Good morning. My name is Tom, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2021 earnings call for The Bank of N.T. Butterfield & Son Limited. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Noah Fields, Butterfield's Head of Investor Relations. Please go ahead. Thank you. Good morning, everyone, and thank you for joining us. Today, we will be reviewing Butterfield's Q3 of 2021 financial results. On the call, I'm joined by Butterfield's Chairman and CEO, Michael Collins, and CFO, Michael Schrum. Following their prepared remarks, we will open the call up for a question-and-answer session. Yesterday afternoon, we issued a press release announcing our Q3 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 U.S. GAAP, please refer to the earnings press release and slide presentation. Today's call and associated materials may also contain certain forward-looking statements which are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these risks can be found in our SEC filings. I will now turn the call over to Michael Collins. Thank you, Noah, and thanks to everyone joining the call today. Butterfield's results in the third quarter of 2021 continued to demonstrate the bank's earnings power and resilience in an ultra-low interest rate environment and health and credit uncertainty in most of our markets. So far in 2021, Butterfield has performed really well through a difficult period in our small and wealthy island market. During the recent fourth COVID wave, people and businesses were better prepared and have learned to live with it. We anticipate this to continue and sense our local economy is taking on more of a business as usual approach without the need for further economy-wide lockdowns. I will turn now to slide four, where we provide a summary of Q3 highlights. Butterfield reported net income for the Q3 of $39.8 million or $0.80 per diluted common share and core net income of $40 million or $0.80 per diluted common share. This represented a core return on average tangible common equity of 17.9%. The board of directors maintained our 44 cent per share dividend rate, which reflects the stability of our earnings and targets a through cycle dividend payout ratio of approximately 50%. In addition to the quarterly cash dividend, we continue to evaluate share repurchases and utilize our share buyback authorization as part of our broader capital management program. Opportunities for organic growth, such as the Channel Islands mortgage product and M&A pipeline, also remain important factors. During the Q3, the bank reached a resolution with the United States Department of Justice concerning the inquiry into Butterfield's legacy business with U.S. clients that was first reported in November 2013. The resolution is in the form of a non-prosecution agreement with a three-year term. The bank paid $5.6 million in respect of forfeiture and tax restitution amounts, which were in line with the provision that was included in the bank's financial statements as recorded in 2015 and 2016. While we are required to comply with obligations under the non-prosecution agreement, we are pleased to have this investigation resolved. I will now turn the call over to Michael Schrum to provide more details on the Q3. Thank you, Michael. I'll begin with slide six, which provides a summary of net interest income and margin. In the Q3, we reported net interest income of $75.7 million, an increase of $1 million, as we were able to increase the volume of interest earning assets in the investment portfolio, which saw average balances increase by $342.2 million or 2.3% compared to the prior quarter. Net interest margin of 1.97% was four basis points lower than the 2.01% in the prior quarter due to lower yielding interest earning assets. Loan yields were down six basis points in the Q3 due to lower yields on new loan originations, due in part to lower yielding production volumes in the Channel Islands. During the third quarter, the blended rate for loan originations was 3.42% for $278 million of new loans, down from 3.57% for $234 million of originations in the Q2 of 2021. In U.S. Treasuries and agency securities, new money yields averaged 1.13% in the Q3 of 2021, or 53 basis points lower than the 1.66% in the prior quarter as we added around $400 million of two and three-year Treasuries. As we expect longer-term rates to rise over the medium term, we made a decision to invest in shorter-term Treasuries to retain some flexibility and add some protection from unrealized marks in the available-for-sale portfolio. Turning to slide seven. Noninterest income continued to show stability with a modest increase to $49 million compared to $48.8 million in the prior quarter. Banking fees and foreign exchange revenues grew during the quarter as we continue to see improved economic activity. The bank's higher noninterest income resulted in a fee income ratio of 39.3% in the Q3 of 2021, which continues to represent a stable and capital-efficient revenue stream for the bank. Slide 8 provides a summary of core noninterest expense, which increased to $84.2 million in the Q3 of 2021 compared to $83.4 million in the prior quarter. The slight increase in core expenses was