Bank of N.T. Butterfield & Son (NYSE:NTB) just released third quarter and nine month earnings, along with a fresh quarterly dividend declaration and an update on its recent share repurchase activity.
Despite the stronger earnings, Bank of N.T. Butterfield & Son shares have eased in the short term, with the share price falling 7.12% over the past 30 days and 12.36% over 90 days. However, the year-to-date share price return is up 9.90% and the 1-year total shareholder return sits at 23.88%. This points to longer term momentum that contrasts with recent profit taking and shifting risk appetite around the latest results and capital return moves.
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Bank of N.T. Butterfield & Son just reported higher earnings, maintained its dividend at $0.50, and has already completed a share repurchase tranche. After the recent pullback, does that combination still tilt the risk reward toward buyers?
Most Popular Narrative: 16% Undervalued
On Simply Wall St's most followed narrative, Bank of N.T. Butterfield & Son screens as undervalued, with a fair value estimate of $65.33 versus the latest close at $54.62. That gap is grounded in a view that future fee income, acquisitions and capital returns are not fully reflected in the current share price.
Butterfield's planned acquisition of CIBC Caribbean for just under US$1.8b, which is expected to roughly double group assets and deposits and add more than US$400m of run rate earnings, would give the bank a larger offshore footprint. Management indicates this could lift long term revenue and earnings once integration is complete.
See why 10 investors see Bank of N.T. Butterfield & Son as 16% undervalued.
Result: Fair Value of $65.33 (UNDERVALUED)
Still, the narrative could crack if the planned US$700m subordinated debt lifts funding costs, or if the CIBC Caribbean integration drags on efficiency and margins.
Find out about the key risks to this Bank of N.T. Butterfield & Son narrative.
Next Steps
Mixed signals on Bank of N.T. Butterfield & Son so far. If you want to move quickly and build your own view, start with the 6 key rewards and 3 important warning signs.
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