷疑的。

Yes. I think I figured like Michael hit it on M&A, so we don't want to reduce capital substantially and then need capital for something that comes up. But I also think we're looking at the long term and we've got a 22% ROE or mid-20% ROEs throughout the cycle with 35% loans-to-deposits. So it's a pretty good model.

是的。我認為麥可在併購方面做得很好，所以我們不想大幅減少資本，然後又需要資本來應對出現的問題。但我還認為，我們正在著眼於長期，整個週期內我們的 ROE 為 22% 或 20% 左右，貸存比為 35%。所以這是一個非常好的模型。

And right now with everything going on geopolitically and tariffs, and with US and where is inflation going and what's the Fed doing, I think it's probably a decent time to just hold a little capital and see where it plays out. And as Michael said, it's not a war chest, but we probably will find something at some point in the future.

現在，隨著地緣政治、關稅、美國通膨走向以及聯準會的行動等各方面因素的出現，我認為現在可能是持有少量資本並觀察其發展的好時機。正如邁克爾所說，這不是戰爭基金，但我們可能會在未來的某個時候找到一些東西。

So we're pretty comfortable where it is. But obviously, we want a payout ratio that's sort of 108%, 110% so that we start to get down to the low 20s in terms of total capital as opposed to where we are today.

所以我們對現狀很滿意。但顯然，我們希望派息率達到 108% 或 110%，這樣我們的總資本就可以開始下降到 20% 以下，而不是現在的水平。

Yes, it's a high-class problems for sure.

是的，這確實是一個高級問題。

It's exhausting, Timur.

這太累了，帖木兒。

On the deposit side, again, I think, surprising on the ability to bring costs down given the really low starting point. I think when we spoke last quarter, it didn't seem like there was all that much room to go and then here we are with another pretty good result. Where are we at this point and the ability to drive deposit costs lower ex any future rate cuts?

在存款方面，我認為，考慮到起點真的很低，降低成本的能力還是令人驚訝的。我認為，當我們上個季度談論時，似乎並沒有那麼大的發展空間，但現在我們又取得了相當不錯的成績。我們現在處於什麼階段？除未來降息外，我們是否有能力降低存款成本？

Yes. Look, while we benefited from kind of talked about it in prior quarters is, I guess, kind of the reduction in the duration of deposits. So in addition to having the ability to reduce the actual rates that we're offering and signing on the deposits particularly in the fixed term, duration is also coming in as well.

是的。你看，雖然我們從前幾季討論過的問題中受益，但我想，這在某種程度上是存款期限的縮短。因此，除了能夠降低我們提供的實際利率和簽署的存款（特別是固定期限的存款）之外，期限也在延長。

So where it was at the end of December, we've got to -- it's a lot more on demand or kind of seven days at this particular point in time. So we went kind of from about 65% that was kind of demand to about kind of 70%. So that's kind of helped with the cost of deposits as well.

因此，與 12 月底的情況相比，我們必須——在這個特定時間點，它的需求量更大，或者說是七天。因此，我們的需求量從大約 65% 上升到了大約 70%。這也有助於降低存款成本。

So -- but to answer your question, given that movement in duration and the fact that we've been able to drive the cost of deposits down over time, I think we still can get some reduction, but it's going to be at a slower rate kind of as we go forward. And of course, that's kind of based on the current kind of interest rate environment.

所以——但要回答你的問題，考慮到期限的變動以及我們能夠隨著時間的推移降低存款成本的事實，我認為我們仍然可以獲得一些減少，但隨著我們前進，這種減少的速度會越來越慢。當然，這是基於目前的利率環境。

Yes. Tim, sorry, it's Michael. You can see in the asset sensitivity slide, we're still modestly asset sensitive, but we are, obviously, exposed to it down 100. So that means we're kind of getting to a flattening NIM where we can't push deposit costs below 0, obviously, maybe a little bit more exposed on that side than the peer group generally, and that is really from -- because of where the starting point is.

是的。提姆，對不起，我是麥可。您可以在資產敏感度幻燈片中看到，我們仍然對資產具有適度的敏感度，但顯然，我們受到的資產影響下降了 100%。因此，這意味著我們正走向一種趨於平緩的淨息差，我們不能將存款成本推低至 0 以下，顯然，在這方面的風險敞口可能比同行總體而言要大一些，而這實際上是從起點開始的。

I think Mike Collins and I have both been in Island Banking for over 25 years, and that NIM sort of 2.75%, 3% is kind of like we normally where it tops up through rate cycles. Every cycle is different, but there's a number of different dynamics going on there.

我認為 Mike Collins 和我都在 Island Banking 工作了 25 年以上，NIM 大約為 2.75% 或 3%，這與我們通常在利率週期中達到頂峰的情況類似。每個週期都是不同的，但其中存在著許多不同的動態。

Perfect. Thanks for the call, guys.

完美的。謝謝大家的來電。

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

我們的問答環節到此結束。我想將會議交還給諾亞·菲爾茲 (Noah Fields) 做結束語。

Thank you, Drew, 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，德魯，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。