made up of relatively small-value items. In particular, there was an increase in technology and communications costs as we have upgraded our desktop access platform during the quarter. In addition, we saw increased professional and outside services fees supporting some longer-term strategic initiatives, including some spend on our broader ESG strategy. Finally, there continues to be some additional costs associated with the three-year non-prosecution agreement with the U.S. Department of Justice as we continue to meet the ongoing terms of the agreement. We do expect core non-interest expense to settle back in the $82 million-$83 million range per quarter over the next few quarters, which is already evident from the exit run rate this quarter. Slide nine summarizes regulatory and leverage capital levels. Butterfield maintains conservative regulatory capital levels that continue to be well above statutory requirements. The bank's elevated deposit levels kept our TCE to TA ratio at 5.8%, slightly below our targeted range of 6%-6.5%. We continue to expect this to build back over the coming few quarters. Turning now to slide 10. Butterfield's balance sheet continues to be strong and conservatively managed with a high degree of liquidity. Deposit levels have stabilized with a slight reduction to $13.9 billion this quarter from $14.2 billion in the Q2. We were able to continue to deploy excess liquidity during the Q3 into the investment portfolio. On slide 11, we show that Butterfield's asset quality remains exceptionally high with low credit risk in the investment portfolio, which continues to be 99% comprised of AAA-rated U.S. government-guaranteed agency securities. Consistent underwriting continues to result in 2/3 of the loan assets in full recourse residential mortgages in Bermuda, Cayman, and the U.K. We have also made a great start in our first year of our residential mortgage offering in the Channel Islands and expect that book to continue to build to around $500 million over the next four-five years. Non-accrual loans have improved further and are now down to 1.2% of gross loans. We remain vigilant and continue with outbound calling programs and are actively working with any borrowers who may experience difficulty. On slide 12, we discuss average cash and securities balance sheet with a summary interest rate sensitivity analysis. Butterfield's weighted average life in the securities AFS investment portfolio increased to 5.3 years from 5.0 years last quarter due to a moderately slower prepayment speed. Consistent with prior quarters, Butterfield continues to expect a potential increase to net interest income in both up and down rate scenarios. I will now turn the call back to Michael Collins. Thank you, Michael. This September marked the fifth anniversary of Butterfield's IPO and listing on the New York Stock Exchange. Since our listing, we have been clear about our strategy to be a leading independent offshore bank and trust company with limited credit exposure, consistent non-interest income generation, prudent expense management, and high risk-adjusted returns. We have achieved growth organically and through acquisitions, including the 2016 purchase of HSBC's trust and asset management operations in Bermuda. In 2018, we successfully acquired Deutsche Bank's Global Trust Solutions business, which helped us establish a licensed trust operation in Singapore, as well as a mid-market corporate banking business in Jersey. In 2019, we completed the acquisition of ABN AMRO Channel Islands, which expanded scale to banking operations in Guernsey and Jersey. We have grown significantly since the IPO in September of 2016, with a compounded annual growth rate of seven percent for deposits and six percent for customer loans. During this time, we have managed through varied economic and interest rate conditions while maintaining quarterly core returns on tangible common equity in the range of 15%-25%. We have also improved tangible book value per share by a compounded annual growth rate of six percent and created significant shareholder value, paying out over $400 million in cash dividends and repurchasing a total of 7.3 million shares, representing approximately a 14% concentration in share count. Butterfield is well positioned to continue to grow and remain on this path. Our success is anchored in a strong balance sheet, capital efficient fee businesses, prudent expense control, balanced capital management, low credit risk, relevant products, and excellent customer service, which yields consistent returns and long-term growth. We greatly appreciate the support of our shareholders, the board of directors, customers, colleagues, and all the stakeholders who have helped contribute to the bank's journey this far. Thank you. With that, we'd be happy to take your questions. Operator? Thank you. We will now begin the question-and-answer session. To ask a question, press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Tim Switzer with KBW. Please go ahead. Hey, good morning. I'm on for Mike Perito. Thanks for taking my question. You guys had- Good morning. Good morning. You guys had a little bit of NIM pressure on both the asset and