The quiet period for the Bank of N.T. Butterfield & Son (NYSE:NTB) will expire on October 10, allowing the underwriters for its IPO to release reports and to make recommendations on October 11. The underwriters include: Citigroup, Goldman Sachs & Co. and Sandler O’Neill & Partners, L.P.
My firm’s – DRD Investments’ – extensive research has found that these reports are, more often than not, detailed and very positive, and lead to a boost in the share price. We recommend more aggressive investors therefore purchase shares of NTB prior to the quiet period expiration to benefit from the event and its anticipation.
Business overview: Full-service Bermuda-based bank
Bank of N.T. Butterfield & Son LTD is a full-service bank that is based in Bermuda. It operates in Bermuda, the United Kingdom, Switzerland, Guernsey, the Cayman Islands and the Bahamas, offering banking services as well as wealth management. In addition to bank accounts, savings accounts, brokerage and portfolio management, N.T. Butterfield also offers payroll services, private banking, commercial credit products and treasury and money market services.
As of June 30, 2016, the bank reported that it had $11 billion in assets, $3.9 billion in net loans and $10.1 billion in deposits. It also had $4.8 billion in assets under management and $101.3 billion in assets under trust administration. It employs ~1,088 people.
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Management team highlights
Michael Collins is the chief executive officer of Bank of N.T. Butterfield & Son (NYSE:NTB). He began serving in the role in September 2015. His previous experience includes working at the Bank of Bermuda, HSBC Bank Bermuda and Morgan Guaranty Trust Company. Collins has a Bachelor of Arts in economics from Brown University.
Michael Shrum is the chief financial officer of the Bank of N.T. Butterfield & Son. He previously held executive financial positions at HSBC Bank Bermuda in New York, London and Bermuda. Shrum is a fellow of the Institute of Chartered Accountants in England and Wales and is a chartered financial analyst. He completed his Bachelor’s degree in economics at the Southern Denmark Business School and his Master’s degree in economics at the University of London.
Competitors
NTB counts among its competitors large banks both domestically and internationally. It competes with banks such as HSBC Holdings plc (ADR) (NYSE:HSBC), Deutsche Bank (NYSE:DB) and J.P. Morgan (NYSE:JPM). Domestically, the bank’s main competitors are the Clarien Bank and the Bermuda Commercial Bank. NTB’s ROA of 0.8 comes in slightly higher than the industy average of 0.5.
Financial overview: Steady performance post-IPO
NTB priced its IPO at $23.50 on September 16. Its price range had been set at $22 to $25. Since then, the price has reached a high of $25.38. At the close on September 30, it was trading at $24.76. The stock has hovered above its IPO price since going public.
In 2015, the bank reported a net income of $77.7 million on total net revenues of $364.3 million. These figures were down from the $381 million in total revenues in 2014 and $108 million in net income. For the six-month period that ended on June 30, 2016, the bank reported it had a net income of $56.5 million on total net revenues of $193.5 million. These figures were up from the same period of 2015 when the bank reported net revenues of $182.3 million and a net income of $51.3 million.
Conclusion: Buy
NTB has remained steady since its successful IPO.
The bank has strong financials and the support of several powerful global underwriters.
We expect Goldman Sachs in particular to have a big influence on Bank of N.T. Butterfield & Son (NYSE:NTB)’s stock price when they issue the anticipated positive detailed report in October.
It is likely that its stock price will increase following the release of the underwriters’ reports after the expiration of the quiet period This is often due to investor anticipation for the event, which is supported by academic findings (1).
We recommend that investors consider buying shares of NTB prior to October 10 to take advantage of the likely boost in price.
Disclosure: I am/we are long NTB.
Note: This article is written by Don Dion. Visit his site at DRD Investments for expert analysis on current and upcoming IPOs.
Additional Links
(1) https://site.warrington.ufl.edu/ritter/