liability side this quarter, it looks like. You talked about kind of the new money yields and the securities portfolio being a little bit lower, due to a shorter duration. That makes sense. Could you talk about what you're seeing on maybe the loan yield side, if that is resulting in more pressure? What's kind of driving the higher deposit costs as well? Yeah. Thanks, Tim. It's Michael Schrum. Just starting with the loan yields, as you know, we saw a modest growth in period-end balances. Most of the new originations shifted, actually, from Bermuda, where we saw more pay downs and more new originations came on in the Channel Islands. The Channel Islands is a lower yielding allocation of deposits in the sort of 3.25%-3.50% range. It comes really from our new mortgage products that we've launched this year in the Channel Islands. That sort of mix shift between dollars and sterling and jurisdictional mix shift kind of caused that modest compression in the NIM on the loan side. In terms of the investment yields, you know, as you know, they continue to decline. We've had elevated, obviously prepay speeds, there. I think we moderated them. Well, they moderated somewhat during the quarter, so the repayments actually came down to about $300 million in the quarter. We took a look and said, "Look where rates are right now, let's go into a little bit shorter duration to give us some flexibility while we wait for sort of clear indications of where and when longer-term rates are coming out. This will give us some more flexibility to redeploy or reladder over the next year or so. Finally, on the deposit costs, they sort of remained stable at 12 basis points, while interest-bearing demand deposits were actually negative three basis points. We've obviously taken a look at our longer term fixed deposit offerings there. I think we're sort of broadly in line with market where we operate with slightly higher deposit costs in the Channel Islands than Bermuda and Cayman. You know, bearing in mind that that was sort of a growing bank in the Channel Islands, we wanna remain somewhat competitive there. I think, you know, they probably won't have much further to go than the 12 basis points, which is still a relatively cheap source of funding for us. Yeah. No, that makes sense. If I could follow up on the investment portfolio strategy, I understand waiting for higher yields to come, if you think we'd be getting them. I guess, just how patient are you willing to be given your elevated cash levels? Do you, I mean, would you continue just deploying in the short-term securities, or is there any kind of macro environment that would maybe change your mind into getting the longer term, even without a substantial increase in yields? Yeah, no, thanks. Thanks for that. Maybe I should have been a little bit more clear. We did redeploy most of the runoff actually back into agency MBS, so you can see a duration extension there. But net new money we put into two-three year. About $400 million went into two-three year, and about $250 million went back into agency MBS at an average rate around 1.25%. Okay, I gotcha. In terms of the longer broader question around, is there anything that would change our thinking? Obviously, there has been a lot of volatility in the rates market at the moment. We're still very sensitive. I think we're just being patient, getting a bit of running book yield, but retaining some flexibility while we see where tapering and longer-term rates end up shaking out. Yeah, that certainly seems like the right approach right now. Okay, thank you. The next question comes from Timur Braziler with Wells Fargo. Please go ahead. Hi, good morning. Maybe circling back to the Channel Islands, what's the loan balances at quarter end now? Yeah. I think we have the end of period balances in note 12 to the financial segment reporting. I think when we think about the net new product balances that, Channel Islands is both the U.K. and the Channel Islands, which includes the ex-ABN book. The net new mortgages this year, I think we're around GBP 50 million at the end of Q3. We continue to expect that to grow to maybe, you know, half a billion dollars or so in four-five years. It's a cautious approach, but I think, you know, not a deal mover, but clearly accretive from our perspective. Yeah. If you remember, this was our plan to turn the Channel Islands into more of a full service retail bank. Actually, we were able to jumpstart the mortgage volume pretty quickly because we used a lot of our people in our London office, the Butterfield Mortgages Limited. We have a good team there focused on central London mortgages, but they were able to really help with the Channel Islands mortgage book. Probably the first new residential lender there in sort of a generation. It's been a really good start, so we're pretty excited about it. Okay. I guess looking at the disclosure for U.K. loans, that is that implying that the central London books has been growing in 2021 as well, or has that still been relatively flat after peaking last year? Yeah, it's been relatively flat. As you remember, these are IOs, so you know, three-five year duration, so kind of running fast to keep the balance flat. Obviously London has just started opening up, so people are actually able to show properties again. It's a broker introduced market there. It's been relatively flat up until now. You know, the market overall is fairly vibrant with a pretty good pipeline. Okay, thank you. Maybe switching over to the deposit side. The Q3 decline, I guess, how much of that was planned transitory exit? As you look ahead, what type of visibility do you have for deposit balances in the coming quarters? Yeah, great question. So we, you know, we spent quite a bit of time obviously looking client by client on deposits for anything that's, you know, over, really over $10 million of deposits and flowing on and off balance sheet. I would classify the outflow as part of the surge deposits that we had starting in December last year. These are sort of intermediaries coming from law firms and some build up from hedge fund cash balances in Cayman. As we head into the fourth quarter, we normally get a bit more seasonal increases in Cayman up towards year-end. We are obviously continuing to dialogue with customers about, you know, how long are these deposits staying? Are you interested in term deposits or off balance sheet items? Yeah, I mean the outflow was really the surge deposit outflow, and I think we should expect some of that to continue, and that will obviously alleviate pressure on the TCE ratio. Yeah. We're also doing a better job on directing some of the bigger clients with transitory money into our money fund. The sweep was more effective this quarter than previous quarters. I think it's starting to come off a bit, but I also think we're just managing the flows better. Okay. Then on, I guess, you know, a corollary to the deposit question and the pressure that's adding to TCE ratio, we saw again, kind of a lower level of buyback activity as TCE is still under six percent. I guess does that absolute TCE level also impact your ability to do M&A, or are those two kind of not binding to each other? I mean, yeah, great question. If we were buying a fee business, which is, you know, some of the opportunities we've been looking at more closely, obviously that doesn't impact the TCE ratio. If you're buying a bank off balance sheet, you know, it could be either accretive depending on what you're buying to TCE ratio. I think certainly the quality of the regulatory capital stack is very high with a very high component of CET1. There's other opportunities for funding or capital funding if we found a larger transaction, particularly in the fee business we've talked about before. I wouldn't really say it's a major constraint. Okay. One last one for me, if I can. Just looking at the fee businesses, the trust business in particular, it seems like fees within trust have been fairly stable over the last couple of years. I guess, what's the organic outlook for the existing trust business? You know, you've obviously been looking for a trust deal now for a little bit. Is that really the next step to start seeing higher trust fees is through M&A, or are there levers to pull where you could start seeing some increased fee utilization from the organic platform? Yeah. To actually see increased fees in trust, it really is inorganic, so it really is about M&A. I think we've said in the past that trust business really is very stable fee income, but it doesn't really grow. In a normal year, you basically will take on about one or two percent additional fee income through a new trust because it takes a long time to set up these very complex family trusts. Then you'll lose one or two percent as settlors move on and the money is distributed down to the beneficiary. Really is a flat business. It doesn't grow much on its own, so it will be through acquisition. We're still having constructive discussions. As we've said in the past, it takes a long time, and probably the most important gating factor is really our own risk appetite from an AML perspective. We are really stringent about what we will take on, and that often results in having to structure the trust acquisitions in various ways, which can be complex and time-consuming. Still having constructive discussions, but as I said, it's a long lead time. Okay, great. Thank you for taking my question. Thanks. We still have time for questions. We have a question from Jeffrey Kitsis with Piper Sandler. Please go ahead. Good morning. Morning. I was wondering if you could give us an update on the M&A strategy. I know, you know, you gave some helpful commentary on sensitivity of M&A to capital levels, but can you give a, you know, a broader update on what you guys are looking for right now? Yeah, sure. It hasn't changed. It's been consistent that our existing banks, and particularly Bermuda and Cayman, produce a lot of capital, which and we have slow-growing markets, obviously, so it's very difficult to invest back into Bermuda and Cayman. The strategy's been to use that capital generation to do two things. One is to acquire private trust companies, which we've shown we can do in the past, to increase the size of that business, usually in our existing jurisdictions. The second part of the strategy is opportunistically to acquire banks in the Channel Islands, either Guernsey or Jersey. There really isn't much overlap acquisition possibilities in Bermuda and Cayman, so that's where we would grow. I would say one of the strategies was to try to balance our exposures and our risk profile across the three jurisdictions, which we have substantially achieved at this point, from a balance sheet perspective. We feel like we're more diversified. Those are the two pieces of the strategy, trust acquisitions and banks in the Channel Islands. Thanks. I appreciate the commentary on the Channel Islands mortgage operation progress. Going into Q4, are there any other dynamics around loan growth that we should be aware of similar to the repayment of the government facility that we saw in Q3? No, I mean, I think, obviously we continue to monitor it. There are a number of, as we come out of COVID, you know, the discussions with some of the larger facilities that we put in place for particularly the Cayman government and the Jersey commitment that we made to the States of Jersey have turned out to be, you know, not utilized. They're obviously evaluating, look, do they need the fiscal stimulus capacity that they had originally, that we had signed up for at the beginning of the pandemic. I think some of them are just reevaluating and reducing their exposure. I think, you know, we should hopefully see more activity in central London in terms of transactions and refinancing. You know, the pipeline is quite good there and Channel Islands is well on the way. Bermuda continues to be a lot of cash buyers, and so there's not much leverage put in and demand is relatively sluggish, I would say. Cayman is growing very fast, and we're just taking our time, making sure we stick with our risk appetite there. I think, you know, what you see in the last couple of quarters, maybe a slightly better growth outlook than we had during the pandemic, certainly. That's all for me. Thank you for taking my question. Thank you. We have a follow-up question from Timur Braziler with Wells Fargo. Please go ahead. Hi. Thank you. Maybe just looking at net interest margins, I guess looking at the dynamics for both loans and securities with those new money yields coming on below the portfolio yield and some catch up on the averages relative to period-end balances. Is it safe to assume that there's some incremental NIM compression coming in the following quarters? Or, is there anything that I'm missing there that could kind of stave that off? Yeah, I mean, we continue to deploy, as you can see, cash balances, but obviously we're quite cautious around the surge deposits and duration of those deposits. We are in the process of updating behavioral analysis on the deposits as well. I think with the way the balance sheet is right now, you know, we tend to focus more on net interest income than NIM, and sort of keeping that at the 75 level, pending what happens in the rates market. Obviously, we continue to be very asset sensitive. As a reminder, you know, two-thirds of that sensitivity is sitting at the front end of the curve, and one-third is kind of at the back end of that curve. You know, we have seen a slightly more constructive 10-year recently, certainly. I think we're just saying that let's do a little staging here in the two-three year. It does cause NIM compression, but running book yield, so it's a good trade-off from our perspective to just kind of keep that 75 level on net interest income. I think the NIM will be dictated by the potential reduction in deposits or normalization of deposits. You know, that really is coming, sort of giving us a trajectory out of there without incurring a huge mark on the investment portfolio. Just adding that flexibility. Okay. As we think about deploying excess cash into securities, I know the number before had been around $150 a quarter. Are the trends in the Q3 kind of indicative of what your plan is going forward, or is there a unique opportunity given the runoff there to reinvest some of those yields? I guess, how should we be thinking about putting cash to work in the securities book going forward? Yeah. I think when we see opportunities, as we did in the Q2 to kind of lock some of that in, you know, we did put $400 out in the Q2 into MBS securities, and that's one of the reasons why we still have gains in that securities book today. Obviously there's quite a bit of volatility in the 10-year right now, but I would expect us to have a platform where we have a two- and three-year ladder, and so we can stem the sort of, you know, NII compression really from additional volume in the investment portfolio in shorter duration. Now, it doesn't, you know, look like a bigger NIM compression, but it does give us that flexibility while we wait for further guidance for the market, really. Got it. Thank you. Thanks. This concludes our question and answer session. I'll turn the conference back over to management for any closing remarks. Thank you, Tom, and thanks to everyone for dialing in today. I know it's a busy morning for calls for everyone. We look forward to speaking with you again next quarter. Have a great day